Updated 4 November 2026
CM Law's Ultimate List: The top 50 FAQs on Buying a Residential Investment Property #21: Strata or Body Corporate Fees
Explore the full residential investment property guide.
Strata levies affect the cost of owning an investment property, but the current quarterly bill tells only part of the story. Before buying, examine what the scheme collects, what it owes and what repairs lie ahead. Adequate funding protects the building; an apparently cheap levy can leave significant expenses unresolved.
What are strata fees in NSW?
Strata fees, usually called levies, are owners’ contributions towards running the scheme and maintaining its common property. In NSW, the owners corporation comprises all lot owners and has statutory responsibilities. Buying a strata apartment brings membership of that corporation and obligations to contribute, even when you rent out the apartment.
The Strata Schemes Management Act 2015 governs these arrangements. ‘Body corporate’ is a familiar alternative expression, but owners corporation is the NSW statutory term. Check whether the property also participates in another shared-facilities arrangement carrying additional costs.
What do the administrative and capital works funds cover?
The administrative fund pays everyday scheme expenses, such as cleaning, management, insurance and common-area utilities. The capital works fund provides for larger capital expenses, including replacing building components and major common-property work. Examine both contributions when comparing properties: an advertised quarterly amount may not clearly explain its components or additional charges.
NSW guidance explains the funds and their purposes. Ask for the current budget and actual expenditure. An individual apartment’s repairs, loan repayments and council rates are separate expenses; paying a strata levy does not cover every cost of ownership.
Who decides the levies and your share?
The owners corporation decides contributions at general meetings, normally approving its annual budget at the AGM. Ordinary contributions are generally allocated according to each lot’s unit entitlement, rather than divided equally between apartments. The strata manager administers authorised decisions; the manager does not simply choose whatever levy amount they prefer.
Check your entitlement on the strata plan and compare it with the levy calculation. Read the meeting resolution and levy-setting guidance. Attend meetings or arrange appropriate representation so you understand proposed expenditure and can participate in decisions.
Are low strata fees always better for an investor?
No. Low fees may reflect a simple, well-maintained building, but they may also reflect postponed work or inadequate reserves. Higher fees can support necessary maintenance or costly amenities. Compare the building’s condition, services, debts and planned expenditure before deciding whether its contributions represent reasonable value for your intended investment.
My practical advice is to ask what the current levy leaves unpaid. Review several years of budgets and minutes for repeated deferrals. A swimming pool or lift creates continuing maintenance obligations even when owners vote against increasing contributions.
Why does the ten-year capital works plan matter?
The plan identifies expected major expenditure and helps the owners corporation budget for it. It generally covers ten years and must be reviewed at least every five years. Compare the plan with current quotations, the fund balance and actual contributions. A plan on file is not proof that the work is adequately funded.
Since 1 April 2026, new and revised plans must use the standard form. Existing plans were not all required to be replaced immediately. Limited exceptions apply, including qualifying two-lot schemes that unanimously decide not to maintain a capital works fund.
When can a special levy become payable?
A special levy raises additional money when the scheme’s available funds cannot meet required expenditure, such as substantial repairs or an unexpected shortfall. It can arise despite regular quarterly contributions. Check whether a levy has been approved, its purpose, your share and each instalment date, as well as works likely to require future funding.
Levy notices generally allow at least 30 days to pay. A shorter 14-day period applies to qualifying emergency repairs addressing a serious and imminent health or safety threat. Do not assume every urgent-looking project qualifies for the shorter period.
Which strata records should you inspect before buying?
Arrange a strata records inspection before committing to the purchase. Review financial statements, arrears, meeting minutes, the capital works plan, insurance, repair reports, contracts and disputes. Look for decisions that remain unimplemented and expenditure omitted from the budget. A records report is only as useful as the material inspected and the questions followed up.
Section 182 provides an inspection process for scheme records, with the required authority and fee. Obtain advice about missing documents and important findings. A records search does not physically assess the building; arrange suitable building or specialist inspections where needed.
Does a section 184 certificate settle every levy question?
No. A section 184 certificate supplies prescribed information about the lot and scheme, including contributions and outstanding amounts. It complements the records inspection but does not guarantee there will be no future special levy. Have your solicitor check existing liabilities, proposed works and how the sale contract allocates contributions between buyer and seller.
