Body corporate levies are the contributions lot owners make towards the costs of running, maintaining and planning for their scheme. Understanding what they cover can help you assess a property, check your budget and prepare for upcoming payments.
This guide explains how levies are set, why they vary and what to do if you may have difficulty paying on time.
What are body corporate levies?
Each lot owner must contribute a share of the body corporate’s expenses. The body corporate prepares budgets and levies owners for the money needed to meet those expenses.
Levies support the shared financial responsibilities of the scheme. Depending on the property, these may include common property maintenance, insurance charges, administration, electricity for common areas and longer-term capital works.
They fund the body corporate’s ongoing responsibilities and help it prepare for significant future expenditure.
What do body corporate levies cover?
For schemes registered under the Standard, Accommodation, Commercial or Small Schemes regulation modules, levy funds are generally divided between an administrative fund and a sinking fund. Different arrangements apply to schemes under the Specified Two-lot Schemes Module.
The administrative fund covers regular operating expenses. These can include:
- routine maintenance of common property
- insurance charges
- body corporate management and other administrative expenses
- common property electricity
- recurring services such as gardening or pool maintenance.
The administrative fund budget must estimate the necessary and reasonable expenditure for these recurring costs.
The sinking fund is used for major, capital or non-recurring expenditure. This may include painting common property, structural repairs and replacing major items such as fences or common property carpets.
The sinking fund budget must allow for necessary expenditure during the current financial year and likely capital spending over the following 9 years. This allows the body corporate to build funds progressively rather than relying entirely on a large contribution when work becomes urgent.
For more information on the distinction between building and personal cover, read our body corporate insurance factsheet.
Maintenance inside or connected to your lot is not automatically a body corporate expense. Responsibility depends on the scheme’s survey plan, lot and common property boundaries, and applicable regulation module. The body corporate must maintain common property, while an owner must maintain their lot in good condition.
Our body corporate maintenance factsheet explains these responsibilities in more detail.
How are body corporate levies calculated?
The committee prepares proposed administrative and sinking fund budgets for owners to consider at the annual general meeting. The proposed budgets must be included with the meeting notice and can be approved by ordinary resolution.
At the annual general meeting, the body corporate agrees on the budgets, calculates the amount payable by each lot, decides how many instalments will apply and sets their due dates.
This process is governed by the Body Corporate and Community Management Act 1997 and the regulation module applying to the scheme. A body corporate manager may assist with administration, but levies are decided through the body corporate’s formal budgeting and meeting process.
Most body corporate expenses are divided using the contribution schedule lot entitlements recorded in the scheme’s community management statement. Building insurance payments for owners in a building format plan are an exception and are based on interest schedule lot entitlements.
Contribution and interest entitlements have different purposes. Contribution schedule lot entitlements are used for each owner’s share of most body corporate costs. Interest schedule lot entitlements relate to matters including an owner’s share of common property and body corporate assets if the scheme ends, and the lot value used for local government rates and charges.
A larger or differently configured lot may have a different contribution entitlement, but size alone does not determine the amount payable. Check the community management statement rather than assuming that every lot contributes equally.
Why do body corporate levies vary between buildings?
Every building has different facilities, services, maintenance requirements and financial commitments. This makes direct comparisons between schemes difficult.
Factors that may affect the budget include:
- the size, design, condition and location of the building
- pools, gyms, lifts, gardens and other shared facilities
- caretaker, cleaning, management and contractor costs
- common property electricity and other services
- insurance charges
- planned painting, repairs or replacement projects
- the amount already held in the administrative and sinking funds.
Older buildings may require more maintenance, while newer buildings can face defects or early repair work. The age of a building or the number of facilities does not provide a complete picture on its own.
Levies may also rise when insurance, utilities, maintenance, contractor or other operating costs increase. Each body corporate must determine the spending and levy levels appropriate for its own circumstances.
If an unexpected expense was not included in the budget, or the amount allowed is insufficient, the body corporate may approve a special contribution by ordinary resolution.
When are body corporate levies payable?
Levies are payable in the number of instalments and on the dates decided by the body corporate. They are not necessarily payable quarterly, so refer to your contribution schedule, levy notice and annual general meeting records.
The body corporate must give each owner a written contribution notice at least 30 days before payment is due. The notice must include the amount owing, due date, applicable discount or overdue penalty, and any previous overdue payments.
Check that the body corporate has your current contact details. If you cannot locate a notice or are uncertain about a due date, contact your body corporate manager before the payment deadline.
What happens if body corporate levies are overdue?
The body corporate may charge a late payment penalty where this has been approved by ordinary resolution and the applicable requirements have been met. It may also decide not to charge all or part of a penalty where there are special reasons.
An unpaid contribution can be recovered as a debt. The body corporate may pursue the matter through the Queensland Civil and Administrative Tribunal or the courts and may claim reasonable recovery costs, including relevant legal fees and fees for issuing arrears notices.
Unpaid levies can affect the body corporate’s ability to pay shared expenses when they fall due. They may place additional pressure on other owners and delay planned work.
If you expect difficulty paying, contact your body corporate manager as early as possible.
How can you understand and plan for your levies?
Before buying into a scheme, or when reviewing your current costs, look beyond the levy amount alone. Consider:
- the approved administrative and sinking fund budgets
- recent annual general meeting minutes
- your lot’s contribution and interest schedule entitlements
- upcoming major works
- existing fund balances
- any special contributions
- the facilities and services being funded
- current overdue amounts shown on your levy notice.
You can also read our overview of what levies are and how they support a scheme.
Well-planned administrative and sinking funds help a body corporate maintain common property, meet recurring expenses and prepare for future capital work.
If you have questions about your levy notice, contribution schedule or payment dates, contact the StrataCare team at reception@stratacare.com.au.
