body corporate fee Archives - Apartment Specialists

Tag: body corporate fee

Summary:

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.

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.


Apartment Specialists Podcast No: 183

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? Watch this video as Andrew from Apartment Specialists provides further insight into this topic.

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.

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.

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.

Apartment Specialists Podcast No: 124

Summary:

What is more expensive? Is it owning and maintaining a house or owning and maintaining an apartment? This podcast shows you the difference between the two properties and gives you an insight why ownership and maintenance of one is more expensive than the other. Watch this video to get more details.

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.

body corporate fee purpose

Apartment Specialists Podcast No: 109

Summary:

As an apartment owner, you pay an annual body corporate fee, but do you know where the money goes? Do you know the items that your body corporate fee covers? This podcast will answer these questions as well as other essential factors about body corporate fees. Get the full detail from this video.

TRANSCRIPTION:

Good day. Andrew Murray here from the Apartment Specialists. What does your body corporate fee pay for?

When you own an apartment, you pay a body corporate levy or a body corporate fee every year. It covers the whole maintenance of the building. But where does this money go? What is it actually paying for? I thought I would go over that, and go over what’s called a budget – go over the typical budget, and point out what are the major ticket items.

You can see here, this has approved the budget on one of the buildings just recently. Often you will have income coming in, that may be something like if the body corporate owns a space that it leases out. It could be commercial. It could be anything like that. Okay, but generally you are talking about, obviously, expenses.

You have a building manager’s fees. That is either the live-in building manager or one that contracts with you, that is available at certain times. And that will be different according to how many apartments you have got in your complex, and what’s needed.

Obviously electricity in common areas. That’s all your lights. That is at nighttime in your hallways. Things like that.Your lift. You know, because you are using an electronic lift. Fire protection. That is your alarms. That is checking it every year, making sure that it’s compliant. Passenger lift maintenance. Your lift – in an apartment complex – is being looked at numerous times a year because it’s for safety, basically.

General expenses. That’s miscellaneous, you know, cleaning things like that. Someone has spewed in the hallway, something like that. Swimming pool expenses. That is if you have got facilities. That will often increase your body corporate levy. Obviously insurance. That is one of the biggest ticket items. It’s $89,000. PDX system, that’s like your phone system. Insurance valuation. That is obviously doing the valuation of the building. Maintenance in general. That is things that go wrong. Maybe part a wall got marked or dented and that had to be repaired or things like that.

Your common water. That is watering the plants. That is more your common areas, where everyone has to pay a portion of. So maybe the building manager is going to be cleaning the outdoor area, and he’s going to be using water, and it’s going to be using whatever is needed. Secretarial fee is another thing that gets charged by the body corporate. That’s who your body corporate is and they will be charging you a per unit fee for that.

The grounds. Well at least in that case it’s just an unusual one. In this case, for this building, they have got – their entrance level is actually not owned by the – it is not a common area. It is owned by another unit, so they have to pay to use that. Often every building will have its little quirks in the budget, and that’s one of these here. Your rubbish removal. That’s obviously each year, every week or twice a week, depending on how big the building is. Your rubbish will get removed, and that’s the fee that covers that. That is quite a big ticket item.

Then your other big ticket items are looking towards your long term maintenance plan, and that can be – in this one you have got where the apartments are paying. It’s also got commercial in the building, because it’s separated. That is, you know – I have gone through that earlier. Let us now look forward to when that building needs to be obviously cleaned or painted or improvements need to made, in the next couple of years, five years, ten years, 15 years, 20 years.

Then there is a contingency fund. This is what is used to be called your sinking fund. That is what is often put aside because the long-term maintenance fund is where money is put aside for particular things, but they can’t be dragged from one purpose to another. Where it is actually, in my opinion, better to put it in a contingency fund – or your sinking fund as some people call it. Which means, the money’s there to be used, but can be used when it is needed, so it’s readily available.

You can see the overall budget for this. There are 115 apartments in this complex. It is half a million dollars, and there’s a few things here. Your levy to ground floor. For example, the ground floor does not use the lift and things like that, so it is not going to have to pay for the maintenance.

That just gives you a bit of an idea of what the budget covers, or where your body corporate fees go, and the major ticket items being, your insurance being a big one – $89,000. Your manager’s fee, your fee that looks after, that your body corporate is charging to look after your building and do all the maintenance and things like your rubbish and the rest is the long-term maintenance and management of the building.

Now I hope that gives you a little bit more of an insight to apartments – to owning apartments – and where your body corporate fee goes to. It just doesn’t go into thin air. There is actually a purpose for it and it’s a very good one.

Hope that helps, and talk soon.

Cheers.

body corporate fee amount

Apartment Specialists Podcast No: 88

Summary:

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.

TRANSCRIPTION:

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.

Cheers, bye.

Apartment Specialists Podcast No: 83

Summary:

Have you encountered apartments in Auckland that do not charge body corporate fees but has an OPEX (operating expense) instead? If you’re new to this term, then you need to learn more about it especially when you’re buying an apartment. In this podcast, you will discover the disadvantages of apartments with OPEX and why you should be wary when dealing with these types of properties.

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!

when i sell my apartment will i get the body corporate fee back


Apartment Specialists Podcast No: 59

Summary:

This podcast gives us an insight on what happens to the rest of the body corporate fee that has been paid advance when you sell your apartment.

TRANSCRIPTION:

Good day. Andrew Murray from the Apartment Specialists. Today we will talk about what happens when you’ve already paid your body corporate fee in advance. For example, you’re selling your apartment.  You paid your body corporate fee three months ago. What happens to that? You’ve paid it for the whole next year or you’ve paid it for the whole next six months. What happens to that money you’ve already paid when you sell your apartment?

Now what happens is, on settlement date, it will be apportioned. For example, let’s look at it like an orange. Let’s say you’re halfway through the year and you’ve paid the body corporate fee for the whole year. And when you sell that apartment, you’re halfway through the year. What happens is, on settlement date, you will get half of your body corporate fee back that you’ve already paid. It’s done just basically on percentage terms.

If you have paid your body corporate fee and you’re only 20% into that period, you will get the remaining 80% back. It’s pretty simple. When you go to sell your apartment, you’re going to get back the money you’ve already paid in advance for any maintenance and rates on your apartment as well.

Cool. Hope that helps. Cheers!