Understanding Strata Levies: Where Does Your Money Go?

If you own a unit, apartment, or townhouse in a strata scheme, you pay levies. They're the regular contributions that fund everything from keeping the lights on in the lobby to saving for major repairs down the track.

Think of levies as your share of running a building. Just like a homeowner pays for their own maintenance, strata lot owners collectively pay for the maintenance of shared spaces and infrastructure.

Every strata scheme in Australia is required to maintain two separate funds:

Administration fund: This covers the day-to-day running costs of the building. Common expenses include:
- Building insurance premiums
- Strata management fees
- Cleaning and gardening
- Utilities for common areas (lighting, lifts, water)
- Minor repairs and maintenance
- Fire safety inspections
- Pest control

Capital works fund (sinking fund): This is your long-term savings account for major repairs and replacements. Think of it as the building's retirement fund. Typical capital works include:
- Exterior painting (every 10-15 years)
- Roof replacement or repair
- Lift upgrades or replacement
- Waterproofing
- Plumbing or electrical upgrades
- Driveway or car park resurfacing

A professional capital works plan (usually prepared by a quantity surveyor) maps out expected major expenses over a 10-year horizon and determines how much needs to be saved each year.

Levy amounts are determined at the Annual General Meeting (AGM) based on the scheme's annual budget. The total budget is divided among lot owners according to their unit entitlements.

Unit entitlements are a number assigned to each lot when the strata plan is registered. They're usually based on the lot's relative value compared to other lots in the scheme. A penthouse with harbour views will have higher unit entitlements than a ground-floor studio — and will pay proportionally more in levies.

For example, if the annual budget is $100,000 and your lot has 10% of total unit entitlements, your annual levy is $10,000 (typically paid quarterly at $2,500).

Sometimes the regular funds aren't enough to cover an unexpected expense — an emergency roof repair, legal action, or a defect that needs immediate attention. When this happens, the owners corporation can raise a special levy.

Special levies require approval at a general meeting and are calculated using the same unit entitlement formula. They can be substantial — tens of thousands of dollars per lot for major building defects — which is why maintaining adequate capital works funding is so important.

A well-funded capital works plan is your best protection against surprise special levies.

Your quarterly levy notice should show:
- The total amount due and the due date
- A breakdown between administration fund and capital works fund contributions
- Any arrears from previous quarters
- Interest charges on overdue amounts (if applicable)
- The payment method (bank transfer, BPAY, etc.)

If any of this is unclear, ask your strata manager or committee treasurer for a breakdown.

One of the most common frustrations for lot owners is not knowing where their levy money goes. A $3,000 quarterly bill feels very different when you can see exactly how it breaks down — $800 for insurance, $500 for cleaning, $400 for the strata manager, $300 for utilities, $200 for repairs, and $800 into the capital works fund.

This is exactly the kind of visibility that tools like Planform provide. Instead of waiting for an annual financial statement, committee members and owners can see real-time budget tracking, expenditure breakdowns, and capital works fund projections — all visualised on an interactive dashboard. When everyone can see where the money goes, trust in the committee goes up and complaints go down.