If you are buying a unit or townhouse, body corporate fees are an ongoing cost you cannot opt out of, and the level of those fees tells you a great deal about the building. The instinct is to look for the lowest fees, but the lowest fees are often the warning sign. Here is how to read them properly before you buy.
What the fees actually pay for
Body corporate fees split into two funds. The administrative fund covers day-to-day running costs: building insurance, common-area cleaning, lift servicing, gardens and management. The sinking fund, or capital works fund, is the long-term reserve for major expenditure like roof repairs, façade restoration, plumbing and lift replacement. Both matter, but the sinking fund is the one that buyers most often ignore and the one that causes the most expensive surprises.
The red flags to watch for
Several patterns should make you cautious. Suspiciously low fees are the big one: a building charging well below comparable properties is often skimping on maintenance and underfunding its sinking fund, which leads to a special levy down the track. The classic trap is buying in on $400 quarterly fees and copping a $15,000 special levy six months later when the façade needs urgent repair. Other warning signs include fees rising rapidly, frequent special levies, a depleted sinking fund balance, and ongoing disputes or litigation within the scheme.
What to request before you buy
Do not take the advertised fee at face value. Order a body corporate or strata search before you exchange, and read it. Check the current sinking fund balance and the most recent capital works statement, review the financial statements, and read the meeting minutes for any planned works, recent special levies or disputes.
JSC Property Investments digs into the body corporate detail most buyers skim over. Book a Kickoff Call with our team and buy with nothing hidden in the fine print.