When you buy into strata, it’s important to check the ongoing strata fees in preparation. But you should do your homework carefully because low fees don’t always mean good things. It could be because the building is run-down or maintenance upkeep isn’t very good. Here’s what you need to know about strata fees and why they differ from building to building.
Types of strata levies
There are typically three different types of levies you may be required to pay when you buy into strata.
Strata fees: These are the standard fees everybody pays on an annual basis, and they are used to cover day-to-day expenses such as maintenance, gardening, cleaning, insurance premiums and electricity in common areas.
Capital works fees: These fees are kept in a different fund that is set aside for major renovations, repairs and the more expensive maintenance not covered by normal strata fees. This fund can also be used for upgrades, infrastructure and any other major works as approved by the committee.
Special levies: If there are significant improvements, repairs or maintenance that the capital works fund can’t afford, special levies can be requested. Implementation of these levies needs to be voted on at a General Meeting.
Are everybody’s levies the same?
In some cases, assuming all apartments in a building are the same size, everybody pays the same amount of strata fees. However, in most situations, the property sizes are all different, and that’s what generally determines the amount of strata fees you pay. So, if you have a larger apartment, it’s likely you’ll pay more.
In addition to the size of the apartment, many strata schemes also operate with ‘unit entitlement’, which also takes into consideration the value of the lot. For example, if you have a balcony, additional car spaces, direct courtyard access or something else that’s considered favourable, the value of your lot increases. As such, you pay strata fees based on the value of your particular unit.
In addition, if you’re an investor who owns more than one apartment, you’ll be paying strata fees on each apartment you own.
How are strata fees calculated?
As mentioned above, the value of your apartment is significant in determining the strata fees you pay. Typically, each strata scheme will have its own terms because every building is different. It’s not uncommon to see strata fees range from 0.3% of the property value to 1.2%. This is generally based on the overall value of the building. For example, a basic building with very few amenities may have low strata fees, but if you get access to facilities like pools or gyms, you can expect to pay a higher percentage.
Another driver of strata levies is the level of onsite service commanded by owners/residents. For example, if concierge service, 24/7 onsite security or twice daily cleaning are what owners want, then more strata fees need to be collected to pay for these services.
Likewise, buildings in more desirable locations might have a higher price tag and a comparable higher strata fee percentage to go with it. Generally, you get what you pay for but this is why strata fees are so different from building to building.
If you need assistance with strata management, or you’re concerned about the financial management and fees involved with your strata scheme, contact More Than Strata today. We can take away the burden of managing your strata building and ensure transparency for all lot owners.
