For Australian landlords who own apartments, townhouses, or other properties within a strata scheme, strata levies are a significant and recurring cost. They can have a material impact on rental yield, and poorly managed schemes can generate unexpected special levies that undermine returns. Understanding how these levies work, what they fund, how they are treated for tax, and what your maintenance obligations are under state tenancy law is essential knowledge for any strata investor.
This guide covers strata levies across Australia, the landlord maintenance obligations that apply to strata properties, and strategies for managing these costs effectively.
What Is a Strata Scheme?
A strata scheme is a form of property ownership that divides a building or land into individually owned lots (such as apartments or townhouses) and shared common property. Each lot owner is automatically a member of the owners corporation (called a body corporate in Queensland and some other states), which manages and maintains the common property on behalf of all owners.
Common property typically includes:
- Lobbies, hallways, stairwells, and lifts
- Car parks and driveways
- Gardens, landscaping, and pools
- Roofs, external walls, and structural elements
- Building insurance for the structure
The Two Types of Strata Levies
Under section 73 and section 74 of the Strata Schemes Management Act 2015 (NSW), owners corporations in NSW are required to maintain two separate funds. Similar structures exist under strata legislation in all other states and territories.
Administrative Fund
The administrative fund covers the day-to-day operational costs of the strata scheme, including:
- Cleaning of common areas
- Building insurance premiums
- Strata management fees
- Routine maintenance and minor repairs
- Utilities for common areas
Capital Works Fund
The capital works fund (formerly called the sinking fund in NSW) builds a reserve for major future expenditure on common property, such as:
- Roof replacement or repairs
- External repainting
- Lift refurbishment
- Waterproofing remediation
- Major structural work
Under the NSW reforms introduced progressively from July 2025 and continuing into April 2026, owners corporations are required to maintain a 10-year capital works fund plan using a standard form to forecast anticipated major expenses. This plan provides lot owners with a forward view of expected levy increases.
How Levies Are Set
Levies are set at the annual general meeting (AGM) by majority vote of the owners corporation. The amount each owner pays is proportional to their unit entitlement -- a figure set when the strata plan is registered, reflecting the relative value of each lot. Higher unit entitlement means higher levies, but also stronger voting rights at meetings.
In NSW, standard levy notices must be provided at least 30 days before the levy falls due. From October 2025, NSW levy notices must include a Financial Hardship Information Statement with contact details for the National Debt Helpline.
Special Levies
In addition to regular levies, the owners corporation may impose a special levy for expenses not covered by existing fund balances. Common reasons include:
- Unexpected structural repairs
- Remediation of building defects
- Compliance with new safety regulations (such as cladding replacement programs)
- Legal costs arising from disputes
In NSW, emergency repair levies to address serious health or safety threats can be imposed with only 14 days' notice (compared to 30 days for standard levies). Special levies can be substantial and are often levied at short notice, making due diligence on the scheme's financial health critical before purchase.
Strata vs. Lot Owner: Who Is Responsible for What?
One of the most common sources of confusion for strata landlords is determining who is responsible for a particular maintenance issue:
- Common property (shared corridors, roof, external walls, driveways, lifts, pools) -- the owners corporation is responsible, funded through levies
- Lot property (the interior of your apartment, internal non-structural walls, fixtures and fittings within the lot) -- you are responsible as the lot owner and, in turn, as the landlord
- Boundary elements -- windows, balconies, and waterproofing can fall under either category depending on the strata plan and the scheme's by-laws. Check the registered strata plan if in doubt.
If a maintenance issue is a common property matter, you report it to the strata manager or owners corporation. The repairs are funded by levies and are outside your direct control as a lot owner.
If the issue is within your lot, you handle it as the landlord under your state's residential tenancy legislation.
Landlord Maintenance Obligations Under Tenancy Law
Regardless of whether a property is in a strata scheme or freestanding, Australian landlords have clear statutory maintenance obligations under each state and territory's residential tenancy legislation.
Fit for Habitation
Landlords must provide a property that is fit for habitation at the start of the tenancy and must maintain it in that condition throughout. This generally means:
- Structurally sound -- roof, walls, floors, and ceilings
- Functional plumbing -- working taps, toilets, hot water system, and drainage
- Safe electrical installations -- wiring, outlets, and fixtures
- Working cooking facilities
- Secure -- working locks on all external doors and windows
- Weatherproof
- Compliant with smoke alarm requirements
Urgent Repairs
All Australian states and territories define a category of urgent repairs that landlords must address promptly. Typical urgent repair categories include:
- A burst water service or serious water leak
- A blocked or broken toilet
- A serious roof leak
- A gas leak
- A dangerous electrical fault
- Flooding or serious storm damage
- Failure of an essential service (hot water, heating or cooling where provided, cooking)
- A serious fault in a lift or staircase
If the landlord cannot be reached and urgent repairs are required, most jurisdictions permit the tenant to arrange the repairs up to a prescribed cost limit and claim reimbursement.
