Hi guys,
I need some advice regarding this case:
I bought an high rise apartment with great facility, such as swimming pool, gym and sauna.
I am aware of strata levy maybe high with such apartment, but after the research, the strata levy is $700 only.
Consider this 3 bedroom brand new apartment in Parramatta Sydney, it is pretty good price I think.
It is completed in Apr 2009 and our strata levy is always $700 until this month.
Owners receive the shocking strata levy $1030, which is nearly 47% more.
I understand the strata levy should be increased after the first year due to the warranty and inflation, say 5%
The number should be around $735 but not $1030 definitely. Apparently, all owners are so angry and attend the AGM for this incident.
Strata management company (Linders strata management p/l) admit they under budget many expenses at the first year but owner still need to make up the variance.
Owners claim it is their fault to under budget and give the misleading info in the beginning.
Many owners will not buy this property at the beginning in the first place because it will not generate good positive cash flow.
In such case, could we lodge the legal complaint and not pay the strata levy until the dispute is solved?
Please let me know what is the necessary step I should take.
Thanks,
Unfortunately you are legally obliged to pay your strata levies as the admin and sinking funds cannot run in deficit. If it was underbudgeted, then a special levy could have been called to make up the short fall – this is not the strata manager's fault but the fault of the owners corporation for not getting onto it earlier. The costs will not disappear simply because they were underestimated and not provided for.
The strata manager can only estimate the costs for the first few years of the building as there is only industry averages to act as a guide (an experienced SM would still be reasonably on the ball) – was there any specific area which was underbudgetted or were all items not provided for sufficiently eg insurance costs were substantially more than budget or large unforseen costs such as security system upgrade/pool equipment replacement?
Sadly from what i hear, this is common in new developments. They keep the figures conservative as it makes the selling process a little easier. The first years show that the conservative figures were too conservative and as such the costs need to be increased.
I have not heard of a way to claim against this, I think it might fall into the buyer beware catagory at $700 even $1030 is by my understanding very cheap.
The other thing to be wary of is that the contributions to the sinking fund are adequate or you sell before the building needs renovating or there can be huge shock here.
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