28 Mar 2019

This is a great question and one that we get asked often. 

Understandably a lot of people are a bit confused about what a ‘strata fee’ actually is, as it is a colloquial term that is often applied to a variety of fees that you are paying.

There are two common understandings of what this term can be applied to –

Levied Contribution (Strata Levies)

As this money is paid to the Strata Company Manager there can be a misconception that these funds are the strata management fees. In reality these payments are actually the money that owners pay into their own schemes account, to pay for all the services and maintenance for your scheme, and yes, this does include paying for your Strata Manager.

The common misunderstanding is, that these regular payments to the Strata Company Management (Blackburne) are their fees, it’s only natural that people are of the impression that they are paying their Strata Manager extraordinary fees and are consistently on the lookout for better value for money. The reality is that more often than not, it is only 10-15% of this money that is going toward paying your Strata Manager. The remainder covers costs for insurance, cleaners, gardeners, maintenance and any other service provider, or scheme costs. These levied contributions are determined at your Annual General Meeting by your owners. (see diagram below)

Strata Management Fees

For those that are referring to ‘Strata Fees’ meaning the fee for your strata management company / strata manager, there is unfortunately no simple answer as to how much you should be paying for this service and there are risks in simply searching for the cheapest. Strata Management is currently an unregulated industry with little control over who enters the marketplace as a Strata Manager or who operates a business in this vocation.

Unfortunately, as anyone can enter this profession there is a wide variety of competencies and offerings available to choose from. Quite often you can find that the ‘cheap’ Strata Management companies have little experience, few checks and balances in place, and/or are under no obligation to hold your funds in independently audited trust accounts. When considering your Strata Management fees, you should also take into consideration –

  • Longevity in the industry (those that have been around are less likely to go bankrupt and/or run away with your funds),
  • Memberships of industry associations (such as Strata Community Association (WA), and REIWA)
  • Company policies and procedures in place
  • The number of staff employed (while a husband and wife duo sounds good, it’s likely they’ll both be on holidays together, or both get unwell at similar times)
  • Ongoing training and education of employees

All these and many more factors should be taken into consideration when thinking about your Strata Management fees because a ‘cheap’ one man band may save you some funds now, but it could end up costing you a lot more should they offer wrong advice or do the wrong thing and you end up at the State Administrative Tribunal, or worse still – should they abscond with some or all of your funds.

Example from an apartment building –

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