Caught in the gap: Feeling the body corporate levy squeeze?

As body corporate costs go up, people on fixed and limited incomes are feeling the pinch and there are no easy solutions.

Everyone will be conscious that the cost of living rose steeply in 2022 and the trend seems set to continue this year. Body Corporate owners have been particularly badly affected as building maintenance and insurance costs spiked, while caretaker fees have gone up with inflation.

No matter how well organised your scheme is, these increases are difficult to avoid. The body corporate is obliged to maintain the common property and repairs have to be done. Insurance is a legislative requirement so when prices go up you pay more. Caretakers have a contract that mandates pay rises.

Add body corporate levies to the list of death and taxes to the things in life that are inevitable. Fortunately, there are other economic factors at work that help balance some of these costs out. Rents have risen steeply and show no sign of declining. Despite some recent wobbles, unit prices have been on an upward trend for the past couple of years. South East Queensland remains a hotspot destination for internal migration and the Olympics will drive the economy of the area through the decade.

Throw in the buoyant jobs market and the majority of people who are in work should be able to handle changes to their levies without it being too painful. This isn’t to say that increases aren’t hard or that you shouldn’t run your scheme efficiently to keep costs down, but for most of us the situation is manageable.

For people on fixed or limited incomes though, these changes are likely to be harder to process. If you are on a pension without the backup of private resources sudden jumps in the cost of living are going to significantly affect your budget. If body corporate levies rise as well, it could push you over the edge.

Over the past year, our office has seen an increasing number of calls from people who are worried they are not going to be able to pay their levies. These are the hardest calls to deal with, as while we are sympathetic, the answers managers can provide don’t always offer much comfort.

These conversations usually start around the time budgets are set or when levy notices go out after an agreed rise. People ask why the costs are going up – a reasonable question and there is usually a multi- faceted response. Then they ask the question for which there is no happy answer – ‘I’m on a fixed income and can’t afford to pay. What can I do?’ What is there to say?

The body corporate has to meet its obligations and levies have to be set accordingly. Over time, major works are going to be required and schemes have to either save for this or have periodic special levies. Owners pay the agreed levies or they enter the debt recovery process. If owners vote to keep the levies artificially low, the scheme may run out of money or face legal issues and levies will have to be raised at that point. At some stage, the owner on a fixed income will have to pay and if they can’t, they may have to sell. That’s the technical answer but it doesn’t provide too much help for people with limited options.

So, is there anything that can be done? Not easily. Each individual will have to consider their own circumstances, but if you are on a limited income, you will have to be realistic. Don’t assume that because the levies were low this year or last year they will stay low over time. Do what you can to build a margin into your budget. If you need assistance with financial planning, it’s better to ask in advance and get assistance while you have time and opportunity.

Committee’s dealing with owners in these positions also have to be practical in their approach. Try and advise people ahead of time of potential levy increases or special levies. Be open to accepting owners who want to go on a payment plan – they can’t reduce the amount they pay, but may be able to spread it out the payments. It may not be possible to change the situation, but perhaps there are ways it can be eased.

If you are having issues with payments or your scheme wants assistance with owners who are, please contact your body corporate manager – the answers may not be easy but we can look to give practical advice about what to do next.

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