Your strata levies, finances and insurance
Understand how strata schemes work including levies, funds and planning for the future, and your responsibilities as an owner.
Key information
- Levies are set at the annual general meeting (AGM) and paid into different 'funds'. These funds cover administration costs, building costs and planned works for the next 10 years.
- Large schemes and two-lot schemes have different rules to follow.
- Support is available if you are finding it hard to pay your levies.
- Your strata scheme must have different types of insurance.
Levies
All owners in a strata scheme are charged a yearly levy (sometimes called a ’contribution’ or ’fee‘). Strata levies are normally paid quarterly. You will receive a levy notice each time before the levies are due. Strata levies are paid into different types of funds.
The funds for your strata scheme are managed by the strata committee or by the strata manager based on direction from the strata committee and/or owners corporation. This is according to the strata scheme's approved budget.
What do levies pay for?
Your levies pay for a range of costs that keep your strata complex (scheme) running smoothly and in good condition, such as:
- maintenance and repairs to the building/s and common property
- insurance
- administration costs (for example, management fees, or work costs)
- utilities supplied to any common areas (for example, electricity to run elevators or lighting).
The owners corporation decides how often you need to pay levies. The treasurer or strata manager works out the levy amount that each owner pays. This is based on their ‘unit entitlement’.
Unit entitlement represents a property owner’s share of the strata scheme and can be different depending on the property.
For example, a small apartment might have a unit entitlement of 10, while a larger apartment might have a unit entitlement of 15.
An owner with higher unit entitlements has a stronger voting power, but also pays higher levies.
You can find your unit entitlement by looking at your property on the strata plan.
You can get a copy of the strata plan by contacting a member of the strata committee.
Example of unit entitlement
There are three lots in a strata scheme. One lot may be larger, or is placed in a better position, and so has greater value than the other lots. If there is a total unit entitlement in the scheme of 100, then the unit entitlement of the more valuable property may be 40 and the unit entitlement for the less valuable properties may be 30 each.
How is the amount of strata levies decided?
The owners corporation approves its budget by majority vote at the annual general meeting (AGM).
The strata scheme then uses the approved budget for the year to determine the total levies that will be charged to owners over that year.
By attending the AGM, you can contribute to decision-making on the budget and be better informed about the levies you will need to pay.
How much notice should I get about levies?
You must receive at least 30 days notice to pay for your standard levies, as well as any special levies. Many strata schemes issue levy notices quarterly.
Your written levy notice will be emailed or posted to you. Sometimes levy notices are also available to access through an electronic portal. If so, ask your strata manager or committee for access.
Your owners corporation may need to raise extra funds to carry out emergency repairs to address a serious and imminent threat to occupants’ health or safety.
If this happens, the owners corporation must give you written levy notice with at least 14 days to pay (instead of the normal 30 days notice).
- Debt recovery action should always be the last resort. It is best if you can approach your strata committee first about options for an alternative payment arrangement before any debt recovery action is considered.
- If you don’t pay your levies by the due date, the owners corporation must give you written notice (for example, in a ‘letter of demand’) at least 21 days before they can start legal action against you.
- The owners corporation can’t start legal action against you to enforce the debt in a court or the Tribunal before the 21 days have passed.
- If you have received a notice of recovery action you need to act quickly. Refer to Help if you can’t pay your levies for information about what you can do.
- If you have received the legal form known as a ‘Statement of Claim’, you have 28 days before further legal action can be taken. Refer to the information sheet on the Local Court New South Wales website.
What if I didn’t receive my levy notices?
Even if you haven’t received a levy notice, you are still legally required to pay your levies.
As a property owner, you are responsible for keeping the strata roll up to date with your current contact details. Otherwise, your levy notice will be sent to the last recorded address or email on the strata roll.
If you are not receiving your strata levy notices, take the following steps:
- Contact the strata manager or the secretary of the owners corporation to check the contact details they have on file for you. Ensure your mailing address and/or email is correct.
- Confirm whether the levy notice was sent and when. Delivery issues may be due to postal delays or errors in the contact information.
- Request a copy of the levy notice. You can ask for it to be resent via email or post.
