Ridiculous strata fees gripe (again)!

[stevie_sloth]

I recall someone on this forum once said the strata fees for a building should be fairly in line with their purchase price. So if you paid $330,000 for the property, the strata fees could be around $35-$40 a week perhaps.

Well. Firstly there is my own complex. We paid $337,000 and the strata fees are $62 per week for a pool, common grounds and insurance. Seems steep to me. 15 units. 3 storey walk-up.

But what really got me to start this thread is an advertisement I saw yesterday for a similar property (10 units and older style, 3 storey walk-up). The property was priced at $349,000 and the strata fees were $90 a week! WHAT THE!?!? It had a pool. Not much of a garden. No lift. WHY!?!?!?!?! Upcoming required maintenance to the old building perhaps?

On a happier note, we have found our absolute dream property. We are in love completely. Sadly, it is for now out of our price range AND we have not put our own place on the market yet but we are doing so in the next month or so. The property is waterfront, 3 bedrooms, bathroom, separate toilet, ensuite, huge laundry, ENORMOUS living area, lovely kitchen, 2 balconies, first floor in a 3 storey walk-up of 6 units. The strata fees are $35 a week. No pool. THANK GOD. Something normal.

 

[kittykat]

I've never heard about the strata fees reflecting a sale price. I've always seen strata as reflecting the size of the complex and the quality of the facilities.

For example, there is a gated community near where I work, where sale prices are around the $220,000 figure, and the body corp is about $100 a week. The facilities are basic (pool, tennis court), but the estate is huge.
Where I own is currently selling at about $270,000, which has less units, but the same facilities, and is $50 a week.
Then there is another major estate close by with amazing facilities, including beach volley ball and a gym, which is also $100 a week. The selling price in there is about the $280,000 mark at the moment.

Congrats on finding your dream home... sounds great!

 

[Propertunity]

I've never heard about the strata fees reflecting a sale price.

Me either!

There are 2 components to strata fees: administration fund & sinking fund.
Admin fund takes care of day to day maintenance (grass cutting, gardens, light bulbs in common areas, cleaning of common areas, pool mtce if there is one, insurance policies - building, etc)
Sinking fund is really for capital works - roof replacement, balcony railings, fire door replacements/upgrades, major painting etc.

High fees can mean trouble with the building needing urgent maintenance or the BC has decided to build up the fund for a major upcoming expense.

BUT low fees can mean no-one cares enough to do anything or spend any money on keeping the place in good repair. Often common areas are unkempt etc.

In both cases you need to look into "why?"

 

[wylie]

On a happier note, we have found our absolute dream property. We are in love completely. Sadly, it is for now out of our price range AND we have not put our own place on the market yet but we are doing so in the next month or so. The property is waterfront, 3 bedrooms, bathroom, separate toilet, ensuite, huge laundry, ENORMOUS living area, lovely kitchen, 2 balconies, first floor in a 3 storey walk-up of 6 units. The strata fees are $35 a week. No pool. THANK GOD. Something normal.

Is this the same property you fell in love with a while ago? Or something you have just recently found?

I wonder if you know what happened with the other one (assuming this is not it)?

With prices being what they are on the coast, fingers crossed this one might still be for sale once your place is sold, and you might get it for less than you think?

 

[stevie_sloth]

Thank you!

I also thought the size and facilities in a complex were the main factors contributing to the strata fees, but sometimes it doesn't seem to be the case.

There's a huge complex near where we used to live...3 pools, 2 spas, a sauna, 2 gyms, a tennis court, mini cinema, corner shop all on the private premises. Plus obviously common areas and insurance. No lifts (3 storey walk-up set around lush extensive gardens). Strata is $70 a week.

Our building, as I said above, is $62 a week for just 1 pool. Minimal nice gardens. Insurance. Common areas. Only $8 less per week than the above property seems odd.

Also, one building I forgot to mention in my initial post consisted of 10 90s-built 2 bedroom units. Absolutely NO garden at all. Just a small concrete strip and then a driveway. Parking out front of each unit (2 up, 2 down style small units in a row). No pool. No facilities. $80 a week. I do not GET it!!

 

[Ed Barton]

I recall someone on this forum once said the strata fees for a building should be fairly in line with their purchase price. So if you paid $330,000 for the property, the strata fees could be around $35-$40 a week perhaps.

Well. Firstly there is my own complex. We paid $337,000 and the strata fees are $62 per week for a pool, common grounds and insurance. Seems steep to me. 15 units. 3 storey walk-up.

But what really got me to start this thread is an advertisement I saw yesterday for a similar property (10 units and older style, 3 storey walk-up). The property was priced at $349,000 and the strata fees were $90 a week! WHAT THE!?!? It had a pool. Not much of a garden. No lift. WHY!?!?!?!?! Upcoming required maintenance to the old building perhaps?