Non-Urgent Repairs
For non-urgent repairs, landlords are required to carry out the work within a reasonable timeframe. What is reasonable depends on the nature of the defect -- a broken oven warrants faster attention than a sticking drawer. Failing to address reported repairs within a reasonable time can expose landlords to tribunal applications by tenants.
Tax Treatment of Strata Levies
The ATO's treatment of strata levies for rental property landlords depends on the type of levy and how the funds are used. Based on the ATO's guidance on body corporate payments:
- Administrative fund levies -- deductible as a rental expense in the year paid. These fund ordinary operating costs and are treated as payments for services provided.
- Capital works fund levies -- the treatment depends on what the fund is used for. Regular sinking fund contributions are generally deductible in the year paid. However, contributions to a special purpose fund specifically raised for capital expenditure are not immediately deductible.
- Special levies -- the deductibility depends on whether the expenditure funded by the levy is revenue or capital in nature:
- Repairs and maintenance within your lot -- deductible in the year incurred (subject to the repairs vs. improvements distinction).
Keep detailed records of all levy payment notices, which should indicate whether contributions are to the administrative fund, capital works fund, or a special levy.
Due Diligence Before Purchasing a Strata Property
The financial health of the strata scheme is as important as the property itself. Before buying:
- Request the strata records -- review financial statements and meeting minutes for the past two to three years. Look for patterns of deferred maintenance or escalating levies.
- Check the capital works fund balance -- a well-funded reserve reduces the risk of large special levies.
- Review the 10-year capital works fund plan -- this forecasts major future expenses and should give you a view of expected levy increases.
- Check for pending or ongoing legal disputes involving the owners corporation.
- Ask specifically about building defects -- defect disputes in newer buildings can result in years of legal proceedings and large special levies.
- Look at insurance arrangements -- building insurance is arranged by the owners corporation; confirm cover is adequate.
Engaging With Your Strata Scheme
As a landlord in a strata scheme, your interests are directly affected by how the scheme is managed. Passive involvement often leads to unwelcome surprises.
- Attend or send a proxy to AGMs -- this is where budgets, levy levels, and major works are decided.
- Nominate for the strata committee -- direct participation gives you a voice in decisions before they are made.
- Monitor levy notices -- compare them against the approved budget to ensure funds are being managed correctly.
- Build a personal maintenance reserve -- for lot-level maintenance that falls outside the strata scheme's responsibility.
How Cleemo Helps Manage Strata Levies and Maintenance Costs
Cleemo gives Australian landlords the tools to stay on top of strata and maintenance expenses:
- Strata levy tracking -- log all levy payments (administrative, capital works, and special) as categorised, date-stamped expenses
- Maintenance request management -- tenants report issues digitally, and you track progress from report to resolution
- Expense categorisation -- clearly distinguish between deductible repairs and capital improvements for tax purposes
- Financial dashboards -- see your true net yield per property after all strata levies, maintenance, and other costs
- Document storage -- levy notices, strata financial statements, invoices, and contractor quotes in one place
- Year-end tax reporting -- export categorised expenses for your tax return or accountant
Frequently Asked Questions
Can I pass strata levies on to the tenant?
No. Strata levies are the lot owner's obligation. They can inform your rental pricing, but the tenant pays a single rent amount and is not liable for levies under any Australian state's residential tenancy law.
What if I disagree with a special levy?
You can challenge the levy at the AGM or an extraordinary general meeting by voting against the proposed expenditure. If you believe a levy has been improperly imposed, most states have tribunal processes that allow lot owners to dispute strata decisions. Engaging early -- before a vote is taken -- is more effective than challenging after the fact.
Are strata levies rising across Australia?
Levies have been rising in many schemes, driven by increased building insurance premiums, rising maintenance costs as buildings age, and remediation of defects in buildings constructed during the apartment construction boom. Well-funded capital works plans tend to produce more predictable, moderate levy increases than schemes that have deferred maintenance.
What if the strata scheme is poorly managed?
Poor management can lead to deteriorating common property, large unexpected special levies, and reduced property values. Options include raising issues formally at the AGM, nominating for the strata committee, or (as a last resort) applying to the relevant state tribunal to review the management of the scheme.
Conclusion
Strata levies and landlord maintenance obligations are inescapable features of owning investment property in an Australian strata scheme. The key to managing them is thorough due diligence before purchase, active engagement with the owners corporation, careful classification of expenses for tax purposes, and meticulous financial tracking.
Cleemo helps Australian landlords track every dollar spent on strata levies and maintenance, understand their true after-cost investment performance, and keep records in the format required at tax time.
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