As an apartment owner you must financially contribute towards the running costs associated with your building and common property.
These contributions are called levies. Levies are typically paid in quarterly instalments to meet the financial obligations of the Owners Corporation although some Owners Corporations pay their levies twice a year or yearly.
As part of our management contract, we issue levy notices to owners on behalf of the Owners Corporation. But it is your strata scheme who receives these contributions so it’s important to pay your levies on time, every time. Otherwise penalty fees can be applicable for late payments.
Who decides on the levy amount?
Actually, it is the owners who decide on the levies each year when they vote on and approve the budget at the Annual General Meeting (AGM).
Utilising our wealth of strata experience we prepare detailed budgets for the Committee to present to owners at the AGM.
These have been carefully forecasted in conjunction with experienced trust accountants to assist your Committee make better, more informed financial decisions to future-proof your strata scheme.
Where are levies spent?
Once levies have been collected from all owners, they are typically divided into two funds; an Administration fund and a Sinking fund (also called a maintenance fund if applicable).
The Administration fund is used for regular day-to-day payments including council expenses, insurance, management fees and payments to service contractors, cleaning, general maintenance and utilities such as power and water.
The Sinking fund is essentially a savings account for the Owners Corporation for future major expenses as the building ages. This includes painting, tiling, plumbing, carpet and plant and equipment, or the purchase of new Owners Corporation assets.
In some states it is a compulsory requirement of state legislation to prepare a Sinking fund budget forecast.
It makes good management and smart financial sense to have a healthy Sinking fund to reduce the need to raise a ‘special levy’ to pay for unexpected costs.