The joys and pains of Body Corporate.
This is a topic that I would spend most of my time explaining to people, and if you have ever looked at buying an apartment especially in Surfers Paradise, then you will know we have some of the highest body corporate fees around. They can range from $100-$220 a week for a 2 bedroom 2 bathroom apartment in a high-rise building.
Expect the fees: you just can’t have that many apartments and residents, living in one place without sharing the costs associated with running a complex. Make sure that the costs are justified in the body corporate and that there is sufficient money in the sinking fund. This will cover any upcoming major repairs or upgrades needed for the complex. In newer buildings you will find that the body corporate does seem to be higher than in some of the older buildings, there is a reason for this as I will explain later
Body corporate fees cover a range of services including the maintenance of the complex, gardens, pools, lifts, on-site managers, electricity for the common areas and any other amenities that the complex has to offer. The more amenities the complex has, the higher the cost will be. While the cost will be more, your lifestyle or that of your tenants will be better. This will increase your rental returns and also the future value of your property.
Compared to other forms of property ownership, your body corporate is easy to budget for, as it covers building insurance and all exterior maintenance. All you only have to look after really is anything internal of the property.
How to work out how much the body corporate is?
This can be tricky as most agents will leave out as much information as they can. Here in Queensland, our body corporate is broken up into parts, administration and insurance are sometimes together, but can be separated and the sinking fund contributions. You will receive a bill every 3-4 months with the total amount due; some buildings have a discount from 10-20% if paid before a date, most agents will quote this to you as the corporate body fee.
Another thing to make sure that the price you are thinking is the whole amount and includes all of these parts, as you may be in for more than you bargained for otherwise. The administration fund is to cover the day-to-day running of the building. Building insurance is to cover the building for any insurance claims. Lastly, the sinking fund is there to cover upgrades and refurbishment of the building.
Special levies what are they?
From what I have noticed body corporate in the newer buildings, does seem to be run differently from the older buildings. Usually, you will find that they have more than enough money in them, to make sure they have the funds to keep the building looking and running smoothly. Older buildings that haven’t had any work done or only minor items fixed can sting you with a special levy. This means that the sinking fund for the building does not have sufficient funds in place to fix what needs to be done.
The way the body corporate raises funds to fix these things is by charging the owners in the complex a special fee to make sure that these issues are fixed. You may be in for a shock if you don’t make sure that you check if these items are coming up. They can range from as little as $5,000 up to and exceed $25,000. The work that the body corporate may be wanting to do may not all be covered by the body corporate. Some windows and doors are a tricky issue and one that I suggest you do your research into before buying.
Once you have found that perfect apartment for you, the best way to find out about the building is to go and talk to the building managers. Just a tip if you are wanting to get information out of building managers, mention that you are thinking of renting the unit out with them, you will find that they will be more helpful.
In Queensland, before you sign a contract of sale, a body corporate disclosure statement must be included. In this is the costs of the fees, the amount in the sinking fund and where the money has been spent for the body corporate. It pays to get your solicitor to look at the corporate body statement and also the last minutes of the body corporate. They will make you aware of anything that you should know about the complex if there is anything.
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Until next time as always, do your research before putting pen to paper.
Happy investing and have fun.
Thank you for taking the time to read this post, I would love to hear about your experiences with your body corporate.