If your body corporate levies have increased, you may be wondering why – and where that extra money is actually going.

Levies are essential to the financial operation of a body corporate. They contribute towards everything from the day-to-day costs of running and maintaining a property to insurance, compliance requirements and planning for major future expenditure.

When these costs change, the amount a body corporate needs to collect from owners may need to change too.

Understanding what drives levy contributions is just one part of the bigger financial picture – and one we’ll be exploring further at our upcoming October Strata Community Education Seminar Series.

So, what can place pressure on your body corporate budget – and ultimately your levies?

1. Rising Insurance and Operating Costs

Insurance can represent a significant expense for a body corporate, and changes in premiums can have a considerable impact on the annual budget.

At the same time, many of the everyday costs involved in operating a property can increase. Services, utilities, contractors and other recurring expenses all contribute to the amount required to keep a body corporate running throughout the year.

2. Maintenance and Repairs

Buildings require ongoing maintenance, and the cost of maintaining common property can change as a building ages.

Routine servicing and preventative maintenance must be considered alongside unexpected repairs and emerging building issues. If expenditure is greater than anticipated, this can place additional pressure on the body’s available funds and future budgets.

3. Compliance and Changing Requirements

A body corporate also has obligations that must be factored into its financial planning.

Compliance requirements, professional advice, inspections and other necessary works can all contribute to expenditure. Some costs can be planned for, while others may arise as circumstances or requirements change.

4. Planning for Major Future Expenditure

Not all of your levies are intended to pay today’s bills.

Bodies corporate also need to plan for significant future expenditure and the long-term needs of their property.

Major works and the eventual repair or replacement of capital items can require substantial funds. Effective forecasting and forward planning help a body corporate prepare for these expenses over time rather than considering them only when the work becomes necessary.

Higher Levies Don’t Necessarily Tell the Whole Story

It can be tempting to look at an increase in levies and assume that something has gone wrong.

But the amount owners contribute is connected to a much bigger financial picture.

Insurance, maintenance, operating expenses, compliance and future capital works can all influence a body’s financial requirements. Understanding why money is being collected, how budgets are developed and how those funds are managed can help committees and owners have more informed conversations about their scheme’s finances.

Want to Better Understand Your Body Corporate’s Finances?

Understanding why levies may increase is only one part of the financial journey.

This October, the Smart Strata Community Education Seminar Series presented in partnership with Archers the Strata Professionals will explore:

Where Does the Money Go? Demystifying Body Corporate Finances

From budgets and levies to sinking funds and long-term planning, our panel of industry professionals will help explain how your body corporates money is planned, managed and spent – and the role committees play in the process.

You don’t need to be an Archers client to attend.

Find your nearest seminar and register today.

Sunshine Coast – Thursday, 1 October

Gold Coast – Wednesday, 7 October

Mackay – Tuesday, 13 October

Brisbane – Wednesday, 21 October

Cairns – Thursday, 29 October

We look forward to welcoming Queensland’s strata community this October as we continue the conversation around better financial understanding and informed decision-making.

Article contributed by the Smart Strata Team.

The post WHY ARE BODY CORPORATE LEVIES INCREASING? appeared first on Smart Strata | Body Corporate Management.