Keeping your body corp fees down: Here’s what you can do!
Owning an apartment comes with lots of lifestyle advantages and it’s no surprise the trend to city living continues to gain momentum in the Sunshine State. At the end of 2018 we had almost 490,000 Queensland apartments (and townhouses and other community title dwellings) in almost 50,000 body corps. That rose 3.5% in just one year and inner-Brisbane has been a big chunk of that growth. And what also continues to grow is our annual body corp fees. Many of us feel decisions on expenses are out of our hands, but there are things you do.
We took a look back at the last 50 listings our sales team have handled and averaged the body corp fee. It was $4876pa. This was a mix of smaller walk-up style buildings and townhouses with no amenities (the $2,500 to $3,500 range); buildings of all sizes with lifts and onsite caretakers ($4,500 to $6,500); and then there’s those with some kind of maintenance challenge or ‘catch-up’ happening to prepare for a big expense ($7000 to $11,000). And apart from management expenses to run these (plus some annoying compliance costs), there’s no reason expenses should add up to more than what you pay in houses. That’s of course if you had a gardener, pool cleaner, mandatory maintenance piggy bank, lifts, a gym, etc etc!
Where we often see body corp fees start to creep up is when a manager is pretty much left unsupervised in the admin of the building. Peter Cassels of Brisbane’s Cassels Strata says an interested and active committee is important in giving the managers guidance, and getting a large number of lot owners to consider the budget and attend the AGM is also helpful. “Costs do rise over time but reviewing contracts like lift maintenance and electricity expenses is a great way to find savings. Putting major items out to tender will often result in big reductions”. Peter says owners should be questioning each line item in the budget.
When does your manager’s own contract come up for renewal? Often they have just one year terms and these are usually rolled forward, voted on at the AGM, but without any competitive submission from alternate managers. Owners may feel it’s better to stick with someone that knows the buiding, and they’re often right. But what premium might you be paying? Any owner can source a proposal from another body corp manager and submit it as a motion for voting at the AGM. (Unsurprisingly the would-be manager will help you write that motion!)
Over-insurance is another symptom of group-think, with lot owners not prepared to question why their 6 pack of small apartments might have an apparent replacement cost of $2m for example! No-one wants to risk the sum being too low, but it’s not hard to get advice on construction costs and at least get the sum insured (and its premium) back to something reasonable.
And here’s one that’s topical right now. Your body corp has just received its annual land valuation notice from the government, and it’s this sum Council will use to determine your rates. And the friendly team at Office of State Revenue will use this to squeeze you for land tax if you’re an investor and lucky enough to tip their threshold. Like any house’s land valuation the body corp can appeal this, and there are valuation firms available at fairly affordable fee to do all the work on this. This can have an immediate reduction (or stop an increase) on your property expenses. Don’t be afraid to speak up!
We know it’s easier to let other owners in your building worry about the body corp fees and decision-making. But doing that will cost you money. Savings are there for those buildings with owners who get involved.
Share your ideas on trimming your body corp fees. Got a tip for the rest of us?!