The PROPERTY DOCTORS, Sydney Australia Novak Properties
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The PROPERTY DOCTORS, Sydney Australia Novak Properties
EP. 1296 STRUGGLING WITH STRATA PAYMENTS? YOUR NOT ALONE!
What if the rising costs of strata levies could jeopardize your investment? Today, we tackle the financial strain facing property owners in Sydney's northern beaches, where levies for one-bedroom units have soared to around $1,200 per quarter and two-bedroom units to $1,500. Our exceptional property manager, Cleo, provides an insider's perspective on the root causes of these increases, such as essential building maintenance and compliance upgrades. She also dives into the compounded pressures landlords experience from additional expenses like water and council rates.
Feeling the financial pinch from high strata levies? We offer crucial advice on managing these escalating costs, emphasizing the importance of proactive communication to prevent financial stress from spiraling out of control. Learn actionable tips to address your concerns early and avoid falling into arrears. Whether you're a landlord or a property owner, this episode delivers valuable insights to help you navigate the complexities of strata levies and maintain financial stability.
The struggle. We're going to talk about strata levies. What's a normal strata levy? And if landlords out there are experiencing high strata, levata strata they're not my favorite bunch, but, um, yes, they have a job to do also so cleo with here extraordinary property manager. You're dealing with lots of landlords out there. What's the word on the street with strata?
Speaker 2:look at the moment, there are quite a few jobs that have overlapped from the last financial year to this financial year and, um, there's a lot of money and a lot of work that's um needing to be done, but nothing's actually been resolved um, and it's dragging on. I think we find the builders that work on strata on the northern beaches, that you know an eclectic bunch and they have a bit of a monopoly on all the buildings and stratas, and so, um, it can be tricky and you know owners are hurting a little bit with levies. I feel um you know they're feeling the pinch and one increase per year doesn't help with their you know quarterly levies they've also got water rates they've also got council you know quarterly levies.
Speaker 2:They've also got water rates. They've also got council rates, you know. So it is a little bit of a you know struggle out there at the moment with paying levies.
Speaker 1:And with these levies that are coming through, are they sort of the regular levies or why are they higher? Is it because of the building works or is it just because the cost of you know, insurance and living is?
Speaker 2:higher. Look, everything's gone up. I'm sure all the EGMs AGMs when they're discussing budgets. You know just like everything's gone up. You know goods and services, interest rates, everything associated with. You know managing a building also goes up with you know managing a building also goes up.
Speaker 2:Um, and you know the levies. There's no levies. I know under a thousand eleven hundred on the northern beaches. Gone are the days where levies used to be, you know, five and six hundred dollars a quarter. Everything's at least minimum 12 to two. You know so it's a big chunk of money.
Speaker 2:When you think about um, you know paying levies and what you actually get for paying levies, you're like, well, I'm just paying these amounts of money and you don't see any of that money in your unit, or your tenant doesn't benefit from it, you know so it does seem, um, like a wasted amount of money that you're paying, just like anything. But yeah, planning for the future, a lot of the buildings on our beautiful northern beaches aren't smoke alarm compliant. They're not. You know the standard of the balconies aren't compliant. You know they haven't had rendering. Or you know common area upgrades. So if you're a good strata manager manager, your plan is to save for those things that will eventually add value to the plan and the building and each lot owner. So you know, having these levies increase rather than you know whacking everyone with a special levy when the time comes is smart but not everyone's got that extra $300, $400 a quarter to just pull out of their back pocket.
Speaker 2:So you know, I think a lot of landlords pay rears with levies at the moment so they're not paying on time. After the first month you get interest incurred for not paying. I mean it's not a lot but it's still. You know it's money that you, you, yeah, and and just the debt recovery letters that they send out. They charge you like 10 bucks a letter, 20 bucks a letter, something like that and it can add up, you know yeah right.
Speaker 1:So, claire, with with these trial levies and for anyone who doesn't know, a house doesn't generate start strata levies. A unit does generate levies that you have to pay. It does include a lot of the things that you'd normally pay by yourself on a house. So you've got building insurance, insurance inside of your strata. You sometimes have water usage inside of your strata because they're not separately needed. Um, you often have common house electricity. So outside of the building or the lobby inside the building, um security, you know up, um fire upgrades, all that stuff goes in, goes in into your strata and pays for it. So it doesn't, it doesn't disappear off into the ether. But generally, if we could pay the strata bonanza game, just to give people a reference as to what they would expect to pay with strata a one bedroom unit in in sydney's northern beaches, what would you pay per quarter for strata about?
Speaker 2:1200, a week, a quarter, to about $1,200, I would say A two-bedroom unit. Two bedrooms, probably about $1,500, $1,480, something like that. The difference between a one and two is only a few hundred dollars.
Speaker 1:When you go into the three and the penthouses that's when you start getting into the big bucks. And what's big bucks like for a three-bedroom?
Speaker 2:sort of townhouse or apartment or something. Oh, a townhouseroom sort of townhouse or apartment or something. Oh, a townhouse depending, because townhouses are tricky, because you get a lot of lots in a townhouse, so you could have 50 or 60, which means that that money is then less. So you're paying about $1,700, $1,800. But if you're in a unit block like Merriton and you're a three-bedroom and it's got a lift and all that sort of stuff, compared to you know, I don't know a double brick townhouse complex, you're paying a lot more for a Meritan in Strata. For sure there's more things to look after there do.
