body corporate fee Archives | Apartment Specialists

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It a building is well maintained the usual increase of annual Body Corporate fees are 1-2% which covers inflation. Ensure you look at the Long Term Maintenance Plan to see what is coming up and if extra costs may occur during that period. A lawyer can assist you with this if need be.

SUMMARY:

Over time everything increases in price, for example buildings require cleaners for common areas, rubbish collectors and so on. In turn to cover these costs the Body Corporate need to increase their fees.

There are two major factors to watch out for to avoid more than the expected annual increase in fees.

Firstly, a building that is not well maintained may need extensive work to bring it back to where it should be, this will in turn effect the Body Corporate fees and they may rise significantly.

The second factor is to have a look at, is the Long Term Maintenance Plan for the building and seeing if funds are being allocated to save for any major changes that are required to be completed in the building, for example the need of new lifts. If the Long Term Maintenance plan is not being followed or funds aren’t being allocated to it, an unforeseen expensive cost may occur at the cost of apartment owners.

TRANSCRIPTION:

Good day, Andrew Murray here from the Apartment Specialists, talking about Body Corporate fees, how much do they go up each year? Now if the building is looked after properly it should go up with inflation, or remain pretty consistent, and inflation is generally about 1-2%. So not much. Now the reason for this is because, when you think about it, when I was small– okay 20 years ago, when I went to buy a can of Coke, when I was younger it was $1. Now it’s probably about $1.60. So over a long period of time, things go up.

You think about a Body Corporate, you’ve got cleaners, you’ve got rubbish collectors, over time their fees will slightly go up as wages go up, and things like that, which is perfectly normal. Now the big thing about a building, and the concern is – and this comes under when you’re going to purchase – is when a building is not looked after. And this is when Body Corporate fees can go up substantially.

So what do I mean by this? I mean let’s say, in two years time, the lift needs to be replaced. There’s a long term maintenance plan, and you can see in the long term maintenance plan it needs to be replaced. The cost that’s estimated is, say $200,000. Then when you look in the long term maintenance fund, or the contingency fund, and there’s, say $30,000, well you know that there’s going to be a shortfall, and money’s going to have to be raised.

Which will mean in that period you’re going to have an increase in Body Corporate fees to raise that money. So the key here is looking at the long term maintenance plan when you go to purchase, and the financials, specifically the long term maintenance fund, and the contingency fund, and see if they match up. I mean, how healthy, financially is it? And do they match the things that have got to, and I mean when that building needs to be painted in five years time.

Is the Body Corporate following that long term maintenance plan, and putting money aside each year for that time? Because if not, you Body Corporate fees could raise substantially and so that’s an unknown amount. And that means you’ve bought into the wrong building, or didn’t use your due diligence properly.

Make sure the Body Corporate that you’re going in to buy into is following the long term maintenance plan, and you can easily ask your lawyer to check this, or put this in as a condition when you purchase.

I hope that helps, Andrew Murray, Apartment Specialists, cheers.

If you have any questions, flick me an email at andrew@apartmentspecialists.co.nz or call +6421 424 892 and I’ll be happy to answer your queries.

The annual costs involved when owning a carpark include Body Corporates which range from $3500 to $8000 depending on size of the apartment. There are rates are around $1500 which is much cheaper than owning a house. Other costs include water, power and internet.


SUMMARY:

Often when someone buys an apartment they don’t know the other costs involved like: Body Corporate fees, parking and such. What do you need to financially prepare for before purchasing an apartment?

What is the Cost of Owning an Apartment?

The cost of owning an apartment is pretty simple:

Body Corporate fees – On average, the smaller the apartment generally the lower the Body Corporate fee is.

One Bedroom – $3500 – $4500

2 Bedroom – $4500 – $7000

3 Bedroom – $6000 – $8000

Car park – Add another $1000 – $1500

Rates – around $1500

Water – $500 per year

Power – Generally half your household power bill due to heating and size.

Internet – Standard fees apply

Improvements to your apartment are obviously your own cost, otherwise everything else is covered in the Body Corporate fees.

Some Body Corporate fees will include power and water and in that case the outgoings will generally be higher. Also, if the apartment is in a hotel complex they are often more due to higher standards.

TRANSCRIPTION:

Good day, Andrew Murray here from the Apartment Specialists, talking about what are the costs of owning an apartment? Now, the costs to own an apartment are pretty simple. They consist of your body corporate fees, which on average for a one bedroom, are around about $3,500 to about $4,500. A two bedroom is around $4,500 to $7,000. They go up higher depending the facilities in the complex, or how high end.

The better quality apartment often the body corporate fees are higher. A three bedroom would generally be about $6,000 to $8,000 a year, and if you have a car park, add $1,000 to $1,500 to that body corporate fee. Now, the next is obviously rates. Now, rates are around about $1,500 per year. The more expensive the apartment, the higher the rates. But if you look at it compared to a house, your rates are a lot less – probably about a third.

Now, your water is probably around about $500 per year, and your power is about half what it would be in a house. This is because you don’t have to heat as much area. You have less appliances, you have less lighting – all that kind of thing. The Internet is pretty much standard, as if you are living in a house. Now, repayments to your own unit, obviously, come at your cost, which is pretty obvious.

