Understanding body corporate: A landlord’s guide

Real Estate | 4 Dec, 2020 |

As a landlord, you need to understand your responsibilities and obligations to ensure the efficient management of your property. Maintaining your property, ensuring the comfort of the occupants and keeping everything up to code can be a lot of work. Having an understanding of the different aspects of your property is important so you know exactly what your role is in any situation.

One aspect of owning a property that can often be confusing is body corporate management. While landlords don’t typically engage in body corporate decision-making, they are required to report any issues that could potentially impact you directly regarding body corporate management. These issues will typically be raised through communications with your tenants or during routine inspections of your property. Reporting these issues to the body corporate is crucial in ensuring that they are resolved and that your tenants are happy and our property maintains its value going forward.

Let’s take a closer look at what body corporate is and what it means for landlords.

What Is Body Corporate?

A body corporate is typically defined as a legal entity that is formed when land is subdivided and registered. This applies to developments of apartments, duplexes, townhouses and other types of multi-resident lots. The body corporate consists of a committee with a dedicated treasurer, secretary and chairperson who are elected by the body corporate members. The body corporate effectively operates as a council for the property complex to ensure that the development is well-maintained and everything is kept above-board.

Body Corporate Funding

To carry out renovations and upgrades to the complex and to maintain communal areas, the body corporate needs to be funded. Typically, there are two different funds in place, an administrative fund and a capital workers fund, also known as a ‘sinking fund’. The former is used for costs associated with the day-to-day management of the complex like gardeners, cleaners and insurance. Thee ‘sinking fund’ is used for significant upgrades or renovations to the common areas of the property that need attention and other capital expenses such as lift maintenance, roof repairs or painting.

Body Corporate Fees

Body corporate fees vary depending on the size of the property development, value of the property, location and a range of other factors. Fees can vary significantly from one property complex to another, ranging anywhere from $1,500 to $25,000+ per year. Every complex will publish a ‘Strata Report’, which outlines the fees fro the previous year so you have an idea of what to expect. Corporate body fees are usually paid quarterly. As a landlord, you can pass the body corporate fees onto your tenant in certain circumstances as an outgoing, or a cost related to running the property. Examples of outgoings include electricity and rates, insurance costs and body corporate fees.

Body Corporate Fees Vs. Council Rates

It’s important to note, that while some landlords might think that council fees and body corporate fees are one and the same, this is not true. These are two different fees and must be paid accordingly. The body corporate fees should be paid to the body corporate and your council rates need to be paid to your local municipality or council. 

Take The Time To Understand Body Corporate

Although body corporate might seem confusing at first, it’s really quite straightforward. As a landlord, it’s important to become familiar with your body corporate, attend meetings, AGM and learn how things are done within your body corporate. Having a better understanding of your body corporate will allow you to raise issues when necessary, keep your property protected and ensure that your tenants are happy going forward.

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