Body corporate fees VS buying a house

Buying an apartment, unit or townhouse usually means being part of a body corporate who handles the management and upkeep of the building and sometimes the entire vicinity. It is responsible for common areas and in some cases may pay for services like pools, gyms and in some cases concierge. This incurs ongoing costs to cover these services.

The same body corporate is also in charge of making sure the building is adequately insured.

In most cases there will be a ‘sinking fund’ in place which is a pool of funds that can be reached into, in the event of unexpected costs such as major structural repairs or emergencies that are not covered under insurance.

On the other hand, living in a house (typically freestanding), means the responsibility of taking care of the maintenance and arranging insurance falls on the owner. However, there will not be any ongoing costs for strata or any other services.

Here, we look at some of the pros. and cons. of the different dwelling types.

Body corporate

Advantages

  • Cost of maintaining the building is shared and the building management will usually organise for the work to be done.
  • Structural housing insurance could be cheaper because you purchase insurance in bulk as part of the owners corporation.
  • Maintenance; cleaning, lawn mowing, gardens, insurance, electricity in common areas and general repairs.
  • Proposed changes, general disputes and collection of funds from the owners to cover these costs is all handled by the body corporate.

Disadvantages

  • As a unit/apartment is typically smaller than a house and there are common walls with others, there may be restrictions to the type of renovations that can be made.
  • Strata levies can cost annually, anywhere from $1,500 to $30,000 (potentially more), depending on the services provided and the type of dwelling. These fees are typically paid quarterly.

Free standing house

Advantages

  • There are typically little or no restrictions to renovations and/or extensions (unless placed by the council).
  • Any costs to repairs and/or renovations is a benefit to the owner.

Disadvantages

  • Any form of maintenance or repairs is the responsibility of the owner, entirely at their cost.
  • Because the cost isn’t divided with anyone else, other factors like property size and/or insurance would usually be absorbed by the owner, solely.

So what’s the better investment choice?

There is no right answer, here. It all comes down to personal preference and financial circumstance. Lifestyle suitability could also be a playing factor when deciding between investing in a body corporate dwelling or a house.