Lose the luxury and save loads on levies

Blame it on overseas holidays to posh hotels or trips to serviced apartments in Surfers and the Gold Coast, but there was a trend in apartment block design a few years ago which promised that marketing oxymoron of “affordable luxury”.

Swimming pools, spas, saunas, state-of-the-art gyms, indoor cinemas (and rooftop ones too), music rooms, yoga studios, concierges, garden terraces … you name it.  If there were bells or whistles to be had, developers were finding room for them.

But all these facilities come at a cost, and the NSW government had to change the law to prevent developers from promoting that other impossibility – both luxury facilities and low levies.

So, whether you are looking a property as in investment, or thinking of moving out of your McMansion to somewhere smaller, levies should be part of your thinking.

If you are downsizing and are retired and on a fixed income, paying quarterly fees for the upkeep of facilities you don’t even use makes no sense at all.

Heating and cleaning a swimming pool costs money.  Concierges, gardeners and cleaners need wages. All of these costs are added to your levies and if you have an apartment the size of a superyacht your share of the fees is going to be higher too.

So if you were reviewing your property portfolio to make the most of rising rents and falling property prices, would you go for the all-singing, all-dancing options or something more modest that would cost less, both up front and in quarterly levies.

Take gyms, for instance. Do you really need one in your block? Is there a suburb in your city that doesn’t have multiple commercial gyms?  And these places don’t just have the best equipment, they have classes and personal trainers too.

How far away is the nearest public swimming pool? OK, it’s full of strangers but at least you don’t have someone you might meet in the lift perving on you from their balcony.

From an investors’ point of view, the aim is to keep the costs down but not to the extent where it leads to a disproportionate rent reduction.  If you can save $200 a week on levies and lower rents by $100, thereby attracting more potential tenants, you are ahead of the game.

So what do tenants really want when it comes to facilities? A bi-annual survey by Brisbane-based BeesNees City Realty reveals that top of renters’ wish-lists are off-street parking, a balcony or terrace, high-speed internet, security and air-conditioning, in that order.

The bottom five, least-wanted items of the 20 in the survey were en-suite bathrooms, water-saving devices, views and swimming pools, with gyms last.

That’s right – one of the most expensive items to maintain in your block has the second-least appeal to potential tenants.

So, while car parking and a larger flat to accommodate a terrace or balcony will obviously add to your levies, at least they are paying their way by attracting renters.  Gyms and swimming pools, maybe not so much.

What potential tenants miss out on facilities they can save on rent, which is a big factor in these days of soaring inflation.    

The same principles apply to resident owners and empty nesters who may be looking to downsize.

Find an apartment near the facilities you want rather than in a block that’s chock full of them.  Beware of hotel conversions as they tend to have more lifts per resident – another serious money drain.

And is proximity to public transport such a huge priority when you’re retired?  Not competing for property with commuters will keep purchase prices down too.

The same goes for schools. Do you really need to have one in walking distance? When you’re kicking back of a morning, the further away the sound for school playgrounds, the better.

Have a close look at the accounts to see where money is being spent and make sure there is a plan in place to repair and replace any facilities that the blocks do have.

Otherwise, think function over fashion and you won’t go far wrong.

This column first appeared in the Australian Financial Review