body corporate levies

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WHAT ARE LEVIES?

Body corporate contributions, generally called levies, are the payments made by all lot owners towards the operation of the body corporate.

Similar to a tax they are a compulsory part of ownership in a body corporate, and are collected to pay for the maintenance and operating costs of the development. The body corporate relies on levies to fund all of its operations.

It can be helpful to think of levies as a large number of smaller individual costs, bundled together into one convenient payment. That is how levies are calculated and spent. Refer to the pie chart for a typical example of which costs make up body corporate levies.

The Common Causes of Body Corporate Levy Arrears

10 Mar 25

When levies are not paid on time, it may lead to cash flow issues and delays in essential maintenance or…

Why low levies are not always better

24 Feb 25

Over time, however, low levies often come at a price. What may initially seem like a financial advantage can lead…

What Happens if I Don’t Pay My Levies?

18 Nov 24

The body corporate is legally obligated to recover all levies from lot owners, as these funds are essential for covering…

What If I Can't Pay My Body Corporate Levies?

13 Aug 24

Unforeseen financial difficulties can make it challenging to meet your property committments. If you find yourself unable to pay your…

Why the size of the scheme matters when it comes to levies

5 Aug 24

One critical factor influencing levy payments is the number of lots within the scheme. This article looks at how the…

How your individual levy amount is calculated

15 Jul 24

Understanding how your individual levy amount is calculated can help you appreciate where your money goes and ensure transparency in…

COMMON LEVY MYTHS

Levies may appear as a simple quarterly amount, but this simplicity can lead to incorrect assumptions. Here are the top 4 misunderstandings about levies.

1. LEVIES ARE THE BODY CORPORATE MANAGER'S FEE

The body corporate levies do not pay the body corporate manager. Body corporate levies go, in full, into a business bank account in the name of your building to pay for all of the body corporate expenses.

Spending is controlled by your body corporate committee.

Your body corporate manager is engaged to issue levy notices, so owners do often interact with us about these. We do not however set the levies or get the money.

2. INCREASING LEVIES IS A SIGN OF GREED OR POOR MANAGEMENT

Levies are simply a collection of funds, in advance, to pay for shared expenses. The higher the expenses, the more money required from owners in the form of levies.

Expenses usually don’t rise because of greed or poor management. For most buildings, most of the time, costs rise because of increases in labour and materials, unexpected damage or repairs, insurance premiums, and the cost of electricity and water.

Just like in your household budget, if your health insurance or fuel costs rise, you need to adjust your budget accordingly.

3. A SMALLER COMPLEX MEANS LOWER LEVIES

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

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

Just like a restaurant bill, if you go out with a smaller group of friends the total bill may be lower, but per head it might still be the same cost as a larger group.

4. SINKING FUND LEVIES SHOULD NOT INCREASE FOR NEW DEVELOPMENTS

Sinking fund levies are set by experts, generally a quantity surveyor who has inspected each body corporate development and prepared a sinking fund forecast or savings plan. These reports will set levies, usually on a 15-year projection.

Just like a new car that starts to depreciate the moment you drive it out of the dealership, buildings start to age and deteriorate from the moment they are completed.

A sinking fund levy isn’t to pay for repairs required right now, it is saving up for repairs that are inevitable in the future. In your own home you may choose not to save up for future repairs gradually and just deal with costs as they come up, but in a body corporate that long-term gradual savings plan is mandatory.

Sinking fund reports also factor inflation into the levies, therefore they typically increase with inflation each year. This way the body corporate can keep up-to-date with the market costs.

If the body corporate does any unplanned improvements, upgrades or repairs, this will create a gap in the savings plan, and typically increase the levies for the following year to catch up.

Common corrections about body corporate levies

30 Mar 23

This article is the transcript of a BCsystems podcast covering many of the common corrections we make about body corporate…

CALACULATING LEVIES

The levies are set each year at the AGM, by a majority vote of all owners.

Setting the levies is relatively simple:

The committee and the body corporate manager work together to prepare a budget for the year’s expected operational costs
The budget takes into account whether last year’s costs were over or under budget
The budget is then divided by the total number of lot entitlements
This shows the amount required for the year to pay for the body corporate’s operational costs.

There is no profit margin on levies. If your body corporate comes in under budget, the saving is rolled forward to offset next year’s levies.

If your body corporate goes over budget, then the difference must be picked up in next year’s levies.

The Common Causes of Body Corporate Levy Arrears

10 Mar 25

When levies are not paid on time, it may lead to cash flow issues and delays in essential maintenance or…

Why low levies are not always better

24 Feb 25

Over time, however, low levies often come at a price. What may initially seem like a financial advantage can lead…

How your individual levy amount is calculated

15 Jul 24

Understanding how your individual levy amount is calculated can help you appreciate where your money goes and ensure transparency in…

Why you need a body corporate sinking fund

3 Jul 23

In this article, we'll provide you with a comprehensive explanation of sinking funds and emphasize their vital role in maintaining…

Sinking funds and administrative funds explained

8 Feb 23

The administrative funds and sinking funds are both common to bodies corporate, however the expenses they cover are very different.

Rising building costs and sinking fund levies

11 Feb 22

At the time of writing this article, building and construction costs are reaching record heights. What are the reasons for…

WHERE DO LEVIES GO?

The body corporate levies are paid to the body corporate. All body corporate funds are kept in a separate bank account in the name of your body corporate and these funds are under the control of your body corporate committee members.

There is a myth that the body corporate manager receives the levies, however that is not the case. Your body corporate manager works for the committee to issue the invoices and assist with enquiries, but does not receive the body corporate levies.

