It’s a simple concept – work out your strata budget, add 10% and then offer that much as a discount for payment by the due date.
It is effectively a legal form of penalty – late payers have to pay 10% more than others and still get charged interest and costs for recovery action. The owners corporation still has the money it needs, even if in the best case scenario everyone pays on time.
We’ve had this power in NSW for decades but the concept has never really taken off here.
The power to do this has been retained in the new strata laws beginning 30 November 2016, and perhaps there is a new imperative for it to be considered in the armory of collection tactics.
The new laws are soft on levy collection. They introduce the concept of an overdue levy repayment plan and, while given at the discretion of the owners corporation, the very existence of such a thing will encourage the professional late payers to ask for the accommodation.
The main objection seems to be from strata managers who are left to explain to people why they can’t have their discounts even though they missed the due date. In this new strata world order, it might be easier for managers to take a bit of heat on discounts rather than working in other ways to collect money from late payers.
In parts where there has been oversupply of apartments, levy collections will get harder, particularly where developers get caught with unsold apartments, so the humble discount may yet have its day.
PS – Fun fact: when you try this, market the benefit to your owners as ‘Get $ off’ rather than ‘Save $’ – the behavioural economists say people respond better to a gain (Get $ off) than avoiding a loss (Save $). Apparently the carrot is indeed mightier than the stick.