Understanding Owners Corporation fees
Introduction
The Owners Corporation Act 2006 requires the Owners Corportation to raise enough funds to maintain the building. This is not negotiable. Our Long Term Maintenance Plan (LTMP) which helps inform how much we need is quantified by professional qualified consultants. Each year, an auditor reviews our process to ensure we are tracking appropriately. This information is presented at the Annual General Meeting.
How are Owners Corporation Fees calculated?
The formula for calculating fees is the same for all OCs in Victoria but the amounts are different because each building is unique.
Formula:
- The size of your apartment determines what proportion of the total fees you will pay. For example, an apartment of 77 square metres will have to pay proportionally more than one that is 66 square metres.
- We determine total funds needed at this stage of the LTMP for our sinking fund.
- We work out total funds needed for the day-to-day operations.
- We add Items 2 and 3.
- This is divided by apportionment ratio of your apartment to determine your fee.
- The process above is repeated for Owners Corporation 3 (residential tower) and Owners Corporation 1 (exterior) and OC4 (car park) if you own a space there.
Our Owners Corporation never raises more than it has to.
How do we compare with other Owners Corporations?
It is impossible to compare our buildings with others because each building is unique.
We are particularly unique because we are exclusive to 144 apartments and took over managing a building needing signifcant and expensive maintenance when the hotel operator left in 2021. For example we need to save up in just five years over $1 million for elevators which should have been upgraded by the hotel operator years before they left. New buildings have 25 years to save that amount. Though our fees are higher to save for them, once the elevators are upgraded, our fees will drop, ongoing maintenance costs will drop and our property values will climb.
How can we make our fees clearer for all?
There are Owners Corporations that calculate fees for normal administrative and long term maintenance and raise a separate special levy for abnormal or unforeseeable expenses. This clearly shows the difference.
For transparency, we advocate for our standard fees being shown separately from funds being raised for the elevators. This will clearly show owners our real fees versus the special levy needed for the elevators.
This will also allow us to lock the elevator funds into a long term deposit and gain bank interest until it is needed to be spent.