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I was wondering, in 2014 you published an article which discussed levies and you offered a general rule of thumb to estimate what apartment levies maybe, with and without facilities.
Given we are now 10 years later would you be able to give any update to that rule of thumb? Would it still be about the same/more/less? Have you had reason to review recently.
My interest is more so for apts with facilities (in Vic), but any update would be very much appreciated.
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Have you had reason to review recently?
Not until I received this post. I struggled to find the article to which you’re referring (although I remember writing it) but all I can say is that apartment prices and costs have both shot up so things may have changed.
A quick search established that the median price of apartment in Sydney is about $850,000 and the average levies are about $850 a quarter. This boils down to about 0.4 per cent of the property value per annum. The big property websites don’t list the levies (except in Queensland) – you have to email the real estate agents (and go on their databases).
Also I suspect these figures are swayed by the proposed levies for off-the-plan blocks which will always be set lower than they would be in reality. There are mechanisms for getting compensation from developers who do this deliberately, but I have yet to hear of an owners corp that has successfully taken such a case to the Tribunal.
If I recall correctly, my rule of thumb back then was that the levies would be between 0.7 and 1.4 per cent of the property value. The reasonably well-managed 20-year-old block in which I live has four lifts, a heated swimming pool, gym, building manager and 24-hour concierges and the levies are about 6 per cent of the property values – suggesting that the property price rises have outstripped increases in running costs.
Our investment property has no pool, concierge or gym and a part-time building manager but multiple three-level lifts. The current levies (based on the developer and strata managers’ estimates) is 0.4 per cent which is already proving to be woefully inadequate and might be worth challenging at the Tribunal, depending on what the actual cost of running the block turns out to be.
I’d be really interested to hear from other Flatchatters what their levies are compared to their property values and the facilities that they are funding.
I also think Fair Trading should insist that real estate websites list the levies (fees) for apartments on sale, rather than allowing agents to withhold this essential information and use it to harvest email addresses for their databases.
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.
- This reply was modified 6 months ago by .
For a set of about 100 townhouses on a large site with a large common property trees and garden area to maintain, our levies average about $3000/unit/year. About 90% of the budget is for four items, insurance, a managing agent’s fee, a general grounds maintenance contractor and tree surgery, in that order. Everything else is small beer.
our levies average about $3000/unit/year.
And how does that compare with the average value of the units, if you can hazard a guess?
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.
I have a townhouse in a NSW regional city. 22 townhouses in total all single level and all either 2 or 3 bedrooms. Units of Entitlement are all quite similar – either 46 or 48. No pool, no lifts, just plenty of open space, so our main cost is gardening care – mainly lawn mowing and a little pruning in winter.
The townhouses are valued around the low $400,000 mark, depending on number of bedrooms, location of carport (either attached or in a “group of carports” not attached). As the property was built in the early 1980s, any interior renovation also affects the value.
Our levies are under $2200 per year, so about 0.5%. And we have adequate sinking funds, and the townhouses are well maintained.
Now, this is of little use to you except to say that the levies can vary quite dramatically between strata complexes.
our levies average about $3000/unit/year.
And how does that compare with the average value of the units, if you can hazard a guess?
Lately units are probably selling for around $800,000 on average but vary from $600,000 to 1,200,000. We have a wide range of sizes.
8 lots. Around $800K each. Levies $3200 per annum. 0.4% of property value. Sydney.
Now, this is of little use to you except to say that the levies can vary quite dramatically between strata complexes.
I’m beginning to get a picture in which the level of facilities is matched by the value of the properties which means that calculating the cost of levies as a comparison is surprisingly valid. The range of 0.4% to 0.6% seems a reasonable benchmark (so far).
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.
Yes and no. My block is small with one lift and a gardener. Our levies are about $15,000/year and about to go up because we have a couple of projects in our capital works plan that need doing (or we might do a special levy). The value of each lot is about $5million, so the levies are low compared to the value. Why this high value with so few facilities? It’s because they are waterfront on Sydney Harbour. So it’s less about property value than the costs of maintaining services.
We are charged enormous land taxes (those of us who are landlords), so we still pay a lot.
In a well run property i.e one where the OC saves for future major repairs / replacements through its Capital Works Fund “CWF”, the majority of levies would be going towards the CWF rather than the running costs in the Admin Fund.
In a poorly run property it is the other way round with most levies going to paying for running costs and little being saved.
If the owners corporation in their wisdom is reluctant to levy for the future in the CWF, they can get away with levying for just the bills they have to pay this year, so total levies will be low.
Trying to work out whether levies are high or low for a building – even taking into account its facilities – will in many cases be an exercise in futility viz. a building with superficially low levies that hits its owners every 5 years with a $20,000 Special Levy that does not show up in simple comparisons.
Any disclosure of levies needs at the very least to be shown side by side with the current balance of the CWF.
Even this doesn’t tell the full story, because lots of $’s in the CWF may still be small compared with the building’s future repair obligations.
Any conversation comparing levies or using rules of thumb runs the risk of owners becoming comfortable with a building’s financial position when there is no reason at all to be comfortable.
There are just too many variables to average out a common levy.
You have two blocks the same size land size but one has 12 lots and the other 20. The lower lot number will have higher levies as they get in less than the other block.
Levy compliance. The smaller the lot number the bigger the levy if you have recalcitrant owners who wont pay and you have to chase them to court.
Building age. Older buildings can have bigger repair bills because the building code of today is far different. Repairs can get complicated replacing old and now non compliant infrastructure.
Management. You can have nice looking quarterly levies set, but discover that’s because your OC set aside next to nothing in your capital works fund. One building I know had a grand total of $200 per annum per owner set aside for capital works in a building of 18 lots. Special levy here I come.
Any conversation comparing levies or using rules of thumb runs the risk of owners becoming comfortable with a building’s financial position when there is no reason at all to be comfortable.
There are just too many variables to average out a common levy.
All true. But how does a newcomer to strata even begin to work out if their levies are off the scale as either too high or too low. The answer is that they ask the question and search the records and discover all the variables mentioned in the previous two posts. Or maybe they just discover that the levies were set at a level to suit parsimonious committee members or deceptive developers AFTER they have bought in.
Guesstimates and benchmarks are not definitive, by definition, but they are a better clue to the reality than saying “how long is a piece of string.”
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.
I do understand Jimmy T’s point that a benchmark % (of lot value) for what levies should be is a useful starting point – one strata manager’s website actually quotes Jimmy’s percentages in their article explaining what Levies are – but unfortunately many strata owners do not understand clearly enough how strata works to realise that levies could sometimes need to be 2 or 3 times these percentages, especially if maintenance has been ignored or underfunded. Therein lies the danger.
It is hard enough for a Committee to sell large levy increases to owners at the best of times – having rules of thumb for levies out there only makes it harder to shake owners out of their low levy complacency.
having rules of thumb for levies out there only makes it harder to shake owners out of their low levy complacency.
Totally understand your point of view but I would dispute that rules of thumb ONLY make is harder to shake owners up. They can also make owners realise that they are paying too much or too little. That can be the start of their journey of enlightenment, not the end. All we want is for owners to ask questions and that has to start with some point of reference.
PS: The thought that I am being quoted in a Strata Manager’s website is frankly terrifying. The “prerogative of the harlot – influence without responsibility.”
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.
- This reply was modified 5 months, 3 weeks ago by .
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