Showing posts with label levies. Show all posts
Showing posts with label levies. Show all posts

Tuesday, August 27, 2013

Apartment Body Corporate Fees

"Apartment buyers should avoid paying for lifestyle amenities already on their doorstep.  Minimising strata fees is increasingly a priority for apartment buyers eager to make sure the quarterly payments for the upkeep of their buildings don't take too much of a chunk out of their income.  So where there's a public gym or pool near a block, developers will often avoid including them in their plans for the complex to keep costs down."
Source:  Domain Advertorial

Here are some example body corporate levies for a random selection of apartments in Brisbane and the Sunshine Coast:
  • City, one bed - $5,200 a year
  • South Bank, two bed - $6,000 a year
  • City, two bed - $7,000 a year
  • City, two bed - $5,800 a year
  • Suburbs, one bed - $4,400 a year
  • Suburbs, two bed - $4,000 a year
  • Suburbs, two bed - $4,900 a year
  • Noosa, one bed - $5,129 a year
  • Mooloolaba, two bed - $11,820 a year

Sunday, November 4, 2012

To buy or not to buy a Queensland Unit?

See here for a transcript of a conversation with property analysts, as to whether it is too risky to buy an apartment in Qld due to the changing strata laws and levy entitlements.

Wednesday, September 19, 2012

Changes to Lot Entitlements, Again

The Campbell Newman Queensland Government has decided to change the lot entitlement laws, yet again.  This adds more uncertainty for apartment owners and people intending to buy apartments.  It also enables a body corporate to reverse any recent changes made to their lot entitlements under the prior law.  So some apartment buildings will end up having 4 lot entitlement schemes within 4 years.  As a direct result of these changes, some apartment owners will have their body corporate levies increased, and a minority of apartment owners will have their body corporate levies significantly decreased.

The Newman Government is clearly favouring rich penthouse owners over those owning the less desirable apartments in a building.  These changes will create further disharmony in some apartment buildings.

Before buying an apartment in Queensland, you should make sure you fully understand the implications of these changes.

Details see:  SSKB newsletter   (Story about old law that has now been repealed is here.)

Sunday, August 5, 2012

Uncertainties, Risks and Body Corporate Fees

I feel that now is probably a good time to buy an apartment in Brisbane.  Prices are down, and there are many good apartments for sale.  However, there are uncertainties that are holding me back:
  • What will happen if the mining boom comes to an end?
  • Will Newman's retrenchment of 20% of the public service kill any chance of growth for the next 3 years?
  • Will Newman increase land tax rates and lower land tax threasolds in Queensland?
  • What will Newman and the Attorney-General do in relation to the complex issues regarding lot adjustments (that impact the percentage of body corporate fees an individual unit owner will pay)?  If I buy now, will the unit entitlements be adjusted up in the near future so that my body corporate fees will increase?  Will there be costly legal action between the body corporate and various interest groups in the buildings.  See here and here for example.  Changes to this are a priority for the government it seems, to reward penthouse owners for voting for the Liberal party.
So, for the time being, there is too much uncertainty and risk to buy an apartment (or an investment property) in Brisbane or Queensland.

Regardless, body corporate fees and council rates are becoming prohibitively high, and make investing in apartments less attractive.

I looked at an older apartment on the river recently.  It has been on the market for more than 6 months.  It is a 2 bedroom (with a small second bedroom), with river views.  The facilities are moderate -- no doorman, onsite manager, reception desk or the like.  The list price has come down, and is now $455,000.  But the body corporate fees are $8,830 a year, and council rates are $2,000 a year.  So more than $10,000 a year in these expenses.  The rent for this apartment would be about $400 a week, or about $365 a week after real estate agent's fees.  So that is 30 weeks, or more than half a year's rent, just to cover body corporate levies and rates!  Clearly, this is not a good investment, even if the price drops another $100,000.

