What Are Strata Levies and How Are They Set?
Strata levies fund the shared costs of managing and maintaining common property:
- Administrative fund levy: Covers the day-to-day operating costs of the strata scheme - building insurance, cleaning and gardening of common areas, strata management fees, utilities for common areas (lifts, lights, water), and routine maintenance. Levied quarterly or annually and set by the owners corporation at the annual general meeting (AGM) based on a budget.
- Capital works fund (sinking fund): A long-term savings fund for major future capital expenditure - roof replacement, lift modernisation, external painting, waterproofing, structural repairs, and major equipment replacement. In most states, the owners corporation must maintain a 10-year capital works forecast and set levies to fund it adequately.
- How levies are calculated: Each lot owner pays their share of total levies in proportion to their unit entitlement - a figure set at the creation of the strata plan that reflects the relative value of each lot. A penthouse may have 3× the unit entitlement of a studio, paying 3× the levy.
- Who sets the levy: The owners corporation (all owners) votes at the AGM to approve the annual budget and levy amounts. A strata manager typically prepares and recommends the budget - but owners vote to approve or reject it. Attending the AGM or providing a proxy vote gives you a voice in levy decisions.
Special Levies - The Strata Surprise Most Buyers Don't Anticipate
Special levies are one-off charges for unexpected or unplanned major expenses:
- When special levies arise: When the capital works fund is underfunded and a major repair becomes necessary - a failed roof, building cladding remediation, lift replacement, or structural defect rectification. If the fund cannot cover the cost, owners are levied an additional amount on top of regular levies.
- The amounts can be substantial: Cladding rectification programs in Victoria and NSW (following the Grenfell Tower fire and subsequent audits of combustible cladding on Australian buildings) have generated special levies of $10,000–$50,000 or more per apartment in affected buildings. Defect claims from major structural issues can be comparable.
- How to assess special levy risk before buying: Request and read the strata records - particularly the last 2 years of AGM minutes, the capital works fund balance, the 10-year capital works plan, and any outstanding maintenance or defect issues. These documents are available to vendors and must be disclosed. A strata records search (conducted by a solicitor or specialist company for $300–$600) provides this analysis.
- Low levies are not always good: A building with very low strata levies may have an underfunded capital works fund - meaning a large special levy or building deterioration is building. Compare the capital works fund balance against the 10-year expenditure forecast.
What Strata Levies Cover - and What They Don't
Understanding coverage boundaries prevents expensive surprises:
- What levies cover: Maintenance and insurance of common property - external walls, roof, common corridors, lifts, pool, gym, parking areas, building structure, and common utilities. The owners corporation insures the building structure and common areas.
- What levies do not cover: The interior of your lot (your apartment). Internal fittings, carpet, fixtures, and your belongings are your responsibility to insure (contents insurance) and maintain. The boundary between common property and lot property is defined in the strata plan - typically at the inner surface of external walls, the upper surface of floors, and the lower surface of ceilings, though this varies by state and scheme.
- Water damage disputes: One of the most common strata disputes - water ingress from common property (a roof or waterproofing defect) is the owners corporation's responsibility; water damage from your own plumbing is yours. The initial investigation to establish the source is critical - keep records and report issues to the strata manager promptly in writing.
- By-laws: The owners corporation sets by-laws (rules) for the scheme covering pets, renovations, noise, short-term letting, and common area use. Breaching by-laws can result in notices and fines. Review the by-laws before purchasing - particularly if you have a pet, plan renovations, or are considering short-term letting (Airbnb).
Evaluating Strata Costs Before Buying
A structured pre-purchase strata assessment prevents costly surprises:
- Request a strata records search: Your solicitor or a specialist strata search company can obtain and review the books and records of the owners corporation. Look for: outstanding levies on the lot you are buying, special levies already approved or being discussed, the capital works fund balance vs the 10-year plan, any current or threatened litigation involving the scheme, and the history of major repairs.
- Check building defects and cladding: For buildings constructed between 2000 and 2018, ask specifically about combustible cladding status and any defect rectification proceedings. These are the most common sources of large special levies in eastern Australian strata schemes.
- Compare levy to comparable buildings: Levies for a building with a pool, gym, concierge, and lifts will be much higher than a simple 4-story walk-up. Compare like-for-like - a $5,000/year levy for a full-amenity building may be well-managed; the same levy for a small scheme with no amenities may be poorly run.
- Attend an AGM if possible: If settlement is timed around an AGM, attending (or asking your solicitor for the AGM minutes) reveals the tone of the owners corporation - whether maintenance is being addressed, whether there are contentious disputes between owners, and whether the strata manager is responsive and competent.
Roopon: Manage Strata and Other Property Costs More Easily
Strata levies are one of the fixed costs of apartment ownership that compound over years. Roopon membership helps apartment owners reduce the variable everyday costs that sit alongside strata, mortgage, and rates - partner discounts on groceries, fuel, dining, and more keep the overall household budget in balance. Members receive FREE included prize-draw entries per their plan and published campaign terms.
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Frequently asked questions
What are strata levies in Australia and are they tax deductible?
Strata levies (also called body corporate fees in Queensland and WA, or owners corporation fees in Victoria) are the charges paid by each lot owner to fund the shared management, maintenance, and insurance of common property in a strata scheme. For investment properties, strata levies are fully tax deductible as a rental property expense. For owner-occupied properties, they are not deductible. Administrative fund levies are deducted in the year paid; capital works fund contributions may need to be treated differently - check with your accountant.
What is a special levy in strata and can I refuse to pay it?
A special levy is a one-off charge raised by the owners corporation to fund a specific, usually unplanned, major expense - emergency repairs, building defects, cladding rectification, or to top up an underfunded capital works fund. Once validly approved at a general meeting of the owners corporation, the levy is legally enforceable against all lot owners in proportion to unit entitlements. Refusing to pay results in debt recovery action by the owners corporation. If you believe the levy was improperly raised, the avenue for challenge is through the state's strata dispute tribunal.
How do I check strata fees before buying an apartment in Australia?
Request a strata records search through your solicitor or a specialist strata search firm ($300–$600). This provides the current levy schedule, the capital works fund balance versus the 10-year plan, the last 2 years of AGM minutes, any approved or threatened special levies, outstanding maintenance issues, and any litigation involving the scheme. The vendor's disclosure statement (required in most states) also includes current levy information. Never purchase strata property without reviewing these records - levies and capital works obligations can significantly affect affordability.
Why are strata levies so high in some Australian buildings?
High levies typically reflect one or more of: a building with extensive amenities (pool, gym, concierge, multiple lifts) requiring substantial upkeep; an older building with significant ongoing maintenance needs; a scheme with a historically underfunded capital works fund now being brought to adequacy; defect rectification costs (particularly combustible cladding); or a small number of lots sharing fixed management costs. Low levies in a comparable building may indicate an underfunded capital works fund - a future liability rather than a current saving.
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