Property investors can attain a fantastic ROI when investing in student accommodation and other versatile inner city residences that have high public transport accessibility and a wealth of local amenities. The face of Melbourne’s inner suburbs is changing rapidly, however, with apartment complexes and townhouses being developed with every passing year.
These new types of inner city residences means a rise in property investors paying body corporate fees alongside council rates, loan repayments, and other fees associated with maintaining their investment properties.
It’s natural for property investors to have a lot of questions surrounding the addition of body corporate fees to their list of responsibilities, so we here at My Rental have taken it upon ourselves to put together this little FAQ specifically for all you property investors out there.
Read on to unearth some of the most common questions surrounding body corporate fees for investment properties.
Body corporate fees are the fees associated with maintaining, repairing, and insuring your lot (or property) and neighbouring lots within a shared complex. Your body corporate fees will generally be inclusive of your building insurance, as well as the costs of maintaining both common areas as well as shared utilities, such as garden spaces, driveways, and garage doors.
Your body corporate will be responsible for ongoing property maintenance and repair work. Their budget comes from both your fees, as well as the fees paid by other neighbouring owners.
Residences that are composed of multiple ‘lots’ or units on a shared plot of land will require a body corporate to oversee both building maintenance procedures as well as facilitating communication between separate lot owners.
Lots generally refer to apartments, townhouses, units, and other residencies that make up a shared residential complex. Many inner city residences require owners to pay body corporate fees, though these types of properties can also be found in Melbourne’s outer suburbs too.
The average cost of owners corporation fees in Victoria are about $2000-$4000 p.a. for apartments, and around $15o0 p.a. for townhouse owners.
The average cost of body corporate fees in the Melbourne CBD can naturally vary to the average costs in other suburbs, just as council rates can vary between different council districts. As is the case with council rates adhering to the size and needs of the district, variances in body corporate fees are largely due to variations in the size of the building complex, as well as the maintenance costs that building may require.
If a complex has over ten different lots as well as a communal pool and multiple elevators, for instance, you can imagine that its body corporate fees may be higher than those of a smaller complex.
The owner of the property that is being managed by your body corporate is responsible for paying body corporate fees, as well as any levies or additional costs associated with building maintenance and repairs.
Renters do not pay body corporate fees, though property investors can factor some of these costs into the monthly rent charged on the property.
As body corporate fees are generally a levy, they are not subject to GST. A complex that is considered for-profit, however, will be required to pay GST. Complexes that take in over $150,o00 a year in its collection of fees are considered for-profit complexes.
Whilst your annual body corporate fees are tax deductible, any payments made towards capital repairs or improvements are not tax deductible.
Property investors can easily keep track of all their tax deductible payments using the financial data features on our My Rental Landlord app.
Records of past fees for your complex can be found in your property’s strata report for your reference. If you have any questions about the fees associated with your investment property or any past fees, you can consult with either your owners Committee, or your strata management team. Our team at My Rental is also always happy to provide advice to property investors surrounding both investments as well as navigating any costs associated with your investment property.
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