Strata fees are the levy paid for the essential maintenance of a property that houses multiple individual units. Buildings and land require upkeep, and with all members of the unit paying strata fees, the cost of that upkeep is split.
Strata fees in NSW are charged on buildings that house several units or apartments with common areas. In general, the strata fees are designed to cover a portion of the upkeep and maintenance of the entire building and also the common areas.
On average, in Sydney, you could expect to pay from as low as $500 per Quarter due to it being a smaller complex with no amenities to $2500 per Quarter because they have lifts, gyms and swimming pools.
What Do Strata Fees Cover?
Strata fees, also known as strata levies, cover the upkeep of the general building and all that entails. Typically, you can expect to pay for the following:
- Building maintenance.
- Common area maintenance.
- Caretakers.
- Cleaners.
- Some utility bills, including shared water and electricity.
- Building insurance.
How Much Do Strata Fees Cost In Sydney?
There are many factors that affect strata fees, including the property’s value, which can vary depending on its age, location and type. The fees will be proportionally allocated based on your unit entitlement.
Some amenities are likely to drive up the cost of strata fees, such as swimming pools, elevators, common living spaces, staircases, car parks, gardens and gymnasiums.Â
| Building Type | Property Price (Average) | Strata Fees
($) |
| Duplex / Townhouse | $1,595,310 | $400-$1000 |
| Apartment / Unit | $1,005,000 | $600-$2500 |
* The data in this table above is based on my own personal experiences as a licensed and accredited mortgage broker, from having serviced 1000s of mortgages over the last 13 years. This data is calculated based on the averages across all major property regions in Sydney. The price of strata is highly dependent on the location, age, size and the amenities within the complex – therefore it’s very important when you’re buying a Strata type property that you do NOT just look at your monthly repayments and you need to include the cost of Strata and special Levies on your Budget.Â
Depending on the property, you could see yourself paying between $400 and $2500 a quarter. The difference depends largely on which suburb in a city you live in. Strata fees are generally higher in suburbs, which are more expensive.Â
What Are The Different Types Of Strata Levies?
Unexpected expenses like building defects can always crop up. Here’s a breakdown of the different types of strata fees and what each of these entails:
1. Administrative Fund Levies
These cover the cost of daily and regular expenses, including cleaning and gardening costs, shared utility bills, body corporate insurance, and general repairs or maintenance.
2. Sinking Fund Levies
Otherwise known as capital works levies, these fees cover larger expenses and major repairs, such as a roof replacement or the repainting of walls. In NSW, you can expect there to be a 10-year plan for the management of these levies.
3. Special Levies
If a task is required for the maintenance of common property and is covered by neither administrative nor sinking categories, it becomes a special levy.
How Are Strata Fees Calculated?
In calculating strata fees, there are many factors that are taken into account, bearing in mind the three types of strata levies. Strata levies are calculated to ensure capital expenses are taken into account.
The overall annual fees will be set at the annual general meeting (AGM) by the body corporate committee. This will then be divided between members based on unit entitlement.
The unit entitlement is attributed based on the unit value and, therefore, the proportion of common property owned.Â
Before you buy a property with a strata title, make sure you have seen the strata plan/Strata report to ascertain this. You’ll need to look for your own lot number (which may not be the same as your unit number).
Here at The Mortgage Agency, we’ve had clients pull out from a purchase of a strata plan property because they were costly essential repairs, internal disputes, disputes with developer and insufficient funds in the sinking fund.
Who Pays The Strata Fees?
Property owners pay for strata fees who directly own an apartment or home within a larger building complex. Renters do not pay strata fees directly but rather indirectly. Let me explain in more detail.
Most landlords will account for strata fee costs by rolling them into the monthly or weekly rent charged for the property. If you’re looking for a rental property, you can ask your property manager for more information on how much rent will increase each year.
Are Strata Fees Tax Deductible?
Strata fees are only tax deductible for property investments from which you receive rental income. If you buy and live in a property, then strata fees are not tax deductible. Â
You always need to keep a record of all of the expenses you pay for the property to claim back tax on them.Â
If the fee falls into the sinking or administration fund, you can claim a deduction. However, if a cost is considered to be a special purpose for a capital expenditure, these fees aren’t deductible.
If you’re looking to find out more information about rental property expenses and what can be claimed on tax, then check our investment property tax guide, which goes into great detail about this.Â
Strata Fees Do Not Cover
While strata fees cover many essential expenses, it’s important to understand their limitations. Here are some of the aspects that strata fees will not cover:
1. Individual Unit Maintenance
Strata fees typically do not cover maintenance and repairs within individual units. Owners are responsible for the upkeep and maintenance of their own units, including repairs, renovations, and upgrades. Things like testing your own unit’s smoke alarms still fall on you!
2. Council Rates
Council rates, which are charges imposed by local government authorities, are not included in strata fees. Owners are responsible for paying their individual council rates directly to the local council.
