How to Avoid Body Corporate Fees

How to Avoid Body Corporate Fees

Strata living is a popular way of life for many people in South Australia, but high body corporate fees can certainly take away some of the enjoyment. Whether they’re called strata fees, strata levies or body corporate fees, they’re an unavoidable part of strata life, but that doesn’t mean they have to be unaffordable. We’re going to give you some useful tips on keeping strata costs down and avoiding constrictive fees.

What do body corporate fees cover?

Body corporate fees, also known as strata levies or strata fees, are payments made by all lot owners to contribute towards general running expenses. This often includes landscaping, cleaning, insurance, and repairs for shared amenities and spaces, but they can also cover administrative costs such as strata management.

Fees can also contribute to the sinking fund, which is like a long-term reserve for major repairs or upgrades in the future, but some strata schemes implement sinking fund fees separately. If you’re considering buying into a strata or shared community, it’s essential that you do your research in order to avoid high or unexpected fees. Here are some things to look out for:

Assess the property’s amenities

Properties with extra amenities like pools, gyms or large landscaped areas provide a great lifestyle, but they often come with higher fees. This is because there are more maintenance and cleaning costs required to keep those areas clean and functional. If you’re concerned about expensive body corporate fees, it might be worth looking for a property with fewer bells and whistles. This is especially relevant if you don’t think you’ll use amenities like gyms and pools because all lot owners contribute to their upkeep whether they use them or not. If you don’t really need them, keep looking for something that suits your lifestyle and price range.

Check the condition of the property

Whether you’re buying a standalone home or entering community living, you should always thoroughly check the property’s condition. In strata, this extends to the entire building and shared areas, rather than just your lot. Do a careful check for signs of wear and tear in the roof, plumbing or external areas. You can even request maintenance records and building inspections to give you peace of mind.

Assess each property on its merits, though, because looks can be deceiving. If your goal is to avoid high strata fees, remember that modern properties in excellent condition may have higher fees to maintain them. Older properties with a little wear and tear might be cheaper because of a few aesthetic issues, but the key elements are all in good condition. It’s about finding the balance that suits your lifestyle and budget.

Examine the sinking fund

We touched on the sinking fund for capital works earlier, and the fact that most community living schemes require property owners to pay fees into it. A well-maintained sinking fund is a sign that the scheme is running well, at least financially. Always ask about the fund balance and any planned usage for those funds. Essentially, when capital works and the sinking fund are managed well, it can negate the need for ‘special levies’ which can be imposed in the event of urgent repair needs.

This ties in with the need to thoroughly check the condition of the property. If it’s in some form of disrepair and the sinking fund also doesn’t look healthy, it’s an indication that some special levies might be just around the corner.

Find out how the strata scheme is managed

Finally, strata management is an integral part of a scheme’s success. It’s important to know how a scheme is managed before you buy in because it can lead to countless disputes and issues if you don’t agree with the setup. Also, when schemes aren’t managed effectively, neither are the fees and sinking funds, which often leads to additional levies or unnecessary increases.

Many schemes are run by a committee of elected lot owners, which can save money in some cases if there are skilled administrators among you. If not, it can lead to mismanagement and extra costs.

So, while strata management services come with a cost, they can often pay for themselves through improved processes, careful planning and greater discretion over spending. Again, every situation is different, but typically the best and most hassle-free strata living environments are professionally managed.

Need more information on managing body corporate fees?

Body corporate fees are a necessary part of community living, but they can be kept reasonable when a scheme is managed well. To ensure every dollar of your fees is maximised, consider speaking to us about strata management. Our expert team can assist with everything from financial management to future planning. If you’re concerned about high strata fees, contact us today for more advice on how to keep them down.