Apartment Specialists Podcast No: 88
As an apartment owner, you may wonder how they calculate your body corporate fee and what are the factors they usually take into consideration? This podcast will answer some of the most significant questions concerning this topic. Andrew will go into detail as he shares his expertise and knowledge on body corporate fees.
Good day, Andrew Murray here from the Apartment Specialists, talking about Auckland apartment sales or Auckland apartments for sale, and questions I often get asked.
Now, the big one I get asked is, how is it decided what your body corporate fee is? Where do they come up with this figure? How come this apartment has a higher figure than its fee? Some of them actually don’t make sense. Now, I’ll explain it to you, it comes down to value. What your apartment is worth, is what you’ll pay in body corporate fee. The way it looks at is, let’s say all the apartments are worth x amount of dollars.
Your apartment will be worth on a round figure, a certain amount – your type of apartment. That value will be represented as a percentage. That will be then transferred into what’s called shares. Now, most apartments in the Auckland City or Auckland CBD, have 10,000 shares. So, your apartment will have a certain amount of shares. That amount of shares will represent a percentage, which is called a unit entitled. When you have your budget – let’s say if it’s 500,000, and your percent is say 1%? Well, 1% of 500,000, means that you’re going to have to pay $5,000 in body corporate fee.
It sounds a bit confusing, but an easy way to think about is your value. The value of your apartment decides the share or percentage, which is your unit entitlement, so the percentage you pay of the overall budget. Where you’ve got ones which are out of sync, which I come across from time to time, it’s because either they were set up incorrectly or say something’s happened like maybe, one side of the building’s lost its view? So, those apartments aren’t worth as much, so then those unit entitlements actually need to be altered. Unfortunately, there’s a costing involved.
Then it comes down to to your owners committee, you’re going to have a meeting. Some people realise all of these values go down, body corporate fees they might go up, so there’s a bit of a discussion. What’s fair is, they should get a valuer around. It costs around $5,000 to do the building. They’ll value the building, and they’ll give you their professional opinion on what the unit entitlements should be or percentages or shares, however you want to put it – of the units. They’ll decide what is fair in regards to paying how much you pay.
When you’re looking at value, generally speaking, that’s why as you go higher up in a building, you’re going to be paying more body corporate fee, because the the higher up you are, the better view you have, the more light you get, the less noise, so the value increases – all that kind of thing. Also about the size, generally the larger an apartment the more value, so then you’re going to be paying more of the body corporate fee. That gives you an idea, so purely it comes down to figuring out your body corporate fee for an Auckland apartment is through them.