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How to drive down the Body Corporate?

By fabforty - 11 June 2008 20

I live in an apartment complex and think our body corporate fees are excessive.

In the last couple of years our fees have more than doubled to include a “painting levy” . Our complex is about seven years old and is apparently due for a paint. We are now paying in excess of $540 per quarter for the next few years. Just to set the scene,  though, we are not a “boutique development” in an exclusive area. We are pretty much small families, singles and tenants in a standard inner north suburb. Nothing special.

Other than the painting levy, we seem to be getting very little for our fees which are increased at each AGM. The usual parking/garbage/pet problems continue as per every other complex. The usual letters are sent out re-iterating the House Rules which are steadfastly ignored.

I would like to hear other people’s experiences and opinions on body corporate fees before I tackle the agent.

What’s Your opinion?


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20 Responses to
How to drive down the Body Corporate?
aidan 1:14 pm 12 Jun 08

Of course there is rates as well ($1200 / year at a guess) — are they rolled in BC fees or do you pay them separately?

aidan 1:09 pm 12 Jun 08

Toriness,

From memory our home & contents insurance is about $450 a year for a very modest 30 year old 3 bedroom house. It was going to be $100 more than that so we opted for a much larger excess to keep the premium at the same level it was the year before.

caf 11:34 am 12 Jun 08

toriness, you can probably do a dummy online quote from one of the major insurer’s websites.

toriness 11:28 am 12 Jun 08

interested to know a RA poster who owns say an average 3 bedroom home what they pay per year in house insurance (ie building) because BC fees obviously include this cost. BC fees might seem outrageous in some respects….but they cover off a lot of expenses that someone who owns a freestanding home is up for as well.

toriness 11:22 am 12 Jun 08

if BC fees are used for decent improvements or projects or maintenance then it is all well and good – you want to maintain or more ideally improve the value of your property, this comes at a cost. $500/quarter is pretty reasonable. both my properties are $400+/qtr and we don’t have lifts or pool or gym or anything.

shauno 10:53 am 12 Jun 08

Thats cheap. Body corporate for the London Tower or what ever its called on London circuit is $1427 per quarter or around $110 a week. These costs really add up. If you lived there for say 10 years thats around $60,000 in body corporate fees.

jimbocool 10:39 am 12 Jun 08

My experience on the executive of a large BC was that we were being badly ripped off and mismanaged by our agent and the constitution of the BC was so badly set up that it was going to be very difficult to get rid of them. Managed to get fees down for a while by setting the budget surplus target lower and redistributing surpluses as lower fees rather than banking them.
Lifts in complexes are hideously expensive to run and maintain – avoid them
On the painting issue you need to check the constitution – there are two types of unit title, A and B and in one type painting is a BC responsibility and in the other it is a unit owner responsibility.

toriness 10:11 am 12 Jun 08

another trend i have heard about which is happening in sydney which might start happening here is that the developer of a new complex makes it mandatory/contracts themselves for a minimum period to manage the complex – then the new owners find the fees increasing after the first year and they can’t do anything about it!

toriness 10:09 am 12 Jun 08

after a few years of paying BC fees for one of my properties and seeing f-all evidence for the fees, i got on the committee to try and drive some real projects/improvements and stop wastage of money. i found it is very hard to do. as other people have said here, a great deal of the BC fees are fixed (pretty much) and not very negotiable – like insurance, water, BC management fees.

insurance is the big one – my suggestion is to demand your BC manager shops around and produces 3 separate quotes because you will find a lot of BC management firms get kickbacks or are associated with BC insurers – don’t let them just pick out one insurer for you without getting other quotes for comparison.

water – one of the worst things about living in a BC complex is that you can be as careful with your water consumption as you like but if your neighbours are water-wasting aholes then you get to help pay for them because there is only one usage meter for the whole complex. this is true for both complexes i own properties in – so i get a quarterly water&sewerage bill for a flat $130 then look at the BC financials and there is a MASSIVE water charge on there for the complex – anyone got a different experience ie you pay for your own excess water?

