How much can I expect to pay for owners corporation fees?
If you’ve never owned a property in an Owners Corporation* before, and aren’t sure what to expect financially, here are some questions I tell clients to ask themselves to help them determine what fees they could be expected to pay.
*formerly known as a Body Corporate
1. Does the complex have a lift, gymnasium or swimming pool?
If so, costs to maintain these types of facilities can be significant. And, if you own a property in a complex with one of these, it is likely your Owners Corporation Fees will be higher than those in a complex without.
2. How many lots (apartments, units) does the complex have?
Usually, the higher the number of lots, the lower the fees. Why is this? Because there are more people to share costs with. And even though the operating costs of larger complexes can be more significant, because there is a lot more common property to maintain – and often, in larger complexes, there are facilities like lifts, gymnasiums, and swimming pools – the operating expense is spread out across the number of lots, so an individual’s contribution tends to be less overall.
3. What percentage or unit of liability is your lot on the Plan of Subdivision?
If there are varying percentages or units of liability, the higher the percentage or unit of liability, the more you will pay in Owners Corporation Fees. Unsure what your lot’s percentage or unit of liability is? Check the Plan of Subdivision for your Owners Corporation, which contains this information.
The percentage or unit of liability per lot is determined by the surveyor early on, most often before building construction commences. Quite often, the percentage or unit of liability will be equal (which then generally results in everyone paying the same or equal amount of Owners Corporation Fees).
However, this is not always the case. There are factors that determine whether a particular lot may attract a higher percentage of liability, and more often than not, the size of the lot is the main contributing factor. If you’re planning to purchase a three-bedroom penthouse apartment, as opposed to a one-bedroom first-floor apartment, and the percentages or units are varying, it is likely your share of the Owners Corporation Fees will be higher than those of the one-bedroom first-floor apartment.
4. Is there more than one Owners Corporation/Subdivision, and is your lot part of more than one Owners Corporation/Subdivision?
Some complexes have multiple Owners Corporations/Subdivisions. Again, this is something that is generally determined by the surveyor before building construction commences. But this does mean that there are multiple areas of common property to maintain, which can result in you having to contribute towards the operating expenses of more than one Owners Corporation. For example, your property might be on the upper floor of a complex and accessed via a lift which is in the common property for Owners Corporation/Subdivision 2. The properties on the ground floor, which aren’t accessed via the elevator, may not be part of Owners Corporation/Subdivision 2, therefore they are not required to contribute to the operating expenses of this Owners Corporation.
5. How much is my Owners Corporation’s insurance?
As well as covering the cost of regular maintenance, repairs, common utilities, essential services, management, and other expenses, Owners Corporation Fees also include the cost of insurance. This can often be the most significant expense for an Owners Corporation (although, when divided up and compared, an individual’s contribution towards the insurance in an Owners Corporation, is often less significant than the cost of home and contents insurance for a stand-alone property).
Owners Corporations are obliged under Section 54 of the Owners Corporations Act 2006 to have insurance for the buildings and common property, including public liability. And the quality and style of the complex can impact on how significant the insurance costs are.
Although the above is not an exclusive list of factors that will determine how much an individual can expect to pay for Owners Corporation Fees, and the overall operating expenses of an Owners Corporation can vary significantly, generally these factors can assist an individual in understanding why the Owners Corporation Fees in one complex, might differ from those in another.
Where to next? If you’re considering purchasing a property in an Owners Corporation, refer to the Section 32 for specific information on the property, including what the current Owners Corporation Fees are, or seek advice from your solicitor or conveyancer.
If you already own a property in an Owners Corporation and aren’t sure why your Owners Corporation Fees are at the level they’re at, contact your manager or chairperson and request further advice or a copy of the Owners Corporation’s Budget. After all, it’s important for all individuals to clearly understand and be aware of what the operating expenses of their Owners Corporations are.