Why are my levies higher than my neighbours?

Why my levies are higher

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With every owner in a body corporate obligated to contribute to levies, these often become the yardstick for comparison – whether between neighbours in the same complex, or friends and family living suburbs away.

Regardless of the property’s similarities, there will always be differences – in the complex itself, the number of lots within the complex, the history of the building, or the individual decision-making and plan of each body corporate. These all impact on what an owner pays.

This article looks at why comparing levies is difficult and some of the factors that cause variations.

Levies are not-for-profit

In Queensland all bodies corporate are considered to be not-for-profit entities in the eyes of the ATO, meaning each owner is only paying what they need to for the continued operation of the body corporate and the collective upkeep and improvement of the common property. All levies are paid into a body corporate fund, and NOT to the body corporate manager.

Because there is no profit on levies, the incentive is always to set them at the minimum possible amount to maintain the property.

Why comparisons are difficult?

Unique building characteristics

Every building is unique, with a different number of units, fixed costs, and operational and long-term savings goals. Consequently, comparing levies between buildings becomes challenging, as the cost profiles are always inherently different.

Individual decision-making

A body corporate will make decisions over time that shape the future of their building. Choices regarding maintenance schedules, repair timelines, and long-term planning will all differ from one scheme to another. These impact levies, for instance, when one building plans to repaint after 15 years, while another with harsher sun exposure might opt for a repaint after 10 years. This creates a different saving schedule for each.

Size of the complex compared to its features

Many owners buy into smaller developments expecting levies to be lower. Of course, depending on its features, the amount required to maintain a small complex will usually be lower than a larger one, but the amount paid per owner may not be.

Think about individual costs. A swimming pool will generally cost a similar amount to maintain whether it’s in a private backyard, shared between 5 townhouses, or shared between 20 townhouses. Even as chemical costs rise with more people swimming, the 20-townhouse development will generally produce a cheaper pool cost to maintain than the 5-townhouse development.

Just like a restaurant bill, the total with a smaller group of friends might be lower, but per head it can still be the same cost or higher than a larger group. 

Factors contributing to differences in levies

Insurance premiums

Insurance is a substantial annual cost for most buildings and one that can considerably impact on levies.  While many factors contribute to higher insurance premiums, the history of the building is a significant one.

Has your building made a high number of insurance claims over the years – whether from storms, floods, or even perhaps substandard construction? These claims impact your annual insurance premiums, not only during the year of the claim, but for all subsequent years.

Check out our article on Insurance Premium Trends here.  

History of the building

If the body corporate chooses not to claim unexpected repairs or defects through insurance, then it must source the funds through its own means – whether this be from the existing sinking fund or via a special levy. Either way, a history of unexpected repairs or defects will increase levies.

Sinking fund savings

If a building has kept levies low for a number of years the sinking fund may not have sufficient savings to address the necessary upgrades or maintenance when it arises.

Given there is now a shorter period to save for these impending costs – things like resurfacing the driveway or repainting the exterior, it may result in a levy increase, or a special levy to ‘catch-up’.

Differences in day-to-day expenses

If your levies are higher than your neighbours, then what is your body corporate spending money on that they aren’t? Does your gardener and pool cleaner come weekly, while your neighbour’s only visits monthly?

As we mentioned earlier, smaller schemes with fewer owners to share the costs make these seemingly insignificant expenses a larger portion of each resident’s contribution.

Building format plan or standard format plan

If you’re not sure about the type of subdivision plan your building is and why it matters, check out our article Understanding Survey Plans in a Body Corporate

The way a building is set up – whether as a building format plan or a standard format plan, influences what the body corporate is responsible for in terms of maintenance and repair. For example, in a build format plan, the body corporate is responsible for the roof and gutters on all lots. This will naturally be reflected in the levies.  

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