A: Every year, before the Annual General Meeting (AGM), the Strata Company's Council of Owners (COO) and Strata Manager conduct a review of the previous year's budget to assess whether the funds collected were enough to cover the expenses and make adjustments for any shortfall. 

The budget is divided into two categories: the Administration Fund, which covers routine expenses for the next 12 months, such as insurance, maintenance, and gardening. This budget is calculated based on last year's expenses, adjusted for any known increases such as Insurance, electricity etc. and any other planned expenses the Council has proposed. 

The Reserve Fund covers contingent or major expenses of the Strata Company often for long-term capital expenses such as repainting the building or replacing plant and machinery for example Lifts, gym equipment, and gates. The Reserve Fund Levy is often calculated by an external consultant or determined by your strata scheme's 10-year maintenance plan.  

A good strata manager will do a review of the financial statements and will assist the council members to identify where savings can be made.  This can include reviewing ongoing contracts to ensure the scope of work is still appropriate and that rates are competitive. 

A Strata Company must prepare a budget for each financial year and submit for approval at the Annual General Meeting (AGM). The budget is approved by a majority of owners present or represented. Once approved, the levy contributions are set and distributed via a strata companies levy notice. 

A: Firstly, it is important to know that levies are an essential component of strata living to meet the financial obligations of your strata scheme.  

The funds are typically billed on a quarterly basis and are used to pay for things like landscaping, building insurance, repairs, and other expenses related to maintaining the common areas of the property.

When you purchase a property in a strata scheme you also own a share of the common property.   

A key function of a strata scheme is to repair and maintain the common property, this may include areas such as gardens, foyers, hallways, gymnasiums and pools. Exactly what is needed is unique to each Strata Scheme,  this is why your contribution to decision-making in your Strata Company is so beneficial.  

A Levy Notice is generated by the Strata Company to all owners to fund the Administration Fund and Reserve Fund.  Payment of Levies is not discretionary there is a statutory obligation for lot owners to pay and pay on time. Unpaid levies attract interest for each day they remain unpaid, the interest is calculated at an annual rate of 11% as per the Strata Titles Regulations.  

The money collected is deposited in the Strata Scheme Trust Account. Your Strata Manager does not keep the money or decide how it is spent, the Strata Managers role is to simply administer the Funds according to the budget set at your last Annual General Meeting (AGM) and according to the Council of Owners instructions.   

To determine what money goes where, the strata schemes bank account is effectively split up in to two funds:  

1. Administration Fund this is used to pay for the day-to-day building expenses that occur on a regular basis such as gardening and landscaping, insurance premiums, smoke alarm and fire testing or repairing a remote-controlled gate into the parking area of an apartment complex.  

2. Reserve Fund this is used to accumulate funds to meet contingent expenses, other than those of a routine nature. Typically funding for Capital Works such as Lift Replacement, Major Roof Repairs or replacement.  

The cost of your levies will vary depending on the lot unit of entitlement allocated to your individual lot. These entitlements are based on the registered plan of the Strata Scheme which determine each lot’s share of the approved budget expenses.    

To determine what is part of your lot and what is common property, please refer to your certificate of title and the strata plan.