health of the strata finances - NSW

[noobhomebuyer]

Looking to buy my first home - a 3 BR townhouse in Baulkham hills NSW, its 20 years old, one of the things that concerns me is the strata $1000 per quarter

Being new to all of this, I want to understand the state of the strata finances/health respective to everybody else'

This is a small complex of 3 houses, common drive way, external fence and gardening being shared responsibilities, no pool, no lifts etc.

Admin cost is 650 per quarter, sinking fund is 350 per quarter, Admin funds are about $4000 in surplus, and sinking funds are $12,000 currently. No special levy or works anticipated.

Is this considered healthy state of strata or risky? Is the admin fund too dear for a small complex like this? Do ask me more questions, I do have details on the break up of the admin fund.

 

[luckyone]

Did you get a breakdown on what the costs are spent on. I'm also in a relatively small complex (10 townhouses) and pay just over $500 a quarter including all gardening costs. Not sure why yours would be so much more expensive.

 

[noobhomebuyer]

Thanks for replying luckyone. I have listed the breakup below and am keen to know how it stacks up against the general public spend (I understand there are a few variables here). It would be nice to know if there is areas to improve as there are only 3 houses and am sure everybody would love to 'spend less' for similar/comparable services.

Administrative costs breakdown
~~~~~~~~~~~~~~~~~~~~
Agent disbursements ~$400
Audit Services ~$400
Insurance premiums ~$3000
Maint (Electrical,General, Lawns, Pest, Plumbing, Drain, Roof) ~2500
Management Fee ~$1200
Taxation ~$750
Trades compliance ~$250
Utility-Electricity ~$300

 

[Wake]

Hi,

In my experience for a block of 3 in Sydney:

Agent disbursements quite high
Audit service quite high
Ins premium fine
Maintenance fine
Management fee very low
Taxation ridiculously high!!!!
Trades compliance too high (the company used by most strata managers to provide this service is about $60pa - even if the manager added a bit for their time in facilitating this, $250 cant be justified)
electricity fine

The purpose of the Admin fund is not to collect a surplus - this is your working account, but depending on when the insurance is due funds can build up, and then deplete quickly as this is the single biggest expense.

Without seeing the complex and knowing the construction of the buildings ie brick or rendered, $12k sinking fund would seem OK for a block of 3 being 20yrs old, if the complex looks well maintained.

Sometimes being in a smaller block means levies are higher. There are certain compulsory insurances which costs the same regardless of whether its a block of 3 or 33 eg legal liability, voluntary workers etc. Also the same with lawnmowing - if its basically the street grass and a bit in the front of the complex, this cost would be spread amongst more owners if the complex ran further down the driveway with more units, but no additional grass.

It is fairly pointless trying to compare levies with another block. Even if two blocks side by side were identical you could find that in one block an owner cuts the grass while next door they pay someone. One block may choose office bearers liability cover while next door may not. So its never apples for apples.

Hope that helps a little.

Wake

 

[noobhomebuyer]

Thanks Wake, that was very insightful.

I am at the point where I agree on the price and everything I like about the house, the only thing that is holding me off is the strata. The building has reasonably healthy sinking funds, no major repairs planned (atleast as per the strata searches) and is a small lot of 3. Its a small complex with minimal ongoing work. But $1000 pq will eat into my savings

As identified, some of the costs seem high and there are a few areas where admin cost could possibly be reduced. Are these strata companies easy to talk to if you approach them directly? It will be nice to get some rough quotes which if offering significant difference, I can use to convince the 2 other owners to consider.

Confused :S

Has anybody been there, done that?

Hi,

In my experience for a block of 3 in Sydney:

Agent disbursements quite high
Audit service quite high
Ins premium fine
Maintenance fine
Management fee very low
Taxation ridiculously high!!!!
Trades compliance too high (the company used by most strata managers to provide this service is about $60pa - even if the manager added a bit for their time in facilitating this, $250 cant be justified)
electricity fine

The purpose of the Admin fund is not to collect a surplus - this is your working account, but depending on when the insurance is due funds can build up, and then deplete quickly as this is the single biggest expense.

Without seeing the complex and knowing the construction of the buildings ie brick or rendered, $12k sinking fund would seem OK for a block of 3 being 20yrs old, if the complex looks well maintained.

Sometimes being in a smaller block means levies are higher. There are certain compulsory insurances which costs the same regardless of whether its a block of 3 or 33 eg legal liability, voluntary workers etc. Also the same with lawnmowing - if its basically the street grass and a bit in the front of the complex, this cost would be spread amongst more owners if the complex ran further down the driveway with more units, but no additional grass.

It is fairly pointless trying to compare levies with another block. Even if two blocks side by side were identical you could find that in one block an owner cuts the grass while next door they pay someone. One block may choose office bearers liability cover while next door may not. So its never apples for apples.

Hope that helps a little.

Wake

 

[Wake]

Based on my calcs, even if you could reduce the 4 items I believe are expensive compared to a more normal industry amount, assuming all 3 units pay the same amount of levies, it would only save each of you about $95 per quarter. Although you could potentially save money in those areas, they are not the high cost items in the budget unfortunately.

Therefore, changing strata managers would not achieve the reduction you are looking for.