Use the current certificate and update enquiries before settlement. Special-levy allocation can require negotiated contract terms. Do not assume the seller pays every levy discussed before purchase, or that a contractual adjustment removes the owners corporation’s statutory recovery rights.
How should strata fees enter your investment budget?
Allow for both regular funds, approved special levies and a contingency for foreseeable increases. Add other ownership costs and realistic vacancy assumptions when assessing rental cash flow. Gross rent is not the amount available after expenses. Test whether you could meet contributions during a vacancy or a period of substantial building work.
The NSW buying guide recommends examining the scheme’s finances and condition. Compare annual costs rather than one quarterly bill. Ask whether a large bank balance is already committed to contracted works, and whether owner arrears undermine the proposed budget.
Are all strata levies immediately tax deductible?
No. Tax treatment depends on what the payment funds and the property’s income-producing use. Regular contributions for ongoing administration and general maintenance may be deductible, while a special levy for a particular capital improvement is not immediately deductible. The fund’s name alone does not determine the tax treatment of every contribution.
The ATO’s guidance explains that eligible capital expenditure may be claimed over time once the work is completed and charged to the fund. Keep supporting records, avoid claiming expenses twice and obtain tax advice about private use, apportionment and the particular work.
What costs remain yours as a landlord?
Your tenant does not pay your strata levies; they remain an owner’s responsibility. Scheme insurance also does not necessarily cover your contents, rental losses or every landlord risk. Check the building policy’s scope and exclusions, then consider appropriate separate cover and the repairs for which you are personally responsible.
NSW renting guidance confirms who pays strata fees. Read the policies rather than assuming comprehensive landlord protection is included. An individual unit’s condition and tenancy obligations still need attention even when the owners corporation manages common-property maintenance.
What should you do if you cannot pay a levy?
Contact the strata manager or committee promptly, explain the difficulty and request an affordable payment plan through the prescribed process. Do not ignore notices or assume a dispute suspends payment. Overdue contributions can attract interest and recovery proceedings, although current law provides protections and requirements that the owners corporation must observe.
From 23 October 2026, agreed payment plans can also cover interest and contributions already levied but not yet due. Plans cannot be unreasonably refused. Keep paying amounts outside the plan; recovery restrictions depend on the statutory conditions and compliance with the plan.
How can you challenge suspected financial mismanagement?
Start with the records and identify the particular decision, missing information or unmet duty. Raise a documented concern with the committee and obtain advice about an appropriate motion or remedy. Many disputes require Fair Trading mediation before NCAT proceedings. Compulsory management is a significant intervention requiring evidence, rather than an automatic response to high fees.
Check NCAT’s application requirements and available orders. An application for compulsory appointment under section 237 is exempt from the usual mediation prerequisite. Dissatisfaction alone does not establish wrongdoing; match the evidence to the legal ground and outcome sought.
What real NSW case shows the risk of underfunding repairs?
Keeping levies unchanged does not make a scheme financially secure. In Berger v The Owners – Strata Plan 48055 [2025] NSWCATCD 39, NCAT intervened when a Maroubra scheme had serious repair and funding problems. The decision shows why investors should assess common property, financial records and planned works together.
The Tribunal found that management was not functioning satisfactorily. Levies had not kept pace with maintenance needs, major works had been deferred and the scheme lacked adequate funding and a ten-year capital works plan. It estimated that more than $1 million needed to be spent urgently on common property.
On 3 June 2025, NCAT appointed Bright & Duggan to exercise all owners corporation functions for 12 months. This was a management order, not a finding that funds had been stolen or an award of compensation.
How can CM Lawyers help before you buy?
CM Lawyers can review the sale contract, explain strata documents and identify legal questions requiring further investigation before exchange. We can advise on special-levy allocation, contractual protections and relevant dispute options. Your purchasing decision should reflect the scheme’s financial commitments and condition as well as the apartment’s price and expected rent.
For help with buying a strata property or a contract review, call (02) 9557 9000, email lawyers@cmlaw.com.au or contact CM Lawyers. Provide the contract, strata report, certificate and any known repair or levy proposals.
This article provides general information, not legal or tax advice. Obtain advice on your property, contract, scheme and circumstances before acting.
Key resources
Australian Taxation Office — body corporate fees and charges.
CM Lawyers — Buying a property — conveyancing for NSW buyers and investors.