Speaker 1:Yeah, so these look it's a significant chunk out of one's budget $100 a week's going just into your strata. You haven't even paid your interest rates on, you know, on the back of this. So so, pete, there is a bit of struggle this out there at the moment with strata, but it must be quite damning when the winner, when a remedial bill comes in, or when what are those types of surprise works that you're seeing with landlords out there at the moment where you go, oh shit. So I think you mentioned fire upgrades was one of them.
Speaker 2:Yeah, so having the building compliant now, so it's up to standard, is a big, big chunk. What they do is they put this back-to-base sort of monitoring smoke alarm system in the common area that has to be wired through all the units. It's then maintained. It's a cost, a lot of these units. You know whether they're concrete, vessel block, you know gyprock, whatever they are. Sometimes the capabilities of having this thing installed means you have to do all these modifications to the common area, to the units individually. This can take time. It takes money.
Speaker 2:People to come back. They charge to go and quote. They charge to write up a report. Some of these reports cost thousands of dollars. You know you're paying for instructional engineers to come out. Um, if you've got scaffolding involved, I didn't realize how much scaffolding cost just to put around an entire building. Over a hundred, you know thousand dollars, like in the entirety of the strata plane. I mean, everyone pays an individual amount, but I was thinking, oh my god, how much could?
Speaker 2:that be it's just like a bit, you know, tracks and steel rods around the property, but it costs a lot. Yeah, the scaffolding.
Speaker 1:So when these works are done to the building I guess it's being remedial works you don't really make money from it either, because often the building just looks the same as it was before they started. They just go in, fix it and rip in and rip out, so it's it's sort of dead money, I guess it is.
Speaker 2:But if you're purchasing as well, a property that's older and you do your due diligence as the purchaser, you look at things like the strata report, what's in it, what works are coming up, what's being done, like you can. I mean it would be smart to ask those questions so you know what you're up for. A property that's had everything done, meaning that you know the balconies are up to spec, the common areas, there's no concrete cans, all of that stuff's being done that's going to add incredible value. If you're an owner selling as well, which is, you know, one of the reasons.
Speaker 2:I have an investment property and we used to make jokes that you know there was an owner in our building that dobbed us into council to say that we weren't compliant because they were planning on selling and they wanted to get the best possible price and it's a pre-'70s build. So we then, out of everybody in the street were, you know, sent letters from council to say that we weren't compliant. Yet the unit block next to us was way older, built before our unit block, and they haven't had to have any fire safety, you know modifications. So you know there was a bit of a conspiracy in that.
Speaker 1:But yeah, look as a seller.
Speaker 2:If you've done everything as well like I think, I think there is value in it for sure. Um, or you know some of these units, I don't know they just they stay. I've been to somewhere. The balcony is so low I feel like I'm gonna fall off and nothing's been done.
Speaker 1:Yeah, it's not too bad.
Speaker 2:But you know they're the red brick beauties that you know. Just stood a little bit, you know, under the radar.
Speaker 1:And so, with people struggling with strata, what's your advice out there, how to approach it? What do you do? Sell it, get through it, get on the strata committee.
Speaker 2:Yeah, look, getting on the committee is good. If you're one of those people that have time and can go through, um, all the documents required like an 18 minutes, like a good chunk of reading. It's probably going to take you two to three hours just to get through the paperwork, um, but yeah, you can put the the breaks on what's happening, um, if you don't agree.
Speaker 2:In a committee everyone has to agree, especially if it's an amount over $200,000, $300,000. So if not everyone's in agreeance, then these works can carry on for years. They can go on for two to three years if people are agreeing. If it's through council, though, and it's to do compliancy, you only have a period of time where you have to comply, otherwise they take you to court.
Speaker 1:Yes, that work's got to be done.
Speaker 2:Yeah, those works that have to be done. But if it's things like garaging or painting or just improvements as such, if you're on a committee and you're know you know your finances and you don't have the money, then you could put the brakes on things very easily in those meetings and just drag things on, which is unfortunate for some circumstances. But, um, talk to your strata managers as well. Um, you know they're, you know, very helpful when it comes to um giving you information on proposed things. I've often asked questions, like you know do very helpful when it comes to giving you information on proposed things.
Speaker 2:I've often asked questions, like you know do you think something's going to be coming up? You know this owner's struggling or the tenants. You know it's vacant. It's been vacant for a long time. You know they're trying to plan and they'll give you an honest you know honest answer. And the owners can ring their Strata people direct as well and ask questions. That's what they do. They're the Strata manager. They're not just there to turn up to meetings and, you know, ask for money. They are there to also help you and guide you with the finances and money and projections of money and things like that. So, yeah, I would say pick up the phone if you have concerns or you're struggling to pay.
Speaker 1:Absolutely. Don't bury your head. Thank you very much, cleo strata levies. It's a cost out there is it's as much as 100 bucks a day for us for some strata um schemes units that you're living in. So, uh, great advice.
Speaker 2:Thank you very much bye, have a see ya.