Every year the same envelope arrives, with a new number inside, and every year owners ask the same thing: where on earth did that figure come from? The honest answer is uncomfortable, and it has nothing to do with your building being especially complicated.
Why does your levy feel like a guess?
Your levy feels like a guess because, more often than not, it is one. Picture how next year's budget actually gets built. A manager opens last year's spreadsheet, nudges one number up, trims another down, adds a little here for insurance, shaves a little there on maintenance, and arrives at a figure that feels about right. And “about right” almost always drifts low. This is because the manager knows that the higher the levy, the louder the complaints at the AGM. The budget you're handed is shaped less by the building's real needs, and more by a very human desire to avoid a difficult meeting.
Is a low levy truly good news?
A low levy is rarely the good news it appears to be. A figure shaded down to keep the room happy is precisely how buildings quietly starve their capital works fund. A starved capital works fund exposes the scheme to being ambushed, years later, by a special levy that nobody saw coming. The comfortable number today becomes the frightening bill tomorrow, and by then the manager who set it may be long gone. Owners cheer the small levy in the moment and pay dearly for it down the track.
Read: From Mascot Towers to Mandatory Compliance: The Reform That Could Save Strata Buildings
What has changed?
What has changed is that the guesswork is no longer necessary. I recently took two years of a building's accounts and asked a machine to build the coming year's budget from scratch. It landed within five per cent of a budget prepared by one of the best strata managers in Sydney. In minutes, I had every line item sourced and explained. The insurance rise traced back to a specific market forecast, the electricity increase came from an independent index. There was no guessing, no quiet lowballing, and no flinching at an unpopular figure. A machine simply does not care whether owners like the answer.
What should you do about it?
What you should do about it is start expecting your manager to show their working. A budget ought to be a document you can interrogate line by line, not a single number you are asked to swallow whole. Ask where each figure came from. Ask what assumption sits behind the insurance estimate, or the maintenance provision. If the honest answer is “last year plus a bit,” that tells you the budget was built to survive the meeting rather than to fund the building. The means to do far better already exist. Your job as an owner is to insist on it.
Read: Can You Tell a Good Story? Presenting Financial Statements at the AGM
Michael Teys has more than 30 years’ experience as a strata lawyer and academic and has owned 11 strata management agencies throughout Australia. He has a Master of Philosophy (Built Environment) and Bachelor of Laws. He lectures and writes widely about strata management issues in Australia and internationally.
