30 Sep Strata Fees and Rates
Do Strata Fees Include Council Rates and Water Rates?
If you own or are thinking about buying an apartment, you may be wondering: do strata fees include council rates? What about water rates?
These are common questions for apartment owners because owning a property affected by an owners corporation involves several different types of costs. You may have to pay strata fees, council rates, water charges, insurance and, in some circumstances, special fees or levies.
Understanding the difference between these costs is important when budgeting for an apartment or comparing the ongoing costs of different properties.
A word about terminology before discussing these costs. In Victoria, the term owners corporation is generally used instead of body corporate. The term strata is sometimes used when referring to an owners corporation.
What are strata fees?
Strata fees are the contributions paid by lot owners to the owners corporation to meet the costs of managing, maintaining and operating the common property, and fulfilling the owners corporation’s legal responsibilities.
In Victoria, an owners corporation can set annual fees to cover costs including:
- general administration;
- maintenance and repairs;
- insurance;
- contributions to a maintenance fund, where applicable;
- management and other professional services; and
- other ongoing expenses of the owners corporation.
Strata fees vary between properties. Factors which can affect the level of fees include the size of the building and apartments, the age and style of the building, installed infrastructure such as lifts or pool, and the service levels desired by members.
This means that strata fees are not a second council rates notice, but are contributions toward the costs and obligations of the owners corporation.
Do apartment owners pay council rates?
Generally, an apartment owner pays council rates in the same way as the owner of other residential property.
Each owner owns their lot and is responsible for costs associated with their property. Consequently, council rates separate expense arising from property ownership.
Do strata fees include council rates?
The short answer is generally no. Owners corporation fees are used to meet the owners corporation’s expenses. Council rates are applied by the relevant local council in respect of the owner’s lot.
Difference between strata fees and council rates
Strata fees and council rates have different purposes.
An owners corporation fees contribute towards expenses incurred by the owners corporation. These include building maintenance, common property repairs, insurance and administration.
Council rates are imposed by the local council and are a separate charge associated with the property. These rates contribute to the cost of council operations such as maintenance of roads, street lighting, waste collection and so on.
Do strata fees include water rates and do body corporate fees include council rates?
Generally, water charges are separate from owners corporation fees. However, who is responsible for paying a particular water charge depends on whether the water relates to an individual lot or to common property, as well as the building’s metering and billing arrangements.
Water charges for a lot
Where an apartment has its own water meter, charges relating to water supplied to the lot will generally be the responsibility of the lot owner. The particular charges and billing arrangements can depend on the property’s water infrastructure and the relevant water corporation. The charge for water supplied will be on the rates notice issued by the water authority.
What if the building has shared water meters?
Some apartment buildings do not have separate meters for each lot and this is termed common metering. Only the total water consumption is used is measured and it is not apportioned to any lot. As lot usage is not measured, the cost of water consumed is the total cost is divided by the number of lots. This is done by the relevant water authority and the amount of water consumption on each owner’s water rates notice.
Water used on common property
Water used for the common property of the owners corporation may be treated differently in some circumstances. For example, water used to maintain communal gardens, clean common areas or other shared facilities may be an owners corporation expense if there is separate metering at the property. These costs are then paid from the owners corporation’s funds and ultimately form part of the costs that owners contribute toward through owners corporation fees. Where an owners corporation does pay for water use, this will be included in the annual fees approved at each annual general meeting.
So, does strata pay for water?
The answer is: sometimes, but not necessarily your individual apartment’s water costs.