How to Avoid Body Corporate Fees in Australia

Body corporate fees, also known as strata fees, are a reality for many Australian property owners who live in shared residential complexes like apartments or townhouses. These fees contribute to the maintenance and management of common areas, building insurance, and other communal services. However, for many owners, these fees can be a significant financial burden.

Understanding how to manage or potentially reduce these fees can provide substantial savings and enhance your property investment strategy. This article explores practical tips and strategies on how to avoid body corporate fees in Australia.

Understand What You’re Paying For

The first step in managing body corporate fees is understanding exactly what they cover. Typically, these fees are allocated towards:

• Maintenance and repair of common areas (e.g., gardens, pools, lobbies)
• Building insurance
• Utility costs for common areas
• Management and administrative fees

By reviewing the body corporate’s annual budget and financial statements, you can gain insights into how funds are being allocated and whether they are being spent efficiently.

Who pays the body corporate fees

Anyone who owns a property in a large building complex with strata title must pay body corporate costs. This includes having a unit, apartment, townhouse, villa, or duplex. They are paid by the property owner, not the tenant.

How much are the body corporate fees? 

This price could range from $30 to $600 each week. It is strongly influenced by the property’s size, age, condition, maintenance schedule, and strata committee. The body corporate charge is typically lower in smaller apartments, townhouses, or villa complexes due to fewer or smaller common areas to maintain. 

How to avoid body corporate fees

Completely avoiding body corporate fees is difficult because they cover the maintenance and upkeep of shared spaces in your building. However, there are ways to minimize them:

Choose the Right Property

One of the most effective strategies to avoid high body corporate fees is to choose properties with fewer or less extravagant amenities. While features like swimming pools, elevators, and gyms add convenience and luxury, they also contribute to higher maintenance costs and, consequently, higher fees. Opting for properties with fewer amenities can lead to more manageable ongoing costs.

Participate in Body Corporate Meetings

Active participation in body corporate meetings allows you to have a say in the decisions that affect the management of the property, including the allocation of fees. By getting involved, you can work with other owners to prioritise essential maintenance over non-essential cosmetic upgrades, ensuring that fees are used effectively and kept to a minimum.

Advocate for Competitive Tendering

Ensure that the body corporate committee is obtaining multiple quotes for maintenance and service contracts. Advocating for competitive tendering can prevent overpaying for services and can lead to significant savings in the collective budget. This, in turn, can keep body corporate fees lower.

Consider Self-Management

If the body corporate fees are largely driven by management costs, one option could be to consider self-management. This approach involves the owners taking over the management duties to save on professional management fees. However, this requires a commitment of time and effort and is more feasible in smaller complexes where the management tasks are less demanding.

Review Insurance Policies

Insurance can be a significant component of body corporate expenses. Reviewing the building’s insurance policy to ensure that it’s not only comprehensive but also cost-effective can reduce overall expenses. Sometimes, savings can be achieved by comparing providers or negotiating better terms based on the current risk assessment and claim history of the property.

Implement Preventive Maintenance

Implementing a proactive maintenance schedule can prevent small issues from becoming major expenses. Regularly maintaining common property can reduce the need for expensive emergency repairs, which can spike the body corporate fees unexpectedly. Engaging with the committee to focus on preventive measures can lead to long-term savings.

Tips to Manage Expenses: Body Corporate Fees 

Budget Accordingly: To avoid surprises, include body corporate payments and council rates in your annual budget.

Understand what you are paying for: Familiarize yourself with the services and maintenance that your fees include. This understanding might assist you in understanding the value they bring to your real estate investment. 

Query Increases: If fees climb significantly, don’t be hesitant to ask why. You are entitled to a clear explanation of how your money is spent. 

Consider payment arrangements: If making large annual or quarterly payments is burdensome, ask whether the council or corporation offers payment options. 

Engage in the Community: Active participation in body corporate meetings can help you influence decisions, particularly those concerning budgets.

Conclusion

While body corporate fees are an integral part of owning strata-titled property in Australia, they need not be excessively burdensome. By understanding what these fees cover, choosing properties wisely, participating actively in body corporate affairs, advocating for competitive services, considering self-management, reviewing insurance policies, and focusing on preventive maintenance, property owners can exert significant control over these costs. Managing body corporate fees effectively ensures that you can enjoy the benefits of your property investment without undue financial strain.

This tailored approach for an Australian audience highlights practical and locally relevant strategies to manage and minimise body corporate fees, making it a valuable resource for current and prospective property owners across the nation.