Strata levies are the number that isn't in the ad

Two apartments at the same price can cost thousands a year apart to hold. In Australia the difference sits in a strata report most buyers never ask for until after they have bid.

The advertised price is negotiable. The levies are not, and they arrive every quarter for as long as you own the apartment.

What you are actually buying into

Buying into a strata scheme — an owners corporation, a body corporate, depending on which state you are in — means buying a share of a building and a share of its obligations. The building has a budget: insurance, cleaning, lifts, common-area power, gardening, management, repairs. Your levies are your slice of it, set by your lot entitlement rather than split evenly.

There are generally two funds, and the distinction is the whole article. The administrative fund covers this year’s running costs. The capital works fund — the sinking fund — is money set aside for the expensive things that eventually arrive: roofs, lifts, waterproofing, façade repair, repainting.

Why a low levy is not automatically good news

A scheme with a thin capital works fund has lower levies today and an unfunded problem tomorrow. When the work becomes unavoidable it is paid for either by a sharp rise in levies or by a special levy — a one-off demand, sometimes a very large one, on whoever owns the lot at the time.

That may be you, three months after settlement, for work that was foreseeable for years.

So the useful question is not “are the levies low” but “is the budget realistic for this building’s age and condition”. A well-run older building with honest levies is a better purchase than a neglected one with cheap ones.

The strata report is the document that answers it

A strata search — a strata inspection report — is an inspection of the scheme’s records. It is not expensive relative to the purchase and it is the only way to see the things the listing will never mention:

The balance of both funds, and whether the capital works fund is being contributed to seriously or nominally.
Minutes of recent meetings. This is where you find the leak nobody has fixed, the cladding question, the dispute with the builder, the levy rise that has been discussed but not yet struck.
Special levies already raised or proposed.
Defect history and any building work, including whether the scheme is in dispute with a developer or builder.
Arrears across the scheme. A building where many owners are behind is a building with a funding problem coming.
By-laws — pets, renovations, short-term letting. If your plan for the apartment depends on any of those, read them before you bid, not after.

What this means at auction

Australia’s auction culture makes this urgent rather than merely wise. A property bought at auction is generally bought unconditionally: there is usually no cooling-off period on an auction purchase, and no opportunity to make the contract conditional on what the strata report says.

Which means the report has to be ordered, read and understood before the day. Buyers who plan to sort the searches out afterwards are planning to find out what they bought after they own it.

The directory angle

An agency that works heavily in strata stock is doing a different job from one selling freestanding houses — different documents, different disclosures, different questions from buyers. That focus is a fact about a business, which is the sort this directory records. It is not a ranking, and there is no scoring here of any kind.