‘Unbelievable’: new warning on costs of strata living

Many ‘lifestyle’ features are being added to unit complexes to make them more appealing to a wider demographic but it’s coming with a significant cost to owners.

Gyms, pools and other “lifestyle” features are being added to unit complexes to make them more appealing to a wider demographic but it’s come with an increased cost to owners.

The Strata Community Association has reported “significant growth” across Australia in high density strata complexes, with the quarterly fees ranging from $1000 to $10,000.

Strata consultant Mark Lever said fees varied depending on the size of the building and its services and facilities.

“Generally speaking a modest unit in a small building in the suburbs, with no extra services or facilities, you could expect to pay less than $1000 a quarter in strata fees, while at the top end of town, a large unit in a high-end building can easily go north of $10,000 a quarter,” he said.

Strata fees for an apartment for sale in this Kogarah (south western Sydney) complex are around $1477.71 per quarter.

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Real Estate Institute of Australia president Hayden Groves said strata levies can be “barriers” to home ownership and advised potential unit buyers to thoroughly look into the financial status of body corporates.

“Sometimes buying properties off the plan, we often find strata levies somewhat understated to what it will eventually be,” he said.

“Some of these places have swimming pools, gymnasiums, rooftop bars and can be pretty expensive with the levies high as a result.

“However, the levies are there for a reason and insurance costs have gone up an unbelievable amount in recent times.”

He warned people to be careful of older buildings on strata titles, making sure they have long term maintenance plans to avoid “special levies” down the track.

However Mr Groves said strata titled properties can be more affordable options with properties often higher density and with lower land holdings.

Strata Community Association (NSW) president Stephen Brell.

REIA president Hayden Groves.

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Strata Community Association (NSW) president Stephen Brell said most owners corporations set budgets, however had yearly levy increases of around 15-20 per cent.

He said cheap strata fees, as a result of cutting corners, can result in larger costs in special levies to repair or replace facilities.

“Cheap strata fees are a classic penny wise, pound-foolish strategy,” he said.

“All too often owners cut corners on maintenance and end up facing much larger costs in special levies to repair or replace facilities that would have lasted years longer if properly cared for in the first place,” he said.

“Or they will cut the capital works budget and find themselves raising hundreds of thousands of dollars when a lift needs replacing.

Maintenance such as gardening is often included in strata fees, however more services and facilities see strata levies increase.

“By setting realistic capital work funds and properly budgeting for the ongoing upkeep and maintenance will help to ensure that the necessary funds are available when needed, alleviating financial pain further down the track. “

Mr Brell said clever ways to increase the value of strata titled buildings, while lowering costs, were through sustainable and smart building initiatives such as energy and water efficient upgrades.

According to the 2021 census data, there are more than 350,000 strata schemes across Australia.

“Strata has seen significant growth in large scale communities, with schemes over 50 lots (units) increasing by 18 per cent in the past five years,” Mr Brell said.

Mr Bell said most owners corporations set their own budgets, however had yearly levy increases of around 15 – 20 per cent for increasing costs of insurance, electricity, and maintenance.

“Strata fees should be viewed by owners as a reinvestment into their asset, in the same way that good care and maintenance protects the value of any other type of property,” he said.

Originally published as ‘Unbelievable’: new warning on costs of strata living