Strata schemes must follow rules about how they manage finances. Including rules about levies, funds and planning for the future.
Last updated: 30 May 2024
Contact your strata manager or strata committee, see a financial counsellor, talk to your bank and access resources from the National Debt Helpline.
All owners are charged a yearly levy (sometimes called a ’contribution’ or ’fee‘).
This pays for a range of costs that keep your complex (scheme) running smoothly and in good condition, such as:
The treasurer or strata manager works out the levy amount that each owner pays. This is based on their ‘unit entitlement’. The owners corporation decides how often you need to pay levies.
What is unit entitlement?‘Unit entitlement’ is a number assigned to your property that’s based on its value in the scheme when the scheme was first registered. This is usually before the first residents move in.
It is different from your property’s number or address. The strata plan lists each property’s unit entitlement. You can get a copy of the strata plan by contacting a member of the strata committee.
Not all lot owners have the same unit entitlement – it is based on the value of the property they own.
For example, there are two lots in a strata scheme. One lot may be larger, or is placed in a better position, and so has greater value than the other lot. If there is a total unit entitlement in the scheme of 100, then the more valuable property’s unit entitlement may be 60 and the other property is 40.
The owners corporation must give lot owners written notice of the levies to be paid including at least 30 days’ notice to pay.
Owners corporations can request payment of levies in 14 days, instead of 30 days, only where the levy is for necessary repairs to address a serious or imminent threat to occupants’ health or safety.
If you are experiencing financial hardship and cannot pay your levies on time, contact your owners corporation and strata manager as soon as possible and ask to have a payment plan put in place.
The owners corporation can arrange a payment plan for an owner owing money. If you are having difficulty setting up a payment plan, lot owners are encouraged to seek the assistance of NSW Fair Trading, which provides free mediation services.
Payment plans usually last for up to 12 months. The owner can ask to extend this period if they need to.
Expand all Collapse all What is needed to set up a payment plan?You can ask the strata committee to give you a statement for your payment plan.
The statement should show what has been paid, what's still to be paid and any interest.
The payment plan statement must also include:
If you don’t pay your levies within one month of the due date, you are charged interest at the rate of 10% simple interest per year.
The owners corporation can’t increase or decrease the interest amount, but it can charge no interest.
Can I be charged the debt recovery expenses?The debt recovery expenses can only be charged back to you if there is a Tribunal or court order.
The Tribunal or a court may order a lot owner to pay:
If you need more information about payment plans to help you pay your strata levies, or access to a free financial counsellor, visit the National Debt Helpline website. It provides clear steps to take if you are struggling to pay your strata levies.
You can also call the National Debt Helpline on 1800 007 007.
Banks and mortgage lenders have various options to help customers facing financial hardship which may include:
For example, if a strata owner negotiates with their bank to add the cost of a levy to an existing mortgage, they may benefit from:
If a strata owner does not have a mortgage, they may be able to draw down on the equity of their home using a reverse mortgage product offered by some banks and financial institutions.
Utilities and energy providers may be able to provide options to help people in financial difficulty. For example, allowing more time to pay a bill or helping to set up payment in instalments.
The owners corporation can take action in the NSW Civil and Administrative Tribunal (if other proceedings are before the Tribunal) or a court to recover the levies, any reasonable recovery costs and any interest owing. Action can be taken even if a payment plan exists.
The owners corporation can only do this if it has given the owner 21 days’ written notice of the action. The notice must include the amount of the contribution, interest and expenses to be recovered, and how the owners corporation proposes to recover the money.
An owner may also be ordered to pay reasonable costs based on what the owners corporation has spent to recover the unpaid levies. However, reasonable costs can only be recovered by order of the NSW Civil and Administrative Tribunal or court.
Generally, taking action in court should be a last resort.
Having a lot owner on a payment plan may affect other strata owners, who may need to cover the gap in funds. If so, the owners corporation may wish to ask their bank about accessing a credit facility to cover the gap and explore other funding sources.
Every strata scheme must have funds. They are set up to keep the levies paid by owners.
The everyday fund
An administrative fund manages the day-to-day costs of the strata scheme.
This includes maintaining common property, paying for insurance and other regular costs such as electricity, water, carpet cleaning and garden maintenance.
The fixing and maintaining fund
A capital works fund (previously called a ‘sinking fund’) is used to pay for capital expenses when they happen.
Capital expenses include:
Planning for something big
Your strata scheme needs to make a 10-year plan of expected major work that will be paid with the capital works fund.
The 10-year plan must start from the first AGM of the owners corporation and be reviewed at least every five years. The plan must be considered at each annual general meeting (AGM). Any changes, revisions or new plans will require a vote.
The 10-year plan and the amount required in the capital works fund will differ between strata schemes and should consider things like the age and features of the building.
Sometimes, the owners corporation may make agreements with owners to provide some services. For example, Pay TV services or high-speed internet.
As these services are voluntary, the owners corporation can create funds specifically for them. To do this, the owners corporation must pass a resolution at a general meeting.
Interested owners can then choose to pay the costs of the service into the fund to access it.
This allows extra services to be provided to particular owners, without passing on the cost to owners who do not wish to use the services.
The strata committee is responsible for making and keeping all financial records for at least seven years.
It also needs to make new ones for every reporting period (usually 12 months). The start and end dates for the reporting period can change slightly year-to-year, so check with the owners corporation secretary or strata manager.
A key financial statement for each fund is sent to every owner before the annual general meeting. Many strata schemes also choose to send out the full financial statements for the last reporting period with the notice of the AGM.
A ‘key financial statement’ is a record that must be sent to each owner before every annual general meeting.
The key financial statement must include::
From 11 June 2024, records which strata schemes are required to keep must be kept electronically. This applies to new records created from this date.
Some types of schemes have different rules for finances.
Two-lot schemes have rules such as:
Large strata schemes with more than 100 lots have rules such as:
Your strata scheme must have certain types of insurance. Individuals are responsible for insuring their personal property (for example, contents insurance). For details, visit the Managing strata finances and insurance page.
If you have any further questions about strata, you can contact Fair Trading via phone or in-person at a Service NSW centre.