3. Personal Contents Insurance
While strata fees include insurance coverage for the building and common areas, owners are still advised to obtain personal contents insurance to protect their own belongings on the property.
Summing UpÂ
Strata fees in Australia are paid by unit owners in complexes to handle all of the necessary expenditures for the common areas, such as repairs and maintenance.Â
If you are looking to buy a property with a strata title, you’ll need to join the owners corporation and monitor the strata fees you pay. Before purchasing, check with a structural engineer to ensure that the building is compliant and has no structural deficiencies.Â
Strata fees are just one of the many considerations when buying an apartment in a strata building. Navigating the financial aspects of purchasing a property can be complex, and you deserve expert guidance. If you need assistance with the mortgage side of things, we’re here to help.
Are you looking to buy a strata property? Contact our expert mortage team today for personalised mortgage advice.Â
Lastly, if you’re looking to find out more information about investing in properties, then check out our useful property guides and resources:
- How many investment properties do I need to retire?
- How to calculate rental yield?
- The pros and cons of cash flow properties.
- How to buy your investment property using equity as a deposit?
- The ultimate guide to positive gearing.
- How to use super to buy property?Â
- How no deposit home loans work, and how to get one?
- What is the first home buyer process in Australia?
- How do mortgage lenders calculate affordability?
Book in your free mortgage discovery session now.
Frequently Asked QuestionsÂ
What Is A Strata Scheme?
A strata scheme is a system by which individual tenants own their own units and collectively share ownership of the overall building. These can be both commercial and residential. As an owner, you would pay strata fees toward the upkeep of the building.
Members of a strata scheme make up an owners corporation together. This is a collective legal entity that comes together to make decisions about the communal elements of the overall property (which is referred to as the body corporation).
These communal areas may include gardens, pools, driveways, stairwells, lobbies, lifts, and the exterior of the building.
This is a particularly prevalent scheme in duplex houses, where only two stakeholders are involved, but also in the following:
- Apartment blocks.
- Villas.
- Townhouses.
- Office buildings.
- Warehouses.
- Storage units.
- Factories.
What Are The Benefits Of Living In A Strata Building?
Strata living can offer convenience. For example, maintenance of common spaces and building management is a collective decision that will always be handled! If you have a facility manager on site, this takes away even more of the stress, albeit with management fees to bear in mind.
If you are looking to purchase to become a property investor, buying in a strata gives you peace of mind. As you know, many essential maintenance requests will certainly be completed in a timely fashion. Not all leased properties are so easily maintained.
Strata living can give you access to amenities you could not afford to fund individually, depending on your financial situation. A swimming pool’s costs split between multiple lot owners can be much more manageable.
What Are The Challenges Of Strata Living?
When working with others, there is always the potential for disputes and conflicts on the strata committee. You need to keep a cool head, though it can be difficult when you’ve got something as important as property on the line.
Your control over property management will be limited and, in some cases, even delegated to the body corporate’s manager. You’ll need to consult others for any changes, including if you want to change strata management companies.
It can be frustrating to see your strata fees go up over time. If you are buying a commercial property in a strata, you will need to factor likely increases into your business plan.
What Are Strata Laws?
Strata laws are in place to make the process of living in strata smoother. NSW Strata bylaws encourage communal living and outline rules that every contributor can agree on. This makes living on shared property easier and reduces the likelihood of disputes between tenants.
These can include noise regulations, parking arrangements, changes to the common property, and the allowance of pets.
Do Strata Fees Include Council Rates?
Strata fees generally don’t include council rates or any of your other property taxes. These are all paid individually.
Do I Have To Pay Strata Fees If I Buy A Property In An Apartment Building?
Yes, generally speaking you can expect to pay strata fees if you are buying a property in an apartment building. Your estate agent should disclose this information.
How Often Can I Expect To Pay Strata Levies?
Though annual levies are the general model, most strata fees tend to be broken down into monthly or quarterly levies.
If My Square Footage Is The Largest, Does That Give Me The Biggest Unit Entitlement?
Not necessarily. Unit entitlement is calculated based on market value. While square footage is one important factor in determining this, it can vary depending on other factors.
When you sell a property, you need to get that property valued so that it will provide your unit entitlement to the buyer. For the precise ratio compared to others, you should contact either the strata management company or your real estate agent for more information.
Does Having A Strata Title Affect My Property’s Value?
The property market has many properties with strata titling, so don’t worry! Just make sure your real estate agent is upfront about advertising the body corporate fees a potential buyer may have to pay.
What Is Strata Insurance?
Strata insurance is an administrative fund levy that a property’s body corporate (owners corporation) pays to cover the common areas and property shared by residents or tenants of a strata building.
It commonly covers factors such as theft and building damage from the elements. It is compulsory in most states in Australia, including NSW. Owners of strata titles share the costs of this insurance as part of their strata fees. It’s important to check what your strata insurance covers and to remember that your personal items are not covered by it.
