When you purchase a property in a strata scheme, you may wonder exactly what the money you pay quarterly for your strata levies cover.

Levies are determined each year by the owner’s corporation at the AGM, and all owners receive a copy of the budget so they can see what the predicted expenditure is for the scheme. Essentially the owner’s corporation will examine the expenditure for the past year and then set a budget for the coming year taking into consideration any maintenance that may need done and any price increases to utilities and other costs.

Strata levies fall into three categories – the administration fund levies, the sinking fund levies and special levies. Let’s take a look at what each one covers.  

Administration Fund Levies 

The administration fund covers the day to day running expenses of the strata scheme, and include costs such as: 

• Cleaning, internally and externally 
• Gardening 
• Electricity 
• Day to day maintenance works  
• Pool chemicals  
• Fuel 
• Equipment maintenance  

This area requires a fair amount of flexibility with the budget, because while something may not cost a lot one year, the next year it may be the area that attracts the most funds; for example, a strata scheme may go a year with no issues to their security gate, and then the next year it is damaged three times requiring repairs.  

Sinking Fund Levies  

These levies cover longer-term maintenance, replacement and repairs such as painting, road resurfacing, footpath repairs and lighting replacement, as well as works that are unplanned such as repairing balconies, replacing pool equipment or roof repairs after storm damage.  

Each strata scheme has what is known as a 10-year maintenance plan. This plan outlines a timeframe for major maintenance, repair and replacement for areas like roof painting, resurfacing, replacement of machinery and the like.  

When the sinking fund or administration fund doesn’t have enough money to cover the required works, the owner’s corporation may decide to raise a special levy.  

Special Levies 

These are levies in addition to the quarterly levies that are already paid. They are raised to cover emergencies or unexpected expenses when there is not enough money in the sinking fund to cover the costs. They are also raised to cover planned costs that cannot be delayed if there is not sufficient funds in the sinking fund to cover the cost.  

Special levies are generally reserved for big repair and maintenance costs. They don’t tend to happen too often, but owners within a strata scheme do need to be aware they can be raised at any point. It is for this reason it is not recommended to have your levies at the lowest possible cost and to always leave some to build up – the rainy-day fund so to speak.  

Strata levies and what they cover can be confusing. If you have any questions about what your fees cover, make sure you attend the next AGM for your strata property.