Understanding strata levies in NSW - What they cover and how to avoid unexpected increases

What Are Strata Levies and Why Do We Pay Them?

In a strata scheme, all owners contribute levies to ensure the ongoing management, maintenance, and long-term financial health of the building. Whether you own an apartment, townhouse, or a unit in a mixed-use building, levies are not optional – they are a legal requirement under NSW strata law.

Understanding how these levies are calculated – and where the money goes – is key to protecting your investment and avoiding unexpected increases.

Types of Strata Levies in NSW

1. Administrative Fund

Covers the day-to-day running costs of the building, such as:

• Cleaning of common areas

• Gardening and landscaping

• Insurance premiums

• Utilities (lighting, water for common areas)

• Strata management fees

2. Capital Works Fund

This is a long-term savings fund for major repairs and building upgrades, such as:

• Roof replacement

• Painting external walls

• Lift upgrades

• Fire safety compliance

• Structural repairs

  
  

3. Special Levies (When Things Go Wrong)

A special levy is an additional contribution imposed when there isn’t enough money in the funds to cover urgent or unexpected expenses. These are usually costly and unwanted, and often occur in poorly managed schemes.

Where Your Levies Really Go

Your levies are there to protect your asset. When properly budgeted and managed, they:

• Ensure your building is compliant with NSW legislation

• Preserve or increase property values

• Reduce the risk of sudden financial shocks

• Allow for strategic maintenance planning

Well-managed strata schemes rarely need special levies because their capital works plan and budgeting are accurate and proactive.

Why Levies Increase

Levies may rise due to:

• Inflation and rising contractor costs

• Underfunded capital works plans

• Unexpected repairs due to lack of preventative maintenance

• Insurance premium increases

• New compliance requirements introduced by NSW Fair Trading

How to Avoid Sudden Levy Spikes

✅ Maintain a Proper Capital Works Plan

NSW law requires a 10-year capital works plan. Buildings that review it annually avoid budget blowouts.

✅ Choose a Proactive Strata Manager

A quality strata manager drives efficiency, negotiates better contracts, and prevents future costs by planning ahead.

✅ Support Preventative Maintenance

Regular inspections and early repairs cost far less than emergency works or full replacements.

What Happens If Your Building Is Underfunded?

• Special levies may be imposed

• Committee members may face legal liability for negligence

• Insurance claims may be denied if maintenance is inadequate

• Property values can decrease due to poor building reputation

How Centric Strata Helps Protect Your Levies

At Centric Strata, we ensure levies are spent wisely and transparently. Our proactive maintenance strategies and long-term financial planning help committees avoid unnecessary costs while preserving owners’ investments.

Our approach includes:

• Accurate budgeting aligned with legislative requirements

• Transparent reporting on where every dollar goes

• Negotiating competitive supplier pricing

• Strategic capital works planning to avoid special levies

Final Takeaway

Strata levies are not just another cost – they are your building’s financial safety net. When properly managed, they protect your investment and reduce long-term expenses.

Want to review your current strata levy budget or capital works plan?

Contact Centric Strata today – we’ll show you where you can save without compromising quality.