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Am I paying too much in levies?
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NSW unit owner
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11/07/2018 - 10:39 pm
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Hi there comrades

I have a question about the amount I am paying in strata levies for a unit I bought recently. The amount seems very high for the amount of maintenance and admin that the building requires (in my opinion). So I am reaching out to ask for others opinions on this forum on the matter.

If others in the forum agree and urge me to do so, I will proceed with contacting individual owners and organise quotes from a different strata agency.

First I will list some features of the unit and the condition it is currently in.

-Built in the mid 1970’s in the inner west of Sydney.
-Brick building with original ceramic roof tiles.
-Garages on ground level, with 3 levels of apartments on top (4-storey).
-Original aluminium window frames, timber window frames and glass throughout units and common area.
-Original tiles in foyer.
-Carpet in stairwells approx. 5-10 years old.
-Common areas painted approx. 5 years ago.
-Intercom at entry to common areas.
-Small amount of grass and garden around perimeter of building.
-No elevators, swimming pools or any other common areas requiring maintenance or upkeep.
-12 apartments, each with a lounge, 2-bedrooms, 1 bathroom, 1 kitchen, an internal laundry, 1 or 2 balconies and an individual secured parking garage.

Note: one of the other owners does gardening, some cleaning around the grounds and takes the bins out. She says she is happy to do it as she’s retired. I don’t believe we employ a company to do this work at all.

Now I will provide some financial information from the last general meeting so you can judge if any of the amounts seem unreasonably high. I have adjusted the figures slightly to ensure anonymity. Figures are from the year 2017.

Each unit pays $3640 a year in levies.
($590 to admin and $320 to capital works per quarter)

$50,000 in capital works fund.
($15k revenue from levies and $15k expenses on “Maint bldg-general replacement” in 2017)

Negative balance in admin fund.
($30k revenue from levies and over $30k total admin expenses) Breakdown of admin expenses below..

Agent management fees $2900
Agent disburse $1000
Agent storage/document holding fee $100
Auditors $400
Other admin expenses $2000
Insurance premiums $8000
Insurance valuation $300
Maint bldg – cleaning and lawns $2600
Maint bldg – fire protection $1200
Maint bldg – general repairs $3600
Maint bldg – misc $500
Maint grounds – lawns and gardening $1200
Trades monitoring $100
Utility – electricity $700
Utility – water and sewerage $4000

Please let me know what you think about my situation. Thanks for reading.

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scotlandx
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12/07/2018 - 11:48 am
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No – I don’t think you are paying too much, it seems reasonable to me. As a comparison, I am in a two building scheme of 9 units, built in 1932. My levies are over $10K a year. Now this might sound exorbitant, but when a building is nearly 100 years old it needs a lot of work. 

The agent fees don’t seem excessive.

You don’t say whether the owners have done a capital works plan to project what works may be required in the future. When you set the budget you should consider why the admin fund is now negative and whether you need to adjust the budget accordingly, and/or go through the admin amounts line by line and determine if they should be reconsidered.

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Happy Strata
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13/07/2018 - 12:21 pm
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Firstly it is great to see someone paying some attention to this sort of thing as most owners let it just wash over them.

I believe your levies are too low by at least a couple of hundred dollars per quarter. My reasoning for this is that:
– you should not be running a negative balance in the admin fund
– $50,000 in the capital works fund is very low for a 45 year old 12 apartment complex. This is less than $5,000 per unit. Imagine living in a house and only have $5,000 available to you in case of a major emergency.
– The $15,000 spent out of the Capital Works Fund may well have been normal, what should be expected maintenance, and therefore should have been out of the Admin Fund, but due to lack of money had to be taken from Capital Works. I see this commonly occurring. 

As scotlandx asked, is there a 10 year Captial Works Plan in place? In many small complexes such as yours there is not, and everyone is very suprised when a large “unexpected” expense comes along.

I have moved into a number of Strata complexes where the levies were 20% to 100% under what they realistically should have been, and had been for many years. This lack of funds had resulted in tired buildings, with large irregular emergency “fixes” having to be done in a rush, because proper maintenance was not in place. The knock on effect was lower sale prices, lower rents, and unhappy residents due to the complexes not being up to par. I hope that as you appear to have a number of interested residents in your complex, that this has not been allowed to occur.

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