What are strata levies?

There has been much discussion about strata levies in the media of late and while the focus is generally on hardship or debt recovery there is rarely commentary on what strata levies are and who they benefit.

Strata levies are recurring payments made by unit owners which cover the costs associated with the maintenance, management and operation of the common areas and shared facilities within the complex. Levies are generally paid on a quarterly basis and may be payable in equal amounts by all unit owners or by entitlement values.

While the infrastructure in place varies from one corporation to the next, here are some common expenses which levies may cover:

• Maintenance: including upkeep of common spaces such as hallways, lobbies, lifts, parking lots, gardens and outdoor areas

• Repair of the building structure, roof and exterior

• Utilities which can include water, rubbish removal, gas for laundry or communal hot water and common area electricity

• Insurance for the building, common areas and public liability

• Administration expenses such as the strata manager and accountants

• Sinking fund - a portion of the levies set aside to cover or contribute to major repairs, renovations or replacement of common property

• Additional amenities - if the building has other common areas like a swimming pool gym or concierge services then the strata levies may cover these

The items listed above are for the benefit of all unit owners who share responsibility and liability for these (irrespective of whether they make use of the facilities) and the legislation in South Australia requires that unit owners (under the Strata Titles Act 1988) or lot owners (under the Community Titles Act 1996) make payment on levies.

Failure to pay strata levies as and when they fall due can lead to penalties or legal action, so it is essential for purchasers to budget for these expenses.