On a happier note, we have found our absolute dream property. We are in love completely. Sadly, it is for now out of our price range AND we have not put our own place on the market yet but we are doing so in the next month or so. The property is waterfront, 3 bedrooms, bathroom, separate toilet, ensuite, huge laundry, ENORMOUS living area, lovely kitchen, 2 balconies, first floor in a 3 storey walk-up of 6 units. The strata fees are $35 a week. No pool. THANK GOD. Something normal.

i too have never heard of strata fees having any relationship to price. 62pw for your place if it has a decent sinking fund doesn't sound to bad. Pools in units are very expensive to maintain.

your in love property - 35pw sounds cheap. what's the sinking fund and future maintenance look like? again, pools in units are very expensive to service so could be the reason.

 

[Propertunity]

I do not GET it!!

Yeah, I can see that

The fees are also a function of the number of units in the building. eg let's say the pool costs $2,000 a year to maintain (just by way of example). In a 50 unit complex that equates to $40pa ec or 77c per week per unit owner.

Put the same thing into a block of 5 units and the fees (for the pool only) increase 10 fold.

 

[stevie_sloth]

Is this the same property you fell in love with a while ago? Or something you have just recently found?

I wonder if you know what happened with the other one (assuming this is not it)?

With prices being what they are on the coast, fingers crossed this one might still be for sale once your place is sold, and you might get it for less than you think?

Ah yes, the other one. I was never in love with that one. I really liked it and we would've been happier there, but it was not my dream home.

Anyway, it sold. We could not stretch to what the seller wanted (which was realistic and reasonable), and then it sold shortly afterwards. I have emailed the agent to find out how much it sold for, but so far have not heard anything back. I assume around $335,000-$340,000. The seller was prepared to sell it to us for $335,000 if we could have managed it.

 

[stevie_sloth]

i too have never heard of strata fees having any relationship to price. 62pw for your place if it has a decent sinking fund doesn't sound to bad. Pools in units are very expensive to maintain.

your in love property - 35pw sounds cheap. what's the sinking fund and future maintenance look like? again, pools in units are very expensive to service so could be the reason.

Hmm, I don't know what the sinking fund and future maintenance are for our dream property. We just inspected it on Saturday and we have done nothing further yet.

What we did with the last place we wanted, was make a low offer subject to selling our own place. It was very complicated and we were lucky to get a seller that would even negotiate with us. But it was also setting us up for disappointment even if we could have gone to the price he wanted, because then if we couldn't get our place sold in time or for a sufficient price, we would still have lost the place.

We don't want to screw people around again ideally, so until we can move forward and make an offer on this one, we wouldn't be looking into sinking funds, etc just yet.

This property does not have a pool. What it does have is a minimal but very neat front grassed area, a clean and well maintained stairwell / foyer, and a well kept back grass area with palms and other trees on the waterfront (river / canal). I think there is a jetty there too.

 

[exsyd]

When I think of ridiculous strata fees, I think of this place:

http://www.domain.com.au/Property/For-Sale/Apartment/NSW/Sydney/?adid=2009039444

Now, you could argue it might be a typo, but judging by the auction price guide, I don't think so. And I'm aware of other commercial/residential buildings with huge strata fees, although none quite that extreme. I'm amazed it sold!

 

[Ed Barton]

pools -

they need regular vacuuming. if it's your house pool you just leave the creaky crawling in all the time and swim around it. if you leave an automatic vac in a unit pool the little poos in unit 1 will be treating it like a toy and break it within a week. so someone has to fix it up for a three hour run and take it out again. you might get away with every other day in a unit pool. so put in > take it out x 3 times per week = 300-600pw. it takes very little time, but the call out fees are a killer. if the retiree in unit 2 can do it for nothing then it save BC the above amount.

this time of the year with no rain the pool with need topping up with water twice a week. that's another call out fee, unless the BC is smart and combine with the above call out. again if the pensioner in unit two can chuck the hose in for a couple of hours a couple of times a week no charge.

a pool used by ~20 people, eg a unit requires a lot of sanitiser. so even a salt pool will require a top of chlorine a couple of times a week. a super chlorination once a week. another call out fee, or included in the pool contract if you have a half awake bc. also praise the pensioner.

every few weeks the pool will require a chemical test and balance, and a backwash.

BCs pool expenses can vary widely based on who does the maintenance and if there are OOs who will do it.

how many units is the pool maintenance spread across?

i do my best to avoid IPs with pools, they are expensive for OOs and VERY expensive for investors.

edit - stevie, if you can become the 'pensioner' in this scenario then you can reduce the bc for the block and possibly get yourself a bit of extra earnings.

 

[stevie_sloth]

Oh my goodness me. lol

Sooo...you pay $300,000 which is ridiculously cheap for an inner city Sydney property...and then you're slugged with upwards of $800 a WEEK in strata fees!? Is that right? *eyes boggling*

I don't see how this is possible. Anyone looking to for a live-in home who can only afford $300,000 could probably NOT afford $800 a week in strata levies, and anyone wanting it as an investment, well...apart from capital growth (which I'm confused by because I don't know why it's only $300,000 to begin with. In Sydney, that's ridiculously cheap), you would be in minus numbers each week because unless you rented it out for $1,000 a week...it'd be like getting only $200 a week rent for an inner city Sydney apartment!

