Strata fees typically cover the repairs and maintenance of the common areas of the complex, including the insurance, utilities and management fees. Maintenance fees are determined by unit entitlement, so smaller units will have lower fees and larger will have higher fees. There are also contributions to a contingency fund that is usually kept aside for future repairs and aby unforeseen expenses.
When considering strata fees, a number of factors have to be taken into consideration.
Buildings with a number of amenities e.g. a pool, a club room, a gym etc. typically have higher strata fees as there are expenses involved in their running and upkeep. Older buildings may have higher fees due to more frequent repair and maintenance needs. Larger buildings may have lower fees than smaller ones because the cost is split amongst a greater number of owners.
There are only 3 things that can happen when you live in a strata when it comes to the upkeep – pay now, pay later or a hybrid of both.
Pay now means having the appropriate strata funds to address the annual operations of the strata, the required maintenance, and to put the appropriate amount needed to cover any future maintenance in the contingency fund, so that a large bill can be handled appropriately.
Pay later is what many underfunded stratas are doing. They are keeping the strata fees artificially low, but the owners will eventually pay for the maintenance of the building through costly special levies.
All properties, whether strata or privately owned, have ongoing maintenance needs that need to be addressed. For a strata, it means paying a reasonable amount of strata fees (and into the contingency fund), so if a huge repair does need to be done, it does not sink the majority of the strata owners financially.
How do you prevent yourself from buying into a strata complex that is going to cost you big money down the line?
- Review the depreciation report of the building, which is basically a 30-year planning tool that looks at all aspects of the strata complex, how old they are, how much they will cost today to replace and how much they might cost to replace when the time comes up, adjusted for inflation.
- Look at the history of increases of strata fees over the last few years to see if the strata is appropriately managing its finances.
- Review the strata minutes when you buy a property, so you can get a good idea of what is going on in that complex.
We have a very experienced property management service that can handle every occupational and operational detail of your property. Call us on 604 695 1000 or contact us for more information.