Body corporate fees are the one cost that makes unit investing a different exercise to house investing. You pay them whether the unit is rented or not, and the owners as a group decide how much they rise. Buy without reading the strata report first and your cash flow can end up worse than you planned.
Body corporate, strata, owners corp
Every state has its own name for the same legal entity. It is a body corporate in Queensland, Tasmania and the NT. An owners corporation in Victoria, NSW and the ACT. A strata or community corporation in South Australia. A strata company in WA.
They all do the same job, so this post uses “body corporate” for all of them.
Strata title: what you own
Strata title divides a building, or a group of buildings, into lots. You own your lot. The common property is shared with every other owner in the scheme.
Your lot is the inside of the unit. On the NSW Government’s list that usually means internal walls, lights, blinds and carpets. The toilet, bath, kitchen cupboards and benchtops are yours too. Common walls, external doors, the roof, pipes and wiring belong to everyone. So do the driveway, the gardens and the pool. What counts as common property changes from one scheme to the next, so check the strata plan. That split decides what you can change without approval and which repairs come out of the levies.
Your unit entitlement, shown on the strata plan, sets your share of the common property and what you pay towards its upkeep. It also affects your voting power. The by-laws are the rules every resident has to follow. They bind your tenants too. In NSW the seller must attach both the strata plan and the by-laws to the contract of sale.
A freestanding house is simpler. On its own title, most of what you want to do needs no sign-off from the neighbours. On strata title, most work that touches common property needs the body corporate’s approval.
What the fees actually pay for
Buy a unit, townhouse or apartment in a strata scheme and you become a member of the body corporate whether you wanted to be or not. Your levies fund everything outside the walls of your own lot, split across two pots.
The administration fund covers the running costs. Building insurance is often one of the largest lines in it. Then come common area cleaning and gardening, lifts, fire systems and security, the body corporate manager’s own fee, and the power and water for common areas.
The sinking fund (called the capital works fund in NSW) is the one to look at. It pays for the big irregular jobs: the roof, waterproofing, repainting, replacing lifts and hot water systems and intercoms, structural work, and whatever the ten-year plan says is coming.
Our rule of thumb is that a healthy scheme puts at least 25 to 30% of total levies into the sinking fund. Much below that and the maintenance is only being postponed. You will meet it later as a special levy.
What body corporate fees cost
The range is enormous, driven mostly by what the building has in it. The ranges below are our own working estimates, not survey data. The strata report gives you the real figure for any building.
| Property Type | Annual Fees (estimate) |
|---|---|
| Townhouse (small complex, no pool) | $1,500 to $3,000 |
| Standard unit (walk-up, no lift) | $2,500 to $4,500 |
| Mid-rise apartment (lift, basic amenities) | $4,000 to $7,000 |
| High-rise apartment (gym, pool, concierge) | $7,000 to $15,000+ |
Put that against an example property. A $5,000 annual levy on a $450,000 unit renting at $400 a week takes more than a full percentage point off your net yield.
Factor in body corporate fees, vacancy, management costs, and all expenses to see your true net yield.
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What pushes a levy up is predictable enough. Every amenity is a maintenance contract, so a pool, a gym, a sauna or a rooftop terrace all show up on the invoice. Older buildings cost more to repair and more to insure. A small complex spreads the same bills across fewer owners. Inner-city service costs run higher. And high-rise buildings carry lifts, fire systems and facade maintenance that a walk-up simply does not have.
One warning about new stock. Developer-sold apartments can launch with levies set low enough to make the investment numbers work on the brochure. A few years in, once the sinking fund has to face what the building actually needs, those levies can rise sharply. Ask for the levy history and the capital works plan as well as this year’s figure.
A house and a unit, same rent
Two properties, both renting at $420 a week, or $21,840 a year.
The house costs $500,000. No body corporate. Say council rates, insurance and maintenance run about $5,500 a year, so it nets around 3.3%.
The unit costs $400,000. Body corporate takes $5,500. Rates and its share of insurance add about $2,000. Net yield: roughly 3.6%.
On gross yield the unit wins comfortably, 5.5% against 4.4%. After the levies the gap almost disappears, and the house still has land underneath it, room to renovate, and no committee that can vote you a special levy. That is the main reason we lean toward houses over units for investment clients.
None of which makes units unbuyable. The right one, in the right location, with levies you have actually verified, can be a strong cash flow property.
Red flags in the strata report
Order a strata report on any strata property before you go unconditional. It typically costs a few hundred dollars. It is the only place the scheme’s finances and its politics are both written down.
Start with the sinking fund balance and hold it against the building’s age. A twenty-year-old block sitting on $50,000 with no capital works plan is a bill with no date on it yet. Then look at the special levy history. One levy for a genuine emergency is ordinary. A pattern of them says the scheme has been underfunded for years.
Check how the fees have moved. As a rough guide, three to five percent a year is just insurance and labour doing what they do. A 20% jump in a single year needs an explanation, and the minutes should contain one.
Then read the minutes themselves, two years of them. They will tell you more than the financials. You are looking for litigation, with owners or builders or neighbours, because it drags on and it costs. You are looking for unpaid levies, which mean either owners in financial trouble or a manager who does not chase. You are looking for a ten-year capital works plan, and if there isn’t one, treat that as a warning sign. And you are looking at how the committee behaves. The same argument in four consecutive meetings, or a quorum they cannot make, tells you who will handle the next $200,000 decision.
When high fees are worth paying
A high levy is not automatically a bad one.
Take a well-run building charging $8,000 a year, with a full sinking fund, a professional manager and nothing deferred. It is a better buy than a neglected one charging $3,000 with an unbudgeted facade repair coming.
High fees make sense when the lift or pool or gym is genuinely lifting the rent. They make sense when the insurance is high for a reason you can name (coastal, flood-prone, high-rise). And they make sense when the sinking fund is full, the ten-year plan is real, and you can walk the common areas and see the money.
They are a problem when the amenities sit unused but still get serviced, or when levies have climbed sharply and nothing about the building has improved. The same goes for a sinking fund still thin after years of high levies, or a management fee out of proportion to a building this size.
Run the real number through the cash flow calculator. If the property still works after the levy, the levy is fine.
Strata is one of five checks we run on any apartment. The others are the local supply pipeline, whether there is land underneath it, the vacancy trend and the house to unit price gap. All five are covered in our guide to whether apartments are a good investment.
What to check before you sign
- Order the strata report. It costs a few hundred dollars and it is not optional.
- Weigh the sinking fund balance against the building’s age and condition.
- Read the last two years of meeting minutes end to end.
- Ask the manager directly what special levies are planned or being discussed.
- Compare the levy to similar buildings nearby. Well above average and well below average are both worth a question.
- Check the insurance policy and its sum insured, especially in flood and cyclone areas.
- Put the levy into your yield calculation and work from the after-everything number.
That checklist is part of due diligence on every unit purchase we run. If you want that done for you, here is what a buyers agent costs and whether it is worth it.
If you are buying your first investment property and it is a unit, this is the cost you are most likely to underestimate. Get the number before you sign.
This is general information only and not financial advice. Speak to a qualified professional before making investment decisions.
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