One of our directors was in the gym one morning and inadvertently overheard a conversation between two people. The older guy walked in, greeted his friend, and they got talking about a new development underway. Before long, the conversation delved into body corporate levies.
The older guy makes the declaration that “As soon as there’s a lift, the body corporate levies go through the roof.” For good measure, his friend added, “Well, this place is going to have a pool and a sky garden as well!”
The director does not usually listen to other people’s conversations, but he said his ears perked up at the mention of ‘body corporate’ (it’s his line of work!).
Key Takeaways:
- The idea that lifts and pools automatically cause high body corporate levies is a myth. While they have upkeep costs, they’re not usually the main driver of fees.
- Costs like insurance, utilities, and sinking fund planning often have a bigger impact on levies. Good management can keep fees reasonable even with premium amenities.
- A professional review can reveal savings in areas like insurance, contracts, and management fees. This helps buildings get better value without sacrificing quality.
Why the myth persists
It’s easy to understand why the myth exists. Lifts and pools require regular maintenance and sometimes major repairs or replacements. These costs can be significant, leading people to assume that buildings with these amenities will automatically have high body corporate fees.
However, this isn’t always the case. Many factors contribute to body corporate levies, and with careful management, buildings with lifts and pools can have very reasonable fees. We’ve seen many examples of this in our work.
Let’s examine this common misconception. The following is an example of a body corporation’s annual operating expenses. But before that, here are two things to note:
- The lift and pool are insignificant in the scheme of things (without going into future CAPEX).
- At Change Body Corporate, we focus our attention and ask questions on a few select areas.
Let’s take a closer look at some of those expense categories. Here’s a quick overview:
- Administrative Fund: This covers day-to-day running costs like building insurance, management fees, cleaning, gardening, and utilities.
- Sinking Fund: This is a critical expense for future capital works, like replacing the roof, repainting the building, or upgrading the lift. It helps keep body corporate levies stable over time by anticipating major costs.
- Other Expenses: These can include various costs specific to the building, such as security, pest control, or maintenance contracts.
The image below shows examples of body corporate levies:
Often, we find potential savings in areas like insurance premiums, utility contracts, or management fees. A professional review can help identify these opportunities and ensure your building is getting the best value for its money.
Is your Committee too busy to delve into the complexities of your building’s expenses?
Change Body Corporate is here to help. Our expert consultants will work with you to understand your current financial situation, pinpoint areas for improvement, and develop a tailored plan to safeguard your building’s long-term financial well-being.
Don’t let misconceptions about body corporate levies hold you back from enjoying the benefits of a well-maintained building with desirable amenities.
Contact us here for a free, no-obligation review.