BC management fees – there are only 2 big firms in canberra (then some small boutique ones, and some real estate agents will do small complexes) so competition is low, fees are high.

the other problem with BC – is the lack of owner participation in both AGMs or offering to have a go on the committee to keep things in order. if you’re not willing to participate, you really cannot complain.

Duke 9:45 am 12 Jun 08

As somebody who is going to buy their first home (read flat) at the end of the year I find this thread quite interesting.

@Sammy – based on your comments, would a first home buyer with limited funds be better off looking for a flat in an exposed brick complex? Are there any other things to look for that I should know about to avoid the massive body corp fees?

Somebody said to me I should avoid a complex with lifts as they are expensive to run and maintain.

cheers

Sammy 8:46 am 12 Jun 08

The problem with a lot of these apartment buildings going up around Canberra is that they bag and render them, rather than using (much!) more expensive exposed (decorative) brick. This is great for the builder as it keeps construction costs down, but it sucks for the residents, as it leads to a very large painting bill every 7-10 years.

I know that when I was on the committee for a large Braddon complex, we were budgeting about $100,000 to repaint our building every 10 years, and that was 10 years ago, so it’s probably a lot more nowadays.

Just imagine one of those Braddon apartment buildings might require painting every 7 years at a cost of $150,000, and there are 40 units in the development, then that is $535 a year that every apartment has to contribute just to cover the re-painting sinking fund.

c` 12:04 am 12 Jun 08

My 2 bob: the parking thing will never go away. the arsehole neighbours will never go away and the body corp fees will rise.

I think the only thing you’ve control over is the your body corporate manager. like the previous posts, consider whether you’re getting a good deal and if not, look around.

RuffnReady 11:12 pm 11 Jun 08

Yup, read last year’s budget and the coming year’s and see where the increases are coming from. Also check out how much is in your sinking fund, and how much is going in. It is there to draw from and slowly replenish for things like painting.

I would carefully set out the problems you are having and argue for ways to remedy them. For example, is your sinking fund money (often 20K+) in an interest earning account? The interest you could be earning would offset $1500 worth of fee increases. And if the agent is trying to raise their fees inordinately, ask them why, and in the interim call some other companies for quotes. If they really are shafting you, don’t be afraid to dump them for someone better. Do your research, build your arguments, and act on them.

We have a good body corporate executive who work together on joint issues (a community of sorts!), and only pay about $350 a quarter (small 1 and 2 bedroom places). I raised a number of issues with the agent that were either acted on or answered satisfactorily. Think of the managing agents as your servants because they are – it is the owners that form the body corporate, the managing agents are just there to carry out the bc’s orders, and if you don’t think they’re doing a good job, find someone else and suggest them to the executive stating reasons.

eatthatfrog 10:22 pm 11 Jun 08

Hi fabforty

This is a little bit long, and some of it may seem terribly obvious – so I apologise in advance if this seems patronising.

Hard to answer that question fully without knowing how many people are in your development. Have you done your research on other body corporates in your area? It’s a pain in the ass but even something as simple as checking allhomes for other complexes in your area could probably give you a start.

Of course, you’re right. You always get issues with parking and pets in any group of people. That comes down to human nature. What you can document, however, is service provision that you are paying the body corporate to provide.

When it comes to services like painting, you get what you pay for. Who’s doing the work? When is going to be done? What is included in the paint? What type of finish/brand is being used?

When it comes to services like garbage, if it is becoming a real issue – do you let the agent know before it goes to meeting?

How often does your body corporate meet? Do you go to the meetings? Do you address issues offline with other tenants/executive and not just once a year in your AGM?

Have you asked your body corporate for evidence of your accounts? Have you read the audit report that goes with your AGM to see where the money is going?

Just my two cents, anyway.

bigred 10:19 pm 11 Jun 08

Join the executive at the AGM or between times and try to understand how the budget (hence levies) is set. The main reasons for increases in my complex are the managing agents stealthy increases, insurance premiums and water charges. Once these are built in there isn’t much room to move.

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