- Ask for payment details (to make payment) and the due date, if payment is due soon.
Always keep a record of any communication with the strata manager or owners corporation about not receiving your levy notice. This can be helpful if disputes arise later on.
If this issue continues, consider putting the matter forward for discussion at the next owners corporation meeting. This can help ensure proper procedures are followed for delivering levy notices in the future.
For more help, contact NSW Fair Trading on 13 32 20 or lodge a property-related enquiry online.
Types of funds
Every strata scheme must have funds. They are set up to keep the levies paid by owners.
Administrative fund
An administrative fund is the 'everyday fund'. It manages the day-to-day costs of the strata scheme.
This includes maintaining:
- common property
- paying for strata scheme insurance
- other regular costs such as electricity, water, cleaning and garden maintenance.
To learn more, see the managing finances and insurance page.
Capital works fund
A capital works fund (previously called a ‘sinking fund’) is the 'fixing and maintaining fund'. It is used to pay for capital expenses when they happen.
Capital expenses include:
- painting or repainting common property
- replacing or repairing the common property
- getting, renewing or replacing property of the owners corporation (for example, outdoor furniture, a table in the foyer)
- renewing or replacing fixtures and fittings that are part of common property
- project management, supervision or other related expenses for these works
- capital upgrades, such as installing sustainability infrastructure.
To learn more, see the managing finances and insurance page.
The 10-year plan
Your strata scheme must have a 10-year plan of expected major work that will be paid from the capital works fund. The purpose of this fund is to ensure enough reserves are built up to cover future major payments.
The 10-year plan starts from the first AGM of the owners corporation and is reviewed at least every five years. The plan must be considered at each AGM. Any changes, revisions or new plans will require a vote.
The 10-year plan and the amount required in the capital works fund will differ between strata schemes and should consider things like the age and features of the building.
You can contact your strata committee to access the 10-year plan.
Other funds
Sometimes, the owners corporation may make agreements with owners to provide some services, for example pay TV services or high-speed internet. These are not compulsory to participate in. This allows extra services to be provided, without passing on the cost to owners who don’t want to use the services.
These services are voluntary and will have a fund specifically created for them. To create a fund, the owners corporation must pass a resolution at a general meeting.
Interested owners can then choose to pay the costs of the service into the fund to access it.
Financial reporting
The strata committee is responsible for making and keeping all financial records for at least seven years. From 11 June 2024, records must be kept electronically.
The strata committee (or strata manager acting on its behalf) also needs to make new reports for every reporting period (usually 12 months). The start and end dates for the reporting period can change slightly year-to-year. Check with your strata manager or the secretary of the owners corporation if you need the exact dates.
Key financial statements
A key financial statement for each fund is sent to every owner before the AGM. Many strata schemes also choose to send out the full financial statements for the last reporting period with the notice of the AGM.
The key financial statement must include:
- the reporting period
- name of fund
- balance carried forward from previous reporting period
- total income received during reporting period
- total interest earned by fund during reporting period
- total contributions paid during reporting period
- total unpaid contributions payable for reporting period
- total expenditure for maintenance during reporting period
- total expenditure for administration costs during reporting period
- balance of fund at end of reporting period
- list of principal items of expenditure proposed for next reporting period.
Rules for different types of schemes
Some types of schemes have different rules for finances.
Two-lot schemes have rules such as:
- accounts and finance statements do not need to be audited
- a capital works fund may not be needed if the strata buildings are physically detached, the two-lot scheme does not include any additional buildings, and the owners corporation passes a unanimous vote that a capital works fund is not needed.
Large strata schemes with more than 100 lots have rules such as:
- financial accounts must be audited
- the estimates prepared for the AGM must list expected costs and what they are for
- the estimates prepared for the AGM must list any difference between the estimates and the 10 year capital works fund and the reason for the difference.
Insurance
Individuals are responsible for insuring their own personal property (for example, contents insurance).
Your strata scheme must have certain types of insurance. For details, visit the Managing strata finances and insurance page.
Contact Fair Trading
If you have any further questions about strata, you can contact Fair Trading via phone or in-person at a Service NSW centre.
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