Why you need a body corporate sinking fund

3 Jul 23

In this article, we'll provide you with a comprehensive explanation of sinking funds and emphasize their vital role in maintaining…

Rising building costs and sinking fund levies

11 Feb 22

At the time of writing this article, building and construction costs are reaching record heights. What are the reasons for…

INCREASING LEVIES

Levies provide the cashflow for your body corporate to operate, and allow it to spend on the labour, services and equipment needed to maintain the body corporate development, including any common property, assets and other responsibilities.

At a basic level, as inflation and increased demand cause prices to rise, the body corporate needs to raise more money to deliver the same outcomes each year. A body corporate is a consumer of goods and services just like a household, and is exposed to many of the same cost pressures that affect individuals and businesses.

The below content looks at which cost pressures affect each of the funds.

Why you need a body corporate sinking fund

3 Jul 23

In this article, we'll provide you with a comprehensive explanation of sinking funds and emphasize their vital role in maintaining…

When should the sinking fund forecast be reviewed

16 Aug 22

To ascertain the amount of sinking funds required for a body corporate to operate, a sinking fund forecast is prepared.

Rising building costs and sinking fund levies

11 Feb 22

At the time of writing this article, building and construction costs are reaching record heights. What are the reasons for…

LEVY COMPARISONS

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 what an owner pays.

Levies are not-for-profit, meaning owners only pay what is necessary to maintain and improve the common property. Since there is no profit margin, the goal is always to set levies at the minimum required to sustain the building’s upkeep. However, comparing levies between properties is challenging due to the unique characteristics of each building, including the number of units, operational costs, and long-term financial plans. Decision-making also varies between bodies corporate, influencing levies based on factors such as maintenance schedules, repair timelines, and future planning.

Ultimately, while levies may appear comparable on the surface, a range of factors contribute to the differences between properties, making direct comparisons difficult.

Why low levies are not always better

24 Feb 25

Over time, however, low levies often come at a price. What may initially seem like a financial advantage can lead…

Why the size of the scheme matters when it comes to levies

5 Aug 24

One critical factor influencing levy payments is the number of lots within the scheme. This article looks at how the…

Why are my levies higher than my neighbours?

8 Jan 24

With every owner in a body corporate obligated to contribute to levies, these often become the yardstick for comparison –…

SPECIAL LEVIES

Special levies are contributions that owners pay on top of their normal levies. They are required when unexpected spending, not allowed for in the budget, must be covered.

For example, if the body corporate has an unforseen building repair, a special levy may be required to fund that work.

Special levies can be used in conjunction with body corporate loans to allow the body corporate to pay for expensive work which cannot be covered using its normal funds.

What are body corporate special levies?

24 Jan 23

A body corporate special levy is an additional levy issued to owners over and above the usual administrative and sinking…

1. WHEN & HOW DO I PAY MY LEVIES?

The body corporate will issue a levy notice invoice to each lot owner, at least 30 days before the due date.

The payment details are shown on each levy notice.

2. ARE THERE SIMPLE PAYMENT OPTIONS?

Yes. Levies can be paid in a number of different ways.

Lot owners can also set up a direct debit arrangement directly with the body corporate to avoid missing payments.

3. WHAT HAPPENS IF I DON'T PAY MY LEVIES ON TIME?

The body corporate must recover all levies. If an owner fails to pay a levy notice invoice on-time, the body corporate will issue reminder invoices and penalty notices to the lot owner, and the costs to recover that levy are also added to the owner’s debt.

If the body corporate is unable to recover the levy debt directly, the body corporate must engage a solicitor and commence court proceedings to recover the debt.

The body corporate is not able to write-off, forgive or credit owner levies. Because levies directly pay for the body corporate’s costs, if the committee forgave a levy invoice for one owner, that would increase the levies for all other owners.

4. CAN I SEE MY LEVY BALANCE?

Yes. Login to our BCsystems owner login to view your levy account balance at any time, and access other records and documents for your body corporate.

The Common Causes of Body Corporate Levy Arrears

10 Mar 25

When levies are not paid on time, it may lead to cash flow issues and delays in essential maintenance or…

What Happens if I Don’t Pay My Levies?

18 Nov 24

The body corporate is legally obligated to recover all levies from lot owners, as these funds are essential for covering…

What If I Can't Pay My Body Corporate Levies?

13 Aug 24

Unforeseen financial difficulties can make it challenging to meet your property committments. If you find yourself unable to pay your…

How to avoid late fees on your levies

16 Aug 22

Most body corporate arrears and subsequent late fees are preventable with this easy checklist.

Levy payment plans

16 Aug 22

What is a levy payment plan and how does it work for body corporate schemes in Queensland?

body corporate levies

Body corporate contributions, generally called levies, are the payments made by all lot owners towards the maintenance and upkeep of the common property, and the ongoing operation of the body corporate. All lot owners must pay annual levies into a separate bank account in the name of the body corporate. These funds are under the control of the body corporate committee, not the body corporate manager. There are three types of levies payable:

Administrative fund levy
Sinking fund levy
Insurance fund levy

This guide looks at how levies are calculated, where they go, and what services they provide. While it won’t make paying them any easier, it might help you better undstand their importance.

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AVERAGE LEVY BREAKDOWN

This chart illustrates how the levies are calculated and allocated in an average body corporate scheme.

For developments that are larger or smaller than average the total costs change but the proportion per owner is usually similar.

If your body corporate does not have a caretaker, this single cost is usually replaced by separate gardening, cleaning and maintenance contractors.

Debunking the top 5 myths about body corporate levies — COMMON LEVY MYTHS

Body corporate records — WHERE DO LEVIES GO?

Common causes of levy arrears — INCREASING LEVIES

Why my levies are higher — LEVY COMPARISONS

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body corporate levies

AVERAGE LEVY BREAKDOWN

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