• Creator
    Topic
  • #11504
    david2708
    Flatchatter

      Have seen conflicting accounts of how much you can increase the annual levies.

      Someone said 10% maximum  but that sounds dubious.

      We are in NSW.

      Our strata has had poor planning and the yearly surplus in the admin account has dwindled to nothing because the annual levies were set too low over the past number of years.

      This year we will end in deficit in the admin account.

      Increased costs and neglected aspects need the admin account to increase by 25% by my calculation to set it at a realistic level.

      The sinking fund settings were also too low as the 10 year plan failed to take into account some big ticket items and also requires an increase.

      The sinking fund increase can be done in small stages as the works needed are long term, but the Admin account needs that 25% extra for the next financial year and beyond.

      Can this be done? I know the residents may vote it down but they need a wake up call.

    Viewing 7 replies - 1 through 7 (of 7 total)
    • Author
      Replies
    • #28903
      Lady Penelope
      Strataguru

        I don’t believe that there is any upper limit on the amount of increase that can be sought for an Admin Fund when an annual Budget is being set. The purpose of an annual budget is to raise funds to cover the known cost. 

        The only other way to raise money is via a Special Levy. However Special Levies should only be used to address repairs etc that were either unknown at the time that the Budget was set, or the contributions had not been adequate over the period to provide for the repair etc. 

        Your scheme’s Admin Fund shortfall is known therefore it can be addressed at the AGM via an increase in the ordinary levies without the need for a Special Levy. I hope that makes sense.

        #28904
        Sir Humphrey
        Strataguru

          Many years ago our OC had a treasurer who seemed to think it was a virtue to keep levies low and only do the minimum of maintenance etc. A comfortable cash reserve was run down. The next treasurer proposed an increase of levies by 25% in one year, explained why and this was accepted as reasonable. Our levies were still lower than most. 

          #28906
          scotlandx
          Strataguru

            There seems to be a general lack of understanding of the connection between the annual budget and levies. The budget sets out what the OC believes will be the costs for the next year, you then set the levies accordingly. If you are doing the job properly, you would include the cost of planned capital works and refer to how much the OC has on hand.

            I worked for several years to convince the owners in our scheme to raise the levies to a realistic amount – in the first year the owners actually reduced the levies, even though we had a long list of things that needed to be done. After part of the building had to be closed off for works that took 3 years, they changed their minds. We increased the levies by 25% two years in a row, i.e. we increaded them by 50%. They are high, but we have had the money on hand to do a range of items with no special levies. I know some people don’t agree with that approach, but it works for us.

            To answer your question, there is no limit to an increase in levies.

            #28909
            david2708
            Flatchatter
            Chat-starter

              Next AGM will  be a case of where I hope not too many owners show up to derail the increase.

              Transparency.

              I intend to show & print out the budget and come up with a dollar figure per unit of entitlement for the Admin & Capital works accounts rather than a percentage increase in the Agenda notes.

              Those who truly care can work out what that means for them and those that pay no attention have only themselves to blame when they complain with a Hey, my levies went up!

              Sneaky? Slightly. What do you do when people throw commonsense out the door when you tell them you are collecting less than the building is spending.

              #28910
              Cosmo
              Flatchatter

                Agree with all above.  My two cents worth:

                So many strata and owners are obsessed with the absolute level of levys.  Surely it is what they are used for that is important.  Since our strata has been doing our 10 years plans (as required by legislation) we have trebled our levys. 

                We not only do a 10 plan for the Sinking fund but the Admin fund.  I find that when people are aware of the reasons they are usually ok with any increases. 

                I think that owners (especially owners who don’t live there) get nervous when they don’t know where the money is going.  Transparency is the key.

                As for a limit on increases, never heard of it or seen it.  Again a properly constructed budget and 10 plan is vital. 

                #28912
                Sir Humphrey
                Strataguru

                  @david2708 said:
                  …I intend to show & print out the budget and come up with a dollar figure per unit of entitlement for the Admin & Capital works accounts rather than a percentage increase in the Agenda notes…
                  Sneaky? …  

                  Not sneaky. It’s what I’d expect. In the ACT, I think the actual amount of levies for each unit has to be presented in the meeting papers. Certainly that is what we always have. The budget is always included in the meeting papers with the agenda and meeting notice. How else can people decide whether to vote for it?

                  The budget should show proposed expenditure for the year against various things as well as the levies that will be income. It has a bottom line that shows whether the balance is anticipated to stay exactly the same or go up or down. On occasions, as treasurer, I have proposed levies that are a bit more, a bit less or exactly the same as proposed expenditure for that year according to where our savings were up to. 

                  #28915
                  Jimmy-T
                  Keymaster

                    David2708 said :
                    Have seen conflicting accounts of how much you can increase the annual levies. Someone said 10% maximum  but that sounds dubious.

                    I suspect this comes from the rule that you can’t overspend on a budgeted item by more than 10 percent without approval from a general meeting.

                    It’s a good example of how people in strata often get things half-right, which means, of course, they are completely wrong. 

                    The opinions offered in these Forum posts and replies are not intended to be taken as legal advice. Readers with serious issues should consult experienced strata lawyers.
                  Viewing 7 replies - 1 through 7 (of 7 total)
                  • You must be logged in to reply to this topic.