A Complete Guide to Body Corporate Fees

Body corporate fee
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Strata property owners in Australia pay a fee associated with strata-titled buildings to a body corporate. The body corporate further utilises the fees in covering the cost of maintenance and repairs in the common areas and paying for general maintenance like building insurance.

But the question that remains unanswered is, what are body corporates? This guide will delve into everything you need to know about body corporates, including what it covers, how it’s calculated, the fees involved, how these costs can impact investors and more.

So, if you’re an owner of a strata property wanting to learn more about body corporate fees in Australia, read on!

What are Body Corporate Fees?

Body corporate fees, also called strata fees or strata levies, are calculated based on the lot entitlement of each unit or lot. These are regular payments made by property owners within a strata-titled building or community. This fee is utilised to cover expenses of management, maintenance and repair of common areas and facilities, including lift, garden, swimming pool, common corridor and building exteriors.

A few factors influence body corporate fees, including building size, the number of occupants, age of the building, general condition of the building and efficacy of maintenance over the years. This is because new buildings requiring less maintenance will charge lower body corporate fees than an old building that requires more maintenance.

What does Body Corporate Fees Cover?

• Common area maintenance: Body corporate fees contribute to the maintenance of common areas, such as cleaning, landscaping, and general repairs.

• Insurance: A portion of this fee also covers the building insurance, which includes common property, fixtures, and structural elements.

• Administrative services: This fee is allocated to the strata management services, insurance premiums, legal fees, accounting services, and other general administrative expenses.

• Utilities and services: Making payments for shared utilities like electricity, gas and water. Additional services like garbage collection and pest control may also be included.

• Sinking fund: This is a pool of funds set aside for more considerable capital expenses and future capital works that may arise and happen on a one-off basis—for instance, replacing a lift or repainting the entire complex.

• Additional amenities: If the strata provide other amenities, like gyms, parking spaces, or security services, their associated costs will be included in the fees.

How are the Fees for Body Corporates Calculated?

The calculation of body corporate fees is based on the annual budget prepared by the body corporate committee or strata manager. It is first calculated and then gets equally divided between the owners. The budget considers various factors, including administrative costs, maintenance and repairs, utilities and services, reserve fund and additional amenities.

Consider this factor when deciding on an investment property, as high strata fees can take a toll on your rental profits.

Who Pays the Body Corporate Fees?

As a standard practice, landlords incorporate body corporate fees into the rent that the occupier pays throughout their stay.

How Much Fees do are Body Corporates Charge?

Body corporate fees vary widely between $1,500 to upwards of $25,000 per annum, depending on the kind of complex or property you’re staying in. Usually, it is paid quarterly.

What are the Responsibilities of a Body Corporate

A body’s corporate responsibilities include the following:

• Maintaining, managing, and controlling common property on behalf of the owners.

• Calculating body corporate fees and resident payment schedule, making and enforcing body corporate rules about what residents can and can’t do.

• Managing and controlling body corporate assets.

• Ensuring insurance of the building and any common property.

• Keeping records, such as minutes of meetings, a roll of owner details, finance accounts, asset registries, and other financial and legal documentation.

Understanding Body Corporate Budgets

• Annual General Meeting: The body corporate committee presents the proposed budget at the AGM, where all owners can review, discuss, and vote on its approval.

• Fee Apportionment: Body corporate fees are typically apportioned based on the unit’s lot entitlement or unit entitlement, which is determined by the property’s size, location, and other factors.

• Special Levies: In certain situations, such as unexpected repair costs or insufficient funds in the reserve fund, the body corporate may impose special levies in addition to regular fees.

• Fee Increases: Fee adjustments may occur annually or when necessary to meet the changing needs of the strata scheme. Increases are subject to approval by a majority vote at the AGM.

Benefits of Paying Body Corporate Fees

• Proper Maintenance: Regular fee payments ensure that common areas and shared facilities receive necessary maintenance, promoting the overall value and livability of the property.

• Financial Stability: The reserve fund, funded by body corporate fees, acts as a safety net for future capital works and unexpected expenses, preventing the need for hefty, unexpected levies.

• Professional Management: Engaging a strata manager or strata managementcompany with the fees allows for professional administration and effective compliance with strata regulations.

• Shared Responsibility: Owners collectively share the financial burden of maintaining and improving the strata scheme by contributing to the fees.

Conclusion

Body corporate fees play a vital role in the functioning and upkeep of strata-titled properties. Now you know how these fees are calculated, what they cover, and their significance in a strata scheme is crucial for property owners. By actively participating in the body corporate processes and paying fees on time, owners contribute to a well-maintained, financially stable, and harmonious living environment within their community.

Are you an apartment or property owner who requires an owners’ corporation? Our Body Corp can provide you with leading technology and the locally-based support you need. We can help you gain more control over managing your strata building with the help of our leading online strata management software and service solution. Our cloud-based online solution lets you know where your owner’s funds are being spent. Contact us today at 1300848343.

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