These questions about levy payments and strata levy increases came in from NSW Lot Owners. Leanne Habib, Premium Strata provides the following response.
Jump directly to the QUESTION you are after:
- QUESTION: How much, within reason, can strata levy increases be and what time frame is reasonable for increases?
- QUESTION: How much am I paying for strata levies per quarter?
- QUESTION: How do we know we are paying the correct amount for our levies? How are my levies and strata levy increases calculated?
- QUESTION: Are my substantial strata levy increases justifiable?
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Question: How much, within reason, can strata levy increases be and what time frame is reasonable for increases?
Are there limitations and / or restrictions for both time and cost for strata levy increases or are they purely at the discretion of Strata Management?
Answer: The Strata Schemes Management Act 1996 does not set a limit regarding strata levy increases and / or timing to pay a levy raised by an owners corporation.
The Strata Schemes Management Act 1996 does not set a limit regarding levy increases and or timing to pay a levy raised by an owners corporation. However, the Act does set out the process for raising a levy payable by owners within a Strata Scheme.
In summary, the process of raising a levy is as follows;
- Levies can only be decided on at a general meeting and must be discussed and accepted by a vote of the owners.
- The annual levies are determined at the Annual General Meeting each year as per Section (75) and (76 ), special levies can be determined at the Annual General Meeting or at an Extraordinary General Meeting as per section (76 {4} ).
- You can vote against the increase or put up a motion for a different levy amount if you wish.
- Levies are normally only increased if there is a need to do new works or there are additional expenses. Ask why the increase is being made if you are not sure.
- If you are concerned about rising costs you could try to negotiate to pay in instalments, this is however for the Owners Corporation to approve any payment plan.
- When a levy (either the annual levies or a special levy ) is determined by an owners corporation at the relevant meetings, the agreed amount, due date, number of instalments and purpose of levy must also be determined.
- A managing agent may put a motion for an increase in levies on the meeting agenda but cannot impose levies, this is entirely up to the owners.
Question: How much am I paying for strata levies per quarter?
I am looking for how much I am paying for strata levies each quarter but I can’t find this information anywhere. I have no idea where I am supposed to look. Can you please tell me how I can find this out?
Answer: You can retrieve confirmation of your levy contribution or strata levy increases a few different ways
You can retrieve confirmation of your levy contribution or strata levy increases by one of the following ways:
- Referring to the levy statement that would be issued quarterly by the Treasurer of the owners corporation and in most cases the delegated treasurer being the Strata Managing agent
- Requesting the treasurer/delegated treasurer for an owner ledger which will summarise all contributions levied to your lot
- Contacting the treasurer/delegated treasurer direct for confirmation of your levy contributions
The annual budget will also summarise what the levy income is used for.
Question: How do we know we are paying the correct amount for our levies? How are my levies and increases calculated?
We bought into this new 14 unit strata scheme 10 months ago. We were asked to pay $600 per quarter plus the % of our unit entitlement of the insurance.
Recently the initial owner who still owns 11 units advised us we had to pay 1/3 of the water usage costs for this 10 month period which is over $1500.
No account was provided to us (single meter only) until I asked and a poor copy of the first page of the latest account was put under our door. We believe that the water usage should be divided as per unit entitlements even though some of the units are empty.
Answer: Contributions should be based on the owners unit entitlement and not on any other equation
It appears from the details provided below that the scheme is possibly self-managed. Either way, if the scheme is self-managed or managed by a Licensed Strata Manager the Strata legalisation sets out the process on how costs are shared by owners via the levy contribution.
The Owners Corporation meets annually to determine and adopt an annual budget. This generally sets out the expenditure relevant to repairing and maintaining common property.
Once the annual budget is determined and adopted by owners at the Annual General meeting the owners are then levied the total budget amount according to their unit entitlement i.e. an owners portion of the contribution to the overall building cost should be based on the owners unit entitlement and not on any other equation.
The levy income collected by the Owners Corporation is used to cover the cost to repair and maintain the common property as required by an owners corporation under Section 62 of the Strata Schemes Management Act 1996.
In conclusion, when levies are determined they are payable by all lots including vacant lots and the owner of each lot is responsible to pay the levies by the due date determined by the Owners Corporation. There is no exclusion under the Act to exempt levies for vacant lots.
The Owners Corporation must also maintain an accurate record of the schemes documents including financial accounts and invoices payable by the Owners Corporation. You may, as a registered owner, search the books and records of the Owners Corporation as per Section 108 of the Strata Schemes Management Act 1996.
Question: Are my substantial strata levy increases justifiable?
Are significant strata levy increases justifiable in order to boost a sinking fund (now known as the Capital Works Fund) of around 30K, especially if a Special levy to the tune of under 3K per quarter has just been concluded for other work to common property for the year.
I feel that it is not reasonable, disproportionate and not fair. The block is from the 1970s and work is required but increments would be more sensible and manageable. What do you suggest?
Answer: The Act does not set a limit regarding increases and or timing to pay.
The Strata Schemes Management Act 1996 does not set a limit regarding strata levies increases and or timing to pay a levy raised by an Owners Corporation.
However, the Act does set out the process for raising a levy payable by owners within a Strata Scheme.
Premium Strata
P: 02 9281 6440
E: [email protected]
This article is not intended to be personal advice and you should not rely on it as a substitute for any form of advice.
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Read next:
- NSW: Q&A When are My Special Levies Due?
- NSW: Q&A Can I Reduce My Strata Levies By Doing My Own Mowing?
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