If you are buying an apartment, townhouse, or unit in Australia, you will almost certainly be paying body corporate fees, also called strata levies in NSW and the ACT.
Most buyers know body corporate fees exist. Far fewer understand exactly what they cover, why they vary so dramatically between buildings, and what to look for when assessing whether a building's fees represent good or poor financial management.
Body corporate fees are the regular contributions all lot owners make to fund the collective management and maintenance of the building and its common areas.
When you buy into a strata scheme, you automatically become a member of the owners corporation -- called the body corporate in Queensland and some other states. The body corporate is responsible for everything outside your individual apartment: the structure of the building, the common areas, the garden, the lifts, the pool, the security systems, and the building's insurance.
Your body corporate fees are your share of the cost of running all of that.
Body corporate fees typically fund two separate accounts.
The administrative fund covers the day-to-day operating costs of the building. This includes building insurance (which is mandatory for all strata schemes), common area electricity and water, cleaning and gardening of common areas, pest control, and the fees of a professional strata manager if one is appointed.
The capital works fund (the sinking fund in some states) is a long-term savings account for major future expenses. Every building will eventually need significant work, painting, roof repairs, lift replacement, waterproofing, facade maintenance. The capital works fund is supposed to accumulate money over time so that when these expenses arise, they can be paid from the reserve rather than from a special levy charged to all owners.
A well-managed building maintains a healthy balance in both funds. A poorly managed building may have a depleted capital works fund and a history of special levies, one-off charges to all owners when an unexpected expense exceeds what the fund can cover.
Body corporate fees are calculated based on the actual costs of running the building divided among all owners according to their lot entitlement.
A small, low-rise building with minimal common facilities, no pool, no lift, no concierge, will have significantly lower fees than a large high-rise with a gym, heated pool, rooftop terrace, multiple lifts, and 24-hour building management.
Other factors that affect fee levels include the age of the building (older buildings typically have higher maintenance costs), the quality of past maintenance (a well-maintained building has lower ongoing costs than one where maintenance has been deferred), and the building's insurance premiums (which have risen significantly across Australia in recent years).
For buyers comparing properties, body corporate fees should be understood as part of the total cost of ownership rather than just an add-on. A property with low body corporate fees and high maintenance costs is not necessarily cheaper to own than one with higher fees and well-maintained common areas.
Before committing to any strata property purchase, the body corporate records should be reviewed carefully. Key things to look for:
The current levy schedule. What are the quarterly contributions to the administrative fund and the capital works fund? Are they increasing?
The capital works fund balance. Is there a healthy reserve to cover future major expenses? A fund that is near zero is a warning sign -- either the building has no upcoming expenses (unlikely in older buildings) or it has been chronically underfunded.
Special levies. Have any special levies been raised in recent years? What for? Special levies indicate that the capital works fund was insufficient when an expense arose.
Outstanding maintenance. Meeting minutes reveal what maintenance issues the building is managing or has recently dealt with. Water ingress, structural issues, and fire safety deficiencies are significant.
Legal proceedings. Any disputes involving the body corporate should be disclosed in the records.
Your conveyancer should review these records as part of the contract review process. Do not sign a contract on any strata property without having the body corporate records reviewed by someone who knows what to look for.
New buildings typically start with lower body corporate fees than established buildings for a simple reason: everything is new, maintenance costs are minimal, and the capital works fund is being built from scratch.
This changes over time. As the building ages, maintenance costs increase and the capital works fund needs to accumulate for future major works. Buyers of new off the plan properties should understand that the fees they pay in the first few years are likely to be lower than the long-term steady-state level for the building.
Developers are required to provide an estimate of body corporate fees as part of the off the plan disclosure process. These estimates should be reviewed critically, some developers set initial fees at artificially low levels that increase significantly after handover when actual costs become clear.
Through Coposit, eligible off the plan developments can be secured with $10,000 upfront and the remaining deposit paid through weekly interest-free instalments during construction. New builds offer the lowest entry point for body corporate fees and the full statutory defects warranty period.
For renters who are working toward their first property purchase, Unrent by Coposit is now live, a model where weekly rent payments accumulate toward a deposit rather than disappearing into a landlord's equity. Find out more at unrent.coposit.com.au.
Browse current off the plan listings on the Coposit projects page, download the app, or contact the team to understand which projects are currently available.
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