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Understanding Increases in Owners Corporation Fees

07 Dec 2023

As strata managers, we must guide our Owners Corporations and their Committees to ensure the optimal maintenance and enhancement of properties while keeping all our lot owners informed about any financial adjustments that may affect them. One such change that owners may have noticed is the increase in the OC’s levies. Here we explain some of the reasons behind increasing OC fees and provide a clear breakdown of how funds are allocated for the running and maintenance of your property. 
Where is the money being allocated?

Transparency is a core value of an Owners Corporation to their owners, and we at Australian Strata Management (ASM) know it’s essential to provide OC’s representatives/committee’s the ability to clarify the allocation of the increased levy funds to their lot owners.
The decision to raise Owners Corporation levies is the result of a thorough evaluation and careful consideration of various factors. These factors are primarily focused on compliance requirements, ensuring the ongoing maintenance, improvement, essential repairs and overall well-being of your Owners Corporation property. 
Here is a comprehensive breakdown of how the funds are being allocated.

Administrative Expenses:
Some funds are allocated to cover necessary administrative costs, including hiring property managers, accountants, legal services, and other professional consultants to ensure the effective operation and governance of the Owners Corporation.

Necessary Maintenance and Repairs:
As properties age, wear and tear become inevitable. It is essential to undertake necessary repairs and upgrades to maintain the value, safety, and appeal of the property. These repairs can range from fixing structural issues to upgrading shared facilities and amenities.

Compliance and Safety Obligations:
Adherence to building codes and safety regulations is a fundamental responsibility. The increased levy funds will support periodic inspections, necessary certifications, and ensure compliance with legal and safety standards to foster a secure living environment.

Long-Term Sustainability Planning:
Financial prudence dictates the establishment of a contingency fund, part of the increased levy, to prepare for unforeseen emergencies and mitigate the need for frequent additional levies.

Rising Insurance Costs:
Insurance premiums are generally the expense item that increases the most, we are currently experiencing annual increases of between 10% to 20%, depending on the type of property and other risk factors as determined by the Insurer. Often, this is due to external factors that are outside of the realm of strata, however, it can occasionally be related to your specific building. External factors may include increasing costs of labour and materials which impacts the building valuation and therefore the sum your building is insured for should it need to be rebuilt. Other factors may relate to non-compliant items such as combustible cladding, claims history and building wear and tear. 
Rising Operational Costs:
Like any organisation, we face rising operational expenses, including maintenance of common areas, utilities, security services, waste management, and property management fees. These costs are subject to inflation, market dynamics, and changes in the overall cost of living.
The increase in the Owners Corporation levy is a thorough and considered decision in consultation with the committee that’s driven by our collective commitment as managers to maintaining and enhancing our lot owners’ investment properties. The funds are strategically allocated to cover escalating operational costs, insurance, essential maintenance and repairs, compliance and safety measures, strategic upgrades, and the establishment of a contingency fund for long-term financial stability.
At ASM, we are here to assist, support and advise strata committees, owners and remain committed to transparency and open communication. Please don’t hesitate to reach out to our management team. Together, we will continue to assist your representatives and Committees to build a thriving, well-maintained, and harmonious living environment for all owners and residents.