In short

Strata levies are the fees owners pay to maintain shared property in an apartment, unit, or townhouse — covering day-to-day running costs and a capital works fund for major repairs. The real risk is a special levy: a large one-off charge, sometimes tens of thousands of dollars, raised when a big job like waterproofing or a lift replacement exceeds the sinking fund.

Selling the family home and moving into an apartment or townhouse is one of the most common moves in retirement, and it usually comes wrapped in a comforting expectation: it'll be simpler, and it'll be cheaper. No more gutters to clean, no more roof to worry about, no big garden to maintain. Often that's exactly how it works out — but not always, and the reason is a cost that many downsizers underestimate until they're living with it: strata levies. ASIC's MoneySmart makes the point plainly, noting that when you move from a house to a unit or apartment you may take on new costs like strata and body corporate fees (ASIC MoneySmart, https://moneysmart.gov.au/manage-your-money-in-retirement/downsizing-in-retirement). If you're thinking of buying into an apartment, unit or townhouse, understanding strata costs before you sign is every bit as important as getting a building inspection on a house. This article is general information only, not personal advice.

What are strata levies?

When you buy in a strata scheme — an apartment, unit or townhouse that shares common property with other lots — you automatically become a member of the owners corporation, the body that runs the scheme, and you pay levies toward running and maintaining that shared property. A strata levy, as MoneySmart defines it, is the fee owners pay for the management of the common property of a building held under strata title (ASIC MoneySmart, https://moneysmart.gov.au/glossary/strata-levy). The terminology varies around the country: the scheme is called strata in New South Wales, an owners corporation in Victoria, and a body corporate in Queensland, with equivalents in the other states and territories — the specifics are governed by each state's own strata legislation, but the idea is the same everywhere.

What are the two regular levies?

Most schemes raise two ongoing levies. The first is the administrative fund levy, which covers the day-to-day running costs — building insurance, cleaning, gardening, common-area electricity, the strata manager's fee, and minor repairs. It's the predictable, keep-the-lights-on money. The second is the capital works fund levy, often still called the sinking fund, which is money set aside for major future works such as repainting the building, repairing the roof or the lifts, or fixing waterproofing. The idea is that the scheme saves steadily over the years so that when a big job comes due, the money is already there. Between them, these two levies are the regular quarterly cost of apartment living, and they belong in your retirement budget as a fixed expense from day one.

Where does the real risk lie — special levies?

Here's the part that catches retirees out. When the regular funds aren't enough to cover a big job — because the work is bigger than expected, or the sinking fund was underfunded for years — the owners corporation can raise a special levy, a one-off charge shared among all the owners and typically approved by a vote at a general meeting. Special levies can be large. Fixing failed waterproofing, replacing a lift, dealing with concrete deterioration, or re-cladding a building can cost anywhere from a few thousand to tens of thousands of dollars per apartment (illustrative — the amount varies enormously by building and defect). For someone on a fixed retirement income, an unexpected bill of, say, $25,000 is exactly the kind of shock a good plan should guard against — and unlike the regular levies, a special levy can land with relatively little warning if you didn't know the building had problems brewing.

Why do levies vary so much?

Strata costs sit on a very wide range, and the driver is simple. A low-rise townhouse block with a bit of shared garden and not much else may have modest levies, while a high-rise with a lift, a pool, a gym and a concierge can have very high ones — into the many thousands of dollars a year (illustrative figures; actual levies depend entirely on the building). The rule of thumb is that the more facilities and shared infrastructure a building has, the more there is to insure, maintain and eventually replace, and the higher the levies. The pool and gym that make a building appealing are also part of what you're paying for every quarter, so it's worth being honest with yourself about which facilities you'll actually use.

How should you do your homework before you buy?

The good news is that strata costs are far more knowable in advance than most people realise. Before you buy, you can obtain the scheme's records — usually through a strata inspection report, which is the apartment-buying equivalent of a building inspection on a house. That report lets you check the things that matter: the history of the levies and how quickly they've been rising; the balance of the capital works (sinking) fund and whether it's adequate for the building's age; the meeting minutes for any looming major works, building defects or disputes among owners; and whether any special levies have recently been raised or are being planned. A building with a healthy sinking fund, steadily managed levies and no big works on the horizon is a much lower risk than an ageing block with a depleted fund and a history of arguments. Spending a little on a strata report before you buy can save you from a very expensive surprise afterwards. It's also worth knowing that if you ever do struggle to pay a levy, MoneySmart's advice is to contact the strata or body corporate as early as possible — they may not offer formal hardship terms, but they can vote on a different payment arrangement (ASIC MoneySmart, https://moneysmart.gov.au/glossary/strata-title).

