Common corrections about body corporate levies

Misconceptions about body corporate levies

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We offer an obligation-free quote.

The first step is a short phone or in-person meeting to better understand the needs of your committee and scheme. This will only take around 10 minutes.

From there, we’ll put together a tailored proposal, including our easy-to-understand fee package.

Submit our proposal form, including the best contact time, and we’ll be in touch.

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We'll need to get some details about your building. Let us know the best time to contact you.

Check out our Complete Guide to Body Corporate Levies

Levies are always a contentious issue in body corporate, yet we find there are many common misconceptions about why and to whom they are paid. This article is a transcript of a recent podcast by Strata Operations Manager Matthew Savage, unpacking the truth behind many of the misconceptions about body corporate levies.
Watch the entire podcast here.

A levy is not a fee

A fee is a payment made to a professional person, business, or public body in exchange for advice or services. As such, that person or business can generally decide what the fee will be.
A levy, however, is different. It is not a business function and is not at the discretion of the body corporate or body corporate manager. Instead, it takes all the costs associated with the body corporate and divides them up among the lot owners within it.
A common misconception about body corporate levies is, because they are sent out on say the BCsystems’ letterhead, then it must be a BCsystsems’ charge, and we are responsible for the increase in costs. This is not correct.
The levy amount charged to lot owners is not set by the body corporate manager, but by the body corporate as a whole, and increasing costs are simply a result of what the body corporate is spending to manage and maintain the property year on year.

A body corporate levy has no profit margin

Again, unlike a business that aims to run at a profit, a body corporate is simply taking what it is spending in a year and dividing those costs among owners.
So, no profit margin means there is no ‘fat’ in the levies, meaning there is no ability for them to be reduced. Reducing the levies without reducing costs, means you won’t be bringing in enough money to maintain the body corporate.
The only way levies can be reduced is via an in-depth review of what areas can be cut back on to reduce spending.

Every levy has been approved by the majority of lot owners

Every dollar spent on a body corporate scheme is raised by levies, and every levy is also proposed as a draft, to every owner, in every AGM before it is approved.
A levy is never imposed on an owner – it is always presented as a yes/no vote at the AGM as part of what the body corporate needs to spend. This must then be approved by a majority vote.

Levies are set at the minimum possible amount

Levies are nearly always set at the absolute minimum amount possible. This means there is usually no ability to reduce levies without reducing spending.

Usually, a body corporate will raise the absolute bare minimum, so when costs go beyond what they were expecting or a project comes in at a higher amount, that is where you get a gap usually requiring a special levy.

Read our full article on special levies here

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