Body corporate fees are an essential part of owning a unit-titled property, ensuring the smooth operation and maintenance of shared spaces. By understanding what these fees cover and how they’re calculated, you can plan your finances more effectively and avoid surprises.
Owning a unit-titled property in New Zealand comes with shared financial responsibilities. As a member of a body corporate, you’re required to contribute to the costs of maintaining and managing the shared property. These contributions are typically paid through body corporate levies.
In this article, we’ll explain what body corporate fees are, what they cover, and how they’re calculated, helping you better understand and plan for these essential costs.
What Are Body Corporate Fees?
Body corporate fees, also known as levies, are regular payments made by unit owners to cover the expenses of managing and maintaining the property. These fees are essential for:
- Keeping shared areas in good condition.
- Ensuring the property complies with legal requirements, such as insurance.
- Funding long-term maintenance to preserve the value of the property.
What Do Body Corporate Fees Cover?
The specific costs covered by body corporate levies can vary depending on the property’s size, type, and amenities. Common expenses include:
1. Maintenance and Repairs
- Routine upkeep of common areas, such as cleaning, landscaping, and painting.
- Repairs to shared infrastructure, like roofs, elevators, and plumbing.
2. Insurance
- Building insurance, which covers the structure against damage from fire, natural disasters, and other risks.
- Public liability insurance, which protects against claims for injuries or accidents in common spaces.
3. Administration Costs
- Fees for organizing meetings, preparing budgets, and managing financial accounts.
- Payment for professional services, such as accountants or body corporate managers.
4. Utilities for Shared Spaces
- Electricity for common areas, like lighting in hallways or power for elevators.
- Water or gas used in shared facilities.
5. Long-Term Maintenance Fund
- Contributions to a reserve fund used for major projects, such as replacing roofs or upgrading infrastructure.
How Are Body Corporate Fees Calculated?
The amount each owner pays is determined by their ownership interest, which reflects the relative size or value of their unit compared to the entire property. This calculation is outlined in the Unit Titles Act 2010 and included in the property’s body corporate documents.
Key Factors Affecting Fees:
- Size of Your Unit: Larger units typically have higher ownership interests and pay a greater share of fees.
- Property Features: Amenities like pools, gyms, or elevators increase maintenance costs and, consequently, levies.
- Maintenance Needs: Older properties or those requiring significant repairs may have higher levies to cover these expenses.
Types of Body Corporate Fees
Body corporates may impose different types of fees based on the property’s needs:
1. Regular Levies
- Collected annually, quarterly, or monthly, these cover ongoing expenses like maintenance and insurance.
2. Special Levies
- Raised to fund unexpected costs or major projects not covered by the regular budget, such as urgent repairs or upgrades.
3. Contingency Contributions
- Funds set aside for unanticipated future expenses, ensuring the body corporate is financially prepared for emergencies.
What Happens If You Don’t Pay Body Corporate Fees?
Failure to pay levies on time can have serious consequences, including:
- Penalties: Late payment fees may be applied.
- Debt Collection: The body corporate can take legal action to recover unpaid levies.
- Impact on Property Sales: Outstanding levies must be settled before selling your property.
How to Budget for Body Corporate Fees
- Review the Budget: Request the body corporate’s annual budget to understand expected costs.
- Check the Long-Term Maintenance Plan: Ensure the body corporate is planning ahead to avoid sudden special levies.
- Factor in Levies When Buying: When purchasing a unit-titled property, ask for the body corporate’s financial statements to assess levy amounts and financial health.
Questions to Ask Before Buying a Unit-Titled Property
If you’re considering buying a property with a body corporate, ask the following:
- What are the current levies, and have they increased recently?
- Are there any upcoming special levies or major projects planned?
- Is the body corporate financially stable with adequate reserves?