Question: How do you get the owners corporation to understand that their current levies will not cover the cost of running a scheme and that they should approve a special levy or increased levies?
Answer: There are long term ramifications for strata schemes that don’t adequately budget their funds.
This is the million dollar Strata Manager question. I would say that there are many strata schemes in New South Wales, and probably across the world, that don’t raise adequate levies. Owners are constantly telling the Strata Manager and the strata committee ‘We need to reduce the levies. Levies are too expensive‘, etc.
Communicate your concerns at budget time. Provide suggestions of where you think you need to raise the levies. For our strata schemes, we suggest that the administrative fund covers costs with a little bit of a buffer. This leads to a little bit of surplus each year. For the capital works fund, follow the recommendations of the capital works fund plan. This is really important so there’s enough money in your strata for future years.
I’ve seen what happens when buildings have to raise special levies. One of my buildings has had to raise $5 million over the last five years to do facade works, lift works and renovations. This was all because they under budget in the first 15 years of the strata scheme’s life. There are long term ramifications for strata schemes that don’t adequately budget their funds.
This post appears in Strata News #557.
Rod Smith
The Strata Collective
E: rsmith@thestratacollective.com.au
P: 02 9879 3547
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