Strata Fees Explained
Strata fees are a key cost for apartment, townhouse, and unit owners, covering the maintenance of shared spaces. Learn what they include and how they impact your home-buying decisions.
At Aspire Mortgage & Finance, we understand that purchasing a property is one of the biggest financial commitments you will ever make. While most buyers focus on securing the best mortgage rates, it’s also crucial to be aware of ongoing costs beyond your mortgage repayments. One significant expense for property buyers, particularly in apartments, townhouses, and units, is strata or body corporate fees. These fees cover the maintenance and management of shared spaces within a complex.
In this guide, we’ll help you understand strata fees and how they can impact your home-buying decisions.
What are Strata Fees?
Strata fees, also referred to as body corporate fees, are contributions made by property owners in a strata-titled building. These fees help maintain and manage the shared areas and services within the complex. These spaces can include stairwells, gardens, lifts, pools, gym facilities, and even external repairs to the building. The amount you pay will vary depending on the size of your lot, available amenities, and the overall maintenance needs of the building.
Types of Strata Fees
Strata fees are typically divided into three main categories:
Administrative Fund Levies
These cover the day-to-day running costs of the building, such as cleaning, gardening, insurance, and minor repairs.
Sinking Fund Levies (or Capital Works Fund)
A reserve fund set aside for major repairs and upgrades, such as painting the exterior, replacing lifts, or performing structural work.
Special Levies
Additional contributions for unexpected expenses not covered by the sinking fund. Special levies are sometimes required if the building needs emergency repairs or major updates.
What Influences Strata Fees?
Several factors contribute to determining the amount you’ll pay for strata fees:
Building Size and Age
Larger or older buildings typically have higher maintenance costs, which can lead to higher strata fees.
Amenities and Services
Complexes with amenities like pools, gyms, lifts, and security services will generally have higher fees due to the extra maintenance involved.
Location
Strata fees can vary depending on the local service costs and council regulations in the area.
Financial Health of the Strata Scheme
If the building’s sinking fund is underfunded, owners may be required to pay special levies to cover repair and maintenance costs.
Why Do Strata Fees Matter for Homebuyers?
When assessing affordability, it’s common for buyers to focus on mortgage repayments alone. However, strata fees can add significantly to your ongoing expenses. It’s important to remember that a low strata levy might seem appealing initially, but if it’s too low, it could signal insufficient funds for future maintenance. This could result in unexpected special levies down the track.
Pro Tip: Always review the strata scheme’s financial records before purchasing. This will give you insight into the building’s financial health and any upcoming maintenance costs.
Tips for Buyers Considering a Strata Property
1. Request a strata report
A strata report will give you valuable information on the financial health of the scheme, upcoming maintenance plans, and potential special levies.
2. Compare fees across properties
Strata fees can vary widely between properties, especially when comparing amenities and services offered.
3. Factor fees into your budget
When calculating affordability, don’t forget to include strata fees alongside your mortgage repayments, council rates, and other living expenses.
4. Strata Fees Must Be Declared in Your Home Loan Application
Strata fees are required to be declared as an ongoing expense in your home loan application. Some banks do not classify these fees as standard living expenses, meaning they are treated as an additional financial commitment on top of your regular living costs. If the strata fees are high, this may limit your loan eligibility, resulting in a lower loan amount being approved during the formal application process.
Need Guidance? Let's Chat!
Understanding all the costs associated with buying a property can be overwhelming, especially with strata fees involved. If you’re considering purchasing a strata property, Aspire Mortgage & Finance can help you navigate your options. We’ll work with you to ensure that your mortgage and ongoing costs fit within your budget and align with your long-term financial goals.
Aspire Mortgage & Finance – Your trusted partner in securing the right mortgage for your property needs.