Post-script -- comment from a reader after this post was published:
Your sentiments re purchasing a unit or apartment in Brisbane reflect my own also, very valid points.
Another is upcoming or planned or approved “future” capital works such as painting, under-pinning, structural repairs, landscaping, tree removals and the like. At a number of units I have looked at, the agents got very cagy when put the question. Pressing one very hard got I wind of a complete paint job coming up within 2 years,  approx $250,000k across 80 units, and unit titles re-appropriation may also make some owners rather unhappy as well. Ouch! Another had $30,000K in quotes not yet voted on (but very necessary since drains were becoming repeatedly blocked by roots) for tree removal. Ouch!  Many units 10 years and over now need a lot of work, much of which has been delayed or put back but  it’s coming. New buyers beware.
Article in AFR, 7 August, P38: Newman at a get together of banks and bizo’s was playing pretend Reserve Bank Chief and instructing banks to start lending. Banks won’t (as we all know), denying they should take risks just for Newman et al. Last para of article states : At a meeting of people from the big four banks recently, one person from one of the big four proclaimed  “We’re not lending anything into Northern Australia. Northern Australia begins at Nundah in Brisbane.”

Saturday, April 14, 2012

Readjustment of contribution schedule lot entitlements

"Much of the animosity between the applicant and the body corporate committee has arisen following his submission to the committee of a motion to reverse contribution lot entitlements to the “pre-adjustment level”. Based on advice that it had obtained from MBA Legal, the committee declined to lodge a new community management statement reflecting “pre adjustment lot entitlements”. As a result, the applicant issued a number of circulars to other lot owners regarding his request for a reversion of lot entitlements.

Within bodies corporate, few issues have been more polarising than the adjustment and/ or readjustment of contribution schedule lot entitlements (CSLE’s) which set the proportion each owner contributes to body corporate expenses. The Body Corporate and Community Management Act 1997 previously provided that in certain circumstances, an owner could apply to the District Court or a specialist adjudicator for an order to have the original entitlements adjusted. Where such an order was made, levies payable by some owners decreased while others increased.

In November 2010 the Minister for Tourism and Fair Trading introduced into parliament a bill to amend the Body Corporate and Community Management Act 1997This bill was passed by parliament in early 2011 and changed the criteria for adjustment of contribution lot entitlements. These amendments also include a procedure for certain owners to seek a reversal of previous adjustment orders. Except in limited circumstances, such as where the adjustment order merely formalized an agreement made by the parties, or there has been a material change such as further subdivision, the body corporate is obliged by the legislation to lodge a new community management statement reflecting the original lot entitlements. Where such action is taken, levies payable by some owners decrease while others increase.

Given that all lot owners are members of the body corporate, it is important that they have an opportunity to air any grievances and have input into the management of the scheme. Owners often have opposing views on various matters, but in my view robust discussion and debate is an important part of body corporate decision-making. This requires that, within reason, all owners feel free to express their point of view without unreasonable threats of defamation proceedings."

See Q1 Decision

Sunday, February 21, 2010

Body Corporate Levy Rules to Change

From a SSKB Newsletter:


The share that each owner pays to their body corporate levies may change, yet again, when the government commences new laws about how contribution lot entitlements are calculated.

In a major omission that the changes to body corporate lot entitlements made in 1997 were unfair to many, the Queensland Minister responsible for body corporate law, Peter Lawlor, today announced that the basis for setting lot entitlements will revert to the principles used prior to 1997.

Under the 1997 principle the entitlements must be equal unless it is just and equitable for them to be otherwise. This principle changes under today’s announcement.

For standard format plans contribution entitlements will be based on the unimproved capital value of the land – so it will be similar to land tax and your council rates.

For building format plans (apartment style dwellings) the system will be a combination of factors that the minister describes as “market conditions and property value”. The impact of this will need to be considered once the legislation is finalised.

It appears clear that this new “old system” will apply to new developments. However, it is unknown what will happen to developments that are currently being sold off the plan.

Any body corporate where the lot entitlements have already changed from the pre 1997 system to the 1997 system because an owner made an application to have the entitlements altered are in for some more substantial upheaval as the Minister has stated the new law will see the entitlements revert to the way they were before.

At this stage the announcement lacks detail. It is unclear what happens to developments that were completed under the 1997 system and have used that principle for calculating entitlements instead of the new principles.