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Dear Friends,
I have been a villa unit owner for over six year in a group of four in Melbourne. My body corp rates started of being around $400 a quarter. For abput thr last 2 years the body corp have upped the bills to $928, being $449 x 2 (the 2 being to a sinking fund). I am on one wage and this amount is killing me every quarter. What can I do to stop this? It is a rip off. Is there a govt body I can complain to?
I’m sorry if this has already beem raised before.
Thanking you.
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Is there a govt body I can complain to?
In Victoria, the government body you can contact about Owners Corporations matters is Consumer Affairs Victoria. https://www.consumer.vic.gov.au/
That said, OC fees being raised for a “sinking fund” (called a Maintenance Fund in Victoria) should be detailed in the OC’s Annual Budget. A Proposed Annual Budget should be supplied to each lot owner along with the Notice of Annual General Meeting. That budget then needs to be approved by the lot owners at the AGM.
Is there a govt body I can complain to?
…OC fees being raised for a “sinking fund” (called a Maintenance Fund in Victoria) should be detailed in the OC’s Annual Budget…
I assume that Victoria, like other jurisdictions, requires an Owners Corporation (OC) to have a Sinking Fund Plan (SFP), usually for 10 years, that anticipates major but infrequent repair and maintenance requirements and spreads the cost evenly over the years of the plan. I suspect that the OC may have had a regime change from people concerned only with keeping levies low to people who developed a SFP with a program of works and a funding plan for that program of works. A SFP avoids hitting the owners with a huge bill all in one year by spreading costs out. It would be unfair for some owners to enjoy the use of the common property facilities and low fees for years and then sell to new owners who then have to pay for the maintenance that becomes necessary the next year.
So, I’d suggest checking whether there is a sinking fund plan that sets out anticipated levies for the fund over an extended period and the schedule of anticipated likely maintenance. It is also reasonable for a SFP to include a contingency component for items that turn out to cost more than anticipated and entirely unanticipated expenses.
If there is a plan, then the levies might be reasonable. On the other hand, if there is no plan, then I would be wanting to know how the increased levy is justified. Presumably the last AGM approved the levy, so there must have been some sort of explanation that a majority of owners accepted as reasonable.
I assume that Victoria, like other jurisdictions, requires an Owners Corporation (OC) to have a Sinking Fund Plan (SFP), usually for 10 years
Unfortunately Sir Humphrey, that assumption is incorrect. In Victoria only a prescribed (read large) OC needs a Sinking (Maintenance) Fund. For most OCs it’s optional. None of my smaller OCs do it, but it’s up to them.
And in Victoria, villa stratas, as described by the OP, usually have very little common property. Often just the driveway. Lot property usually includes the lot villa buildings. So an OC’s usual major annual expense is building insurance. There’s not much else an OC needs to do or maintain. And that seems to be reflected in the OP’s post ($400/quarter levies).
So why the levy hike? I think there might be a bit more to the OP’s situation?
I assume that Victoria, like other jurisdictions, requires an Owners Corporation (OC) to have a Sinking Fund Plan (SFP), usually for 10 years
…that assumption is incorrect. In Victoria only a prescribed (read large) OC needs a Sinking (Maintenance) Fund. … And in Victoria, villa stratas, as described by the OP, usually have very little common property. Often just the driveway. … So why the levy hike? I think there might be a bit more to the OP’s situation?
Where I am (ACT) in townhouses, our biggest single sinking fund item is resurfacing our roads. We have a mix of private roads and a public road through the site. When local govt. resurfaces the public road, we have had the contractor do our bits too. It is hard to predict when that will happen. Perhaps the OP’s driveway needs redoing or the OC has anticipated that it will need resurfacing some years from now? In any case, if there is a sinking (maintenance) fund for this OC, and it has a budget (whether for one year or a longer plan), that must have been agreed by a general meeting so there should be some justification given, which may or may not be a reasonable justification. I suggest the first stop for the OP is to ask when the rise in levies was approved and what documentation was presented to the general meeting that approved it.
My body corp rates started of being around $400 a quarter. For about the last 2 years the body corp have upped the bills … what can I do to stop this?
Easy solution – if you don’t want to pay strata fees, buy a house.
Perhaps the OP’s driveway needs redoing or the OC has anticipated that it will need resurfacing some years from now?
Yes, that might be it. In villa unit strata schemes in Victoria, the common driveway is the often the only common property. There can however be common services. And OCs can also decide, by vote, to maintain lot property.that must have been agreed by a general meeting so there should be some justification given, which may or may not be a reasonable justification.
Totally agree. It would be good if the OP could supply a bit more information. Levies need a budget. Budgets need an approval. Approvals should be documented.
Easy solution – if you don’t want to pay strata fees, buy a house.Hardly an easy solution if you already own a flat. Many apartments in the past have been sold on the basis of unrealistically low levies which the original owners try to live with until wear and tear and the requirements of sinking funds make this unfeasible. When the bubble bursts, levies go up by a lot more than the gradual rise you would see normally.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.
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