What are strata fees?

When purchasing a property in Melbourne, especially an apartment, townhouse, or unit, it's crucial to consider ongoing costs beyond your mortgage repayments. One key expense is strata fees, which cover the maintenance and management of shared spaces within the complex. Understanding these fees will help you budget effectively and avoid surprises down the track.

What are strata fees?

Strata fees, also known as body corporate fees, are contributions made by property owners in a strata-titled building to maintain shared areas and services. These can include stairwells, gardens, lifts, pools, gym facilities, and external repairs. The amount you pay depends on the size of your lot, available facilities, and the building’s overall maintenance requirements.

Types of strata fees

Strata fees are usually divided into three main categories:

1. Administrative fund levies - cover day-to-day running costs like cleaning, gardening, insurance, and minor repairs.
2. Sinking fund levies (or capital works fund) - a reserve fund for major repairs and upgrades, such as painting the exterior, replacing lifts, or structural work.
3. Special levies - additional contributions for unexpected expenses not covered by the sinking fund.

What influences strata fees?

Several factors determine the amount you'll pay in strata fees:

• Building size and age - larger or older buildings typically have higher maintenance costs.
• Amenities and services - complexes with pools, gyms, lifts, and security services generally have higher fees.
• Location - strata fees may vary based on local service costs and council regulations.
• Financial health of the strata scheme - if the building’s sinking fund is low, owners may need to pay special levies for repairs and maintenance.

Why do strata fees matter for homebuyers?

When assessing affordability, many buyers focus only on mortgage repayments. However, strata fees can add significantly to your ongoing expenses. A low strata levy may seem attractive at first, but if it’s too low, it could indicate insufficient funds for future maintenance, potentially leading to unexpected special levies.

Tip: always review the strata’s financial records before purchasing to understand the building’s financial health and any upcoming costs.

Tips for buyers considering a strata property

• Request a strata report - gain insight into the financial health of the scheme, upcoming maintenance plans, and potential special levies.
• Compare fees across properties - some buildings offer more services than others, leading to varying fee structures.
• Factor fees into your budget - include strata fees alongside your mortgage repayments, council rates, and other living expenses when calculating affordability.

Need guidance? Let’s chat!

Understanding all the costs associated with buying a property can be overwhelming. If you’re considering a strata property, FinancePath can help you explore your options and secure a loan that works with your budget and future plans.

Reach out today, and let’s get you one step closer to your dream home! Book a 10-minute chat or call us at 1300 780 440.