Paying Levies in Strata

What is a Strata Scheme?

When we talk about paying strata levies we should first understand exactly what a strata scheme is and how it differs from living in a stand-alone house. In a strata scheme an owner owns a portion of the scheme or a lot. There is also common property shared by all owners such as gardens, driveways, pools and foyers.
The main difference between owning a lot in a strata scheme and owning a house is all the external elements. Any external walls, windows and the floor are generally not owned by the individual but are referred to as common property. This means the maintenance and repairs of these areas are usually the responsibility of the Owners Corporation, unlike a house where all maintenance is the sole responsibility of the homeowner.

Paying Levies

When buying into a strata plan, it is the responsibility of the owner of a lot to pay levies. These are made up of annual fees and special fees. Annual fees cover general administration, maintenance, insurance and other ongoing costs to operate the owners corporation. Special fees however cover extraordinary or unexpected expenditure. For an owner there should be no mystery as to what the fees are and what they are used for. At Tideways we believe in full transparency when delivering our service. We understand the requirements of administrating an owners corporation so charge a set fee guaranteeing no surprises during the year.

Annual Fees

To further understand the fee structure, each lot owner does not necessarily pay the same annual fee as everyone else in the plan. Fees are charged according to lot liability. This is determined by the surveyor and noted on the registered plan of subdivision. Fees are typically apportioned based on size of lot or price of lot.
To determine the fees for the financial year, an owners corporation prepares an annual budget. The committee or a delegate estimates the cost of administration, maintenance, insurance and contributions to the maintenance plan to be presented at the Annual General Meeting.

The owners corporation must send its proposed budget to members with the notice of the annual general meeting, where the budget will be approved.

A maintenance plan provides a snapshot of what work will need to be completed over the next 12 months and guide the owners corporation to budget for these necessary works. A detailed plan is important again for transparency so owners have a full understanding where funds will be allocated and the allowance of a contingency.
If an owners corporation has a maintenance plan, it must also have a maintenance fund. The owners corporation can decide what, if any, portion of the annual fees should be contributed to the fund, how it is paid and when payment is due.

Special Fees

Special fees cover extraordinary or unexpected expenditure. This may include urgent repairs, upgrades to the property or even costs such as legal action against the owners corporation.
A special resolution must be approved by at least 75 per cent of all lot owners or lot entitlements if the proposed special fee is more than double the amount of the owners corporation’s annual fee.

Lot owners are charged special fees according to their lot liability. There are instances however where work may only benefit one, or some (but not all) lots. In this case, special fees are charged using something called the ‘benefit principle’.

Basically, the principal means, those who benefit more, pay more.

Understanding your fees and what they are used for is important in strata living and Tideways are here to help.

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