What Do Strata Levies Cover?

Strata levies are a regular contribution paid by lot owners in a strata scheme to cover the shared costs of owning, operating and maintaining the building. In New South Wales, strata levies are governed by the Strata Schemes Management Act 2015 and are an essential part of keeping a strata community safe, compliant and financially sustainable.

Strata levies are set by the owners corporation and are usually paid quarterly. The amount each owner pays is calculated based on unit entitlement, which reflects the relative size or value of each lot within the scheme.

In NSW, strata levies are generally divided between two funds.

The Administrative Fund

The administrative fund covers the day to day expenses required to operate the strata scheme. These are the regular and recurring costs that keep the building functioning smoothly.

Common expenses paid from the administrative fund include cleaning of common areas, gardening and landscaping, minor repairs and routine maintenance, electricity and water for shared areas, building insurance and public liability cover, strata management fees, accounting and bookkeeping services, fire safety inspections, lift servicing and other compliance related costs.

These expenses are predictable and form the backbone of the annual strata budget.

The Capital Works Fund

The capital works fund, previously known as the sinking fund, is used for long term maintenance and major repair works. Its purpose is to ensure the owners corporation can plan ahead for large expenses and avoid unexpected financial shocks.

Capital works fund expenses commonly include external painting, roof repairs or replacement, lift refurbishment or replacement, major plumbing or electrical upgrades, renewal of common property fixtures and fittings and upgrades to shared facilities such as pools, gyms or car parks.

In NSW, owners corporations are required to prepare a 10 year capital works fund plan to forecast future expenditure and set levies accordingly.

Special Levies

In some circumstances, the existing funds may not be sufficient to cover an unexpected or significant expense. In these cases, the owners corporation may vote to raise a special levy.

Special levies are typically used for urgent repairs, unforeseen building defects or major works that were not adequately provided for in the budget or capital works plan. Special levies must be approved at a general meeting and are paid in addition to regular strata levies.

What Influences the Cost of Strata Levies

Strata levies vary significantly between buildings. Factors that commonly influence levy amounts include the age of the building, the size and complexity of the scheme, the presence of lifts, pools or gyms, the standard of finishes and shared facilities, insurance premiums and the overall maintenance history of the building.

Newer buildings may have lower levies initially, while older buildings often require higher contributions to fund ongoing maintenance and capital works.

How Levies Are Set Each Year

Each year, the owners corporation prepares a budget outlining expected administrative and capital works expenses. This budget is presented to owners at the Annual General Meeting, where levies are approved by majority vote.

This process ensures transparency and gives owners visibility over how their money is being spent and planned for.

Why Understanding Strata Levies Matters

Understanding what strata levies pay for helps owners and buyers make informed decisions. Well planned levies protect property values, reduce the likelihood of special levies and ensure the building remains safe, compliant and well maintained over the long term.

Strata levies are not just a cost, they are an investment in the ongoing care and value of the property.