inadequate levies

You go to Fair Trading/CTTT and ask for an adjudication ordering the Owners' Corporations to undertake the work on the grounds that they have a legal obligation to do so. 

Or you ask for the appointment of a statutory manager to take over the running of the building.

Or you and your like-minded neighbours sue your Owners Corporation in the Supreme Court for damages on the grounds that the value of your home has been lowered by their failure to observe their legal responsibilities to undertake repairs.

Or you get a strata lawyer to write a letter to all owners explaining their responsibilities under the Act and the consequences of not fulfilling them.

Or you do any combination of the above

JimmyT

FCF, all owners corporations are required to have a 10 year plan to help plan levies.  Refer here

https://www.fairtrading.nsw.gov.au/Tenants_and_home_owners/Strata_schemes/The_owners_corporation/Sinking_funds.html

It doesn't help much that there is no penalty for not having one but you can apply for an order to make the oc make one. I don't know what the remedy would be for one that purposely underestimates requirements so as to keep levys low! But I guess if an owner could go to a Tribunal showing that past plans were purposely 'fudged' maybe the order could cover that.

FlatChatFan said:

How do we know what is an adequate rate of levies? Several months ago I think this forum showed a formula that could be used but I have been unable to find that information again.

I realise that Strata plans with more basic accommodation would pay a lower rate than a high rise building with lifts, pool and gym provided. Please advise.

You're right. There are so many factors at play when it comes to calculating levies but basically it comes down to three elements: the number and cost of facilities and services, the age and condition of the building and number of lots across which the cost can be spread.

For instance, apartment blocks with “resort style” facilities like concierges and swimming pools can be quite expensive. Hotel conversions are notoriously expensive because they often have a lot of lifts servicing a relatively low number of units.

There are developments now that are being designed to keep the levies low which they can do as they are close to commercial or public facilities for those who want them.

Other things that can skew levies are exorbitant management fees and lift maintenance contracts that have been negotiated by the developer (who often doesn't care how much they cost the owners as they, the developers, don't have to pay them).  A good example of this is when developers get a discount on their lift installations – a saving to them – in exchange for an exorbitant  long-term lift management service contract that the apartment owners have to pay.

But to answer your question as a rule of thumb, a high-end building with lots of facilities, over 100 lots and with no major maintenance issues, should have levies somewhere around 1 percent of the purchase price of the apartment plus or minus a couple of points.

A new development with fewer units, facilities or common property could come in at 0.5 percent or thereabouts.

But this is only a very basic rule of thumb and  every building is different. The best way to keep your levies low is to examine every contract and see if you are getting value for money.  Check on wastage such as water leaks and excessive use of electricity which will not only save you money but will help the environment.  Have a look at GreenStrata for more information on that.

The worst way to reduce levies is to starve your sinking fund, reduce services and neglect maintenance.  It may give you a short-term financial benefit but you are effectively reducing the value of every property in the building and that's too high a price to pay for the majority of owners. 

This may sound tough, but if your building is well-run and the budget is tightly controlled and you still can't afford the levies, then it's time to start looking for a new home.