I must have read something wrong. Maybe it said $3 million. lol Or maybe it meant $10,000 a YEAR strata.

 

[stevie_sloth]

BCs pool expenses can vary widely based on who does the maintenance and if there are OOs who will do it.

how many units is the pool maintenance spread across?

i do my best to avoid IPs with pools, they are expensive for OOs and VERY expensive for investors.

There are 15 units in our complex.

One of the owners (who has since moved away and rented out his apartment) takes care of the garden maintenance and pool cleaning. He is there around twice a week, doing stuff.

I have investigated slightly and found that other complexes the same as mine (same appearance, layout, etc. There are quite a few around the Gold Coast), with a similar number of units (12-18) pay between $55-$65 a week strata. So I guess it's just the pool combined with the number of units.

The identical complexes that are slightly bigger (18-30 units) pay between $70-$80 a week in strata fees.

Hmm. I am still dissatisfied. We never even use the pool. But of course, that's no fault of the strata company people or the building. It's our choice.

Which is also why we long to buy into a place that does not have a pool or any other things we won't end up using and paying needlessly for.

 

[livewildcard]

Yeah, I can see that

The fees are also a function of the number of units in the building. eg let's say the pool costs $2,000 a year to maintain (just by way of example). In a 50 unit complex that equates to $40pa ec or 77c per week per unit owner.

Put the same thing into a block of 5 units and the fees (for the pool only) increase 10 fold.

It is also based on whatever your unit entitlement and contribution is. You could have exactly two places right next to each other, same size, same purchase price, same everything. Except for some reason on the strata plan or similar your entitlement and contribution for one is 100/10,000 the other is 200/10,000. Suddenyl one is liable for a lot more (yes they claim extra in depreciation etc for having bigger) but you get my point sale price isn't the story.

What's in the complex to be maintained, who's liable for what etc etc etc. People may want to pay that extra to have things maintained and the luxuries of the complex. If its $800 a week and all there is is a driveway obviously have to ask the question as part of your DD.

 

[exsyd]

Oh my goodness me. lol

Sooo...you pay $300,000 which is ridiculously cheap for an inner city Sydney property...and then you're slugged with upwards of $800 a WEEK in strata fees!? Is that right? *eyes boggling*

LOL I think that's right - in this case the reason it's so cheap is BECAUSE of the incredibly high strata. There are a couple of other old CBD buildings that are similarly 'cheap' (ie not). I imagine it could rent for $800/wk, but it still wouldn't be worth it. I'm guessing there's major structural work required or something, and in that case I'd expect strata to only go up as the building ages.

It's zoned commercial as well as residential, so maybe some company thought it was a reasonable purchase, but you'd really want to know what you were doing.

 

[lizzie]

Also depends where in the complex. With my two units the upstairs units pay $7.50/wk extra into the sinking fund to cover carpet replacement and maintenance of the stairwells - that the lower units don't use.

You can ask for a copy of the strata report, which will give you an indication of where the money is going.

You said that the property you are currently in backs onto a canal with jetty. Are their council fees for the jetty (usually are)? Maintenance of such? Planning for embankment repair? Is it salt water and hence maintence in general is higher for corrosion?

For an IP I wouldn't buy one with a pool - but would consider it for a PPOR

 

[RightValue]

This is one of the reasons why I am never interested in buying and apartment. I would happily rent one but never buy one.

IMO those tower blocks, like in Docklands, tilt panel concrete held together with bolts and mastick with pools, gyms, tall buildings needing painting and lots of lifts will chew a large chunk of the rental income in a decade or so. It will not be good for resale prices either.

 

[stevie_sloth]

No no, the property I WANT backs onto a canal. Their strata fees are $35 a week, which is great.

The place I live NOW just has a pool and general maintenance, grounds, insurance, etc.

I'm on the ground floor, so I don't use the stairs...I wonder if people upstairs are paying even more than me. Wow. Never thought of that.

 

[peastman]

The fees are set by committees and may have no valid reason for being what they are other than someone suggested a figure and everyone else agreed without thinking.

So to ensure the fees are what they should be, get on the committee. That way you can influence what happens. Makes sense really, but most investors just dont bother.

 

[stevie_sloth]

This is one of the reasons why I am never interested in buying and apartment. I would happily rent one but never buy one.

IMO those tower blocks, like in Docklands, tilt panel concrete held together with bolts and mastick with pools, gyms, tall buildings needing painting and lots of lifts will chew a large chunk of the rental income in a decade or so. It will not be good for resale prices either.

Yes, I agree.

However, for me, my building is just a 3 storey walk-up. No lifts. I would never buy in one of those huge complexes, but mainly because the stata fees are $150+ per week and I just can't afford that.

Otherwise, the only option is to buy a house, which I definitely can't afford (not in the areas I want to live in anyway). But yeah, that's my choice, to be stuck paying strata fees...except it'd be good to pay a little less than what I do, and get what I actually pay for.