Does this affect the Age Pension?

One reassurance: strata levies don't affect your Age Pension — the means-tested government payment administered by Services Australia. They're a living expense, not an asset or income, so they aren't counted in the means test, and your apartment, as your principal home, is an exempt asset just as a house would be. Services Australia confirms that your principal home and up to the first two hectares of land it sits on generally don't count in the assets test (Services Australia, https://www.servicesaustralia.gov.au/asset-types). So strata costs are purely a budgeting matter, not a Centrelink one (our companion piece on the family-home exemption covers that exemption in more detail). That doesn't make them any less important, though — high levies come straight out of the retirement income you're trying to live on, which is exactly why they belong in your sums from the start.

What do the worked examples show?

These show the two ends of the strata range — the modest, predictable case and the high-facilities case with a special-levy shock. They are illustrative only, not personal advice, and strata law and levies vary by state and by scheme.

Margaret, 69, sells her house and buys into a small, single-storey townhouse block of six with a shared driveway and a patch of lawn — no lift, no pool, no gym. On these facts the ongoing cost is likely to be modest and predictable: with little shared infrastructure to insure and maintain, the administrative and capital-works levies are low, and the special-levy risk is comparatively small because there's simply less that can fail expensively. On these facts it is generally rational for Margaret to still order a strata inspection report before buying — to confirm the sinking fund is healthy and the minutes show no looming works — and then to budget the quarterly levies as a fixed cost, confident that the "simpler and cheaper" move is likely to live up to the promise.

Frank and Susan, both in their early seventies and part-pensioners, are drawn to a smart high-rise apartment with a lift, a pool, a gym and a concierge. On these facts the picture needs a much closer look: buildings like this carry high regular levies — potentially many thousands of dollars a year — and, more importantly, a real special-levy risk, since lifts, waterproofing and (in some buildings) cladding are exactly the big-ticket items that trigger one-off charges of tens of thousands per apartment. On these facts it is generally rational for them to obtain the strata inspection report and read the capital-works fund balance and recent minutes carefully before committing, because a depleted sinking fund in an ageing tower is a warning sign that a large special levy — the kind that can badly dent a fixed retirement income — may not be far away. The levies won't touch their Age Pension (Services Australia, https://www.servicesaustralia.gov.au/asset-types), but they will touch their budget every quarter.

Sources

Key takeaways

  • Strata levies are the fees paid to maintain shared property in an apartment, unit, or townhouse — they don't automatically make apartment living cheaper than a house.
  • The two regular levies are the administrative fund (day-to-day running costs) and the capital works (sinking) fund, which saves for major future repairs.
  • The real risk is a special levy — a large one-off charge, sometimes tens of thousands of dollars per apartment, raised when the sinking fund can't cover a big job.
  • A strata inspection report before buying reveals the levy history, sinking fund balance, and any looming major works or disputes — the apartment equivalent of a building inspection.
  • Strata levies are a budgeting matter only — they don't count in the Age Pension assets or income test, and the apartment itself remains an exempt principal home asset.

Frequently asked questions

What are strata levies?

Strata levies are fees paid by owners in a strata scheme (an apartment, unit, or townhouse sharing common property) to fund the management and upkeep of that shared property. They're set by the owners corporation, called strata in NSW, an owners corporation in Victoria, and a body corporate in Queensland.

What's the difference between a regular levy and a special levy?

Regular levies (the administrative fund and the capital works/sinking fund) are predictable quarterly costs. A special levy is a one-off charge raised when a big job — like re-cladding, waterproofing repairs, or a lift replacement — costs more than the sinking fund has saved. Special levies can run to tens of thousands of dollars per apartment.

How can I check strata costs before buying an apartment in retirement?

Obtain a strata inspection report, which shows the levy history, the sinking fund balance, meeting minutes for any planned major works or disputes, and whether any special levies are being considered. A healthy sinking fund and steady levy history are good signs; a depleted fund in an ageing building is a warning sign.

Do strata levies affect the Age Pension?

No. Strata levies are a living expense, not an asset or income, so they aren't counted in the Age Pension means test. Your apartment remains an exempt principal home asset just as a house would be — but high levies still come out of your retirement income, so they belong in your budget.

A note on advice. This article is general information only and doesn't account for your personal circumstances. Everyone's situation is different — before acting, it's worth talking it through with a licensed adviser who knows your full picture.