Improvements to the rest of the building and everything else is covered by the body corporate fee. Now, bear in mind, some body corporate fees are quite high, and this will often be because things like power are included and water is included in the body corporate fee. That’s not common, but it does happen from time to time. Also, if you live in a hotel, the complex will often be looked after to a very high standard, and you can get higher body corporate fees then. I hope that has helped.

Andrew Murray, Apartments Specialists, Cheers.

If you have any questions, flick me an email at andrew@apartmentspecialists.co.nz or call +6421 424 892 and I’ll be happy to answer your queries.

SUMMARY: 

Did you know that the cost to run an apartment as opposed to the cost of running a house is much less? It costs a significant amount more to run a house vs an apartment. Not just in what you have to pay to purchase but because of the time and money you spend maintaining a house. For example, when owning apartments all you have to do is pay the Body Corporate fees and your utilities.

Body Corporate fees are a really efficient way of having to do very little because if you think about it, how many hours would you spend a year looking after your home? At an hourly rate, what would that be? Would you not much rather be enjoying yourself? Having more time with friends and family.

I think people really need to realise that a Body Corporate fee is actually a positive rather than a negative, because it takes out so many other costs that are associated with owning a home and having a garden and added maintenance.

TRANSCRIPTION:

Did you know that the cost to run an apartment as to the cost to run a house is much, much less. It costs so much more to run a house vs apartment. Not just in what you have to pay but because of the timing you spend maintaining a house. For example, owning apartments and all you have to do is to pay the body corporate fees. You would also pay the power and water as well as to make sure that’s  tidy inside of your apartment.

Now when you think about a house. I have to take the rubbish out on a particular day. Now, that used to do my head in and I always forget. Also, I need to sweep the driveway. My dad always made me do that. Cleaning out the gutters and it is just endless stuff. Mowing the lawn and doing the garden. Making sure the house is clean and painting the house every 10 or so years. I also need to take care of the roof and plumbing.

What people do not realize is that they think that the body corporate fee is the a cost for owning an apartment. It is actually a really efficient way of you having to do nothing because if you think about it, how many hours would you spend a year looking after your home? At an hourly rate, what would that be? Would you not much rather be enjoying yourself? Free time with friends and family and all that kind of thing.

Not only does an apartment save a lot of time in traffic because of location, but also so much in maintenance. I think people really need to realise that a body corporate fee is actually a positive rather than a negative, because it takes out so many costs. There is less accounting and so much less stuff to do.

Anyway, I hope that helps you just have a little bit of a different perception on body corporate fees and I hope that helps. Anyway, if you have any questions, andrew@apartmentspecialists.co.nz.

Cheers.

Summary:

An OPEX is instead of a Body Corporate fee, this means that the building doesn’t come under the Unit Titles Act. It also means the rules are slightly different and you need to ensure that properties are run like a Body Corporate with meetings, minutes recorded, long term maintenance plans and so on. If it is run well you generally won’t have any problems at all.

TRANSCRIPTION:

Good day, Andrew Murray here from the Apartment Specialists talking about Auckland apartments for sale.

There are a few buildings in the Auckland CBD area in greater Auckland which don’t have body corporate fees. You’re probably thinking, What do you mean, all apartments have body corporate fees? Well, some of them are run under a different system and they don’t come under the Unit Titles Act and so they have what’s called OPEXs.

So, people ask me on these few buildings – there’s about 300 buildings in the Auckland CBD and so out of these 300 buildings approximately there’s five or six that do not fall under the Unit Titles Act. What that means is, they don’t charge a body corporate fee, there is no fee contract for disclosure, there are no compulsory minutes and they will have what’s called an OPEX. An OPEX means, the first two letters – OP, and the second two letters  – EX, that stand for operating expenses. So, essentially it’s the same thing.

But what you want to be wary of when you’re dealing with an apartment complex that has an OPEX so it doesn’t fall under the Unit Titles Act is, do you have the visibility? Is there an owner’s committee meeting? Are there AGM minutes – as in minutes on what happens in a meeting every year? And do you have the same visibility into what’s happening in that building?

If you do, and you’re comfortable with that, you’ve got a Chairman and all that kind of thing – it’s run pretty much the same – the risk isn’t really that much, it just means as long as you’ve got trust in the governing body. If you don’t, that puts out a few alarm bells because it means, how are you supposed to know what’s happening in your building? How are you supposed to know what’s happening in regards to your body corporate fees?

How are they being kept low, how are they being kept at– How do you know the best job’s being done? Because if you don’t have visibility you don’t have control and you’ll pay for that. You’ll pay for that when you go to sell it, and you’ll pay for that where things may… It just leaves the door open for things to be mismanaged.

I’m not saying that ones with OPEXs that don’t supply visibility are, but I’m saying it leaves the door open. So, just be always aware, when you’re dealing with OPEX – looking at OPEX rather than a body corporate – when you do, just make sure that they do have AGM minutes, there is an owner’s committee that’s overseeing the whole thing and you generally should be fine, in my opinion. If not, you want to really look further and see if that governing body provides you the visibility you need and your lawyer’s happy with it as well.

Hope that helps. Talk to you soon.

Cheers!