Challenging High Strata Levies in NSW: Guide + Free Interactive Tool

Introduction

Strata levies are a fundamental part of owning property in a strata scheme, supporting the maintenance and management of shared spaces across New South Wales. Yet, many strata owners are concerned when these levies rise unexpectedly, leading to questions about fairness, transparency, and the reasons behind such increases.

This guide aims to help strata owners understand why levies might increase, what rights and options are available for challenging them, and how to resolve common strata disputes under the Strata Schemes Management Act 2015 (NSW) and related legislation. By providing practical knowledge, this article supports informed decision-making and encourages effective participation in the management of your strata community.

Interactive Tool: Check If You Can Challenge Your NSW Strata Levy

Understanding How NSW Strata Levies Are Determined

The Role of Unit Entitlements in Calculating Your Strata Levy

In a NSW strata scheme, your levy contribution is calculated based on your property’s specific unit entitlement. This figure, which can be found in the strata plan, represents your proportional ownership of the common property and directly determines the amount you pay.

A property's unit entitlement is generally linked to its market value at the time the strata plan was first registered. As a result:

• Owners of larger apartments or those with premium features, such as a penthouse, will have a higher unit entitlement.
• These owners contribute a larger share to the strata levies and also hold greater voting power at owners corporation meetings.

Distinguishing Between Administrative Funds & Capital Works Funds

Strata levies are paid into two separate funds, each serving a distinct purpose in managing the building's finances. Understanding the role of each fund helps clarify how your contributions are used. These two funds are:

• The Administrative Fund: This fund is used for the day-to-day operational expenses of the strata scheme. It covers recurring costs such as strata insurance, cleaning services, gardening, utility bills for common areas, and minor repairs.
• The Capital Works Fund: Previously known as a sinking fund, this is a long-term savings account for the building. It is designed to cover the cost of major capital expenses, including painting the building, replacing common property, or upgrading essential infrastructure like lifts.

The Formal Process for Approving Strata Levies at an AGM

The authority to determine and approve strata levies rests with the owners corporation, a process that often requires legal advice for an owners corporation to ensure compliance.These decisions must be made through a formal resolution passed by a majority vote at a general meeting, which is typically the Annual General Meeting (AGM).

At the AGM:

• A proposed budget is presented that outlines the scheme’s anticipated expenses for the upcoming year.
• Based on this budget, the owners corporation votes to set the levy amounts for both the administrative and capital works funds.

It is important to note that a strata committee or a strata managing agent cannot impose levies, including special levies, on their own authority.

Investigating Common Reasons for High Strata Levies

The Impact of Building Age Facilities & Maintenance Needs

The age and features of a strata building heavily influence levy costs. Properties with extensive amenities therefore attract higher day-to-day expenses.

These features often include:

• Swimming pools
• Gymnasiums
• Multiple lifts

Older buildings typically face:

• More frequent maintenance and repairs that increase financial pressure on the owners corporation
• A higher likelihood of special levies for major or unexpected works
• Costly lift renovations every 20–25 years if replacements have not been planned in advance

Inefficient Strata Management & Hidden Costs

The proficiency of the strata management team directly affects levy rates. While skilled managers find savings, poor management can allow expenses to spiral.

Common hidden costs include:

• Overpriced long-term service contracts for cleaning or building management
• Strata insurance commissions of 20–25 % that inflate owners’ premiums

Underfunded Capital Works & Frequent Special Levies

Maintaining artificially low strata levies may seem attractive but can leave the capital works fund under-resourced for future repairs.

Potential consequences include:

• Large and frequent special levies when major work becomes unavoidable
• Levies that more than double for several years to finance essential upgrades

Initial Underquoting of Levies by Property Developers

For buyers in new developments, initial levies may be deliberately underquoted as a sales tactic to enhance affordability.

Once actual running costs emerge, the owners corporation must often impose sharp, significant levy increases. New laws now impose penalties on developers who misrepresent these initial costs.

A Step-by-Step Guide to Challenging a Strata Levy in NSW

Step 1: Check for Financial Hardship Support & Payment Plans

If you are struggling to pay your strata levies, the first action you should take is to request a payment plan from your owners corporation. Under the Strata Schemes Legislation Amendment Act 2025 (NSW), which took effect on 27 October 2025, owners corporations must consider all such requests from owners experiencing financial hardship.

This legislative change has two immediate effects:

• no blanket policies that refuse payment plans are permitted;
• levy notices must include a Financial Hardship Information Statement that directs owners to free support services such as the National Debt Helpline.

Contacting your strata manager early is crucial, before interest accumulates or debt-recovery action begins.

Step 2: Verify the Levy’s Legality & Gather Your Evidence

If you believe a levy is unjustified, first confirm that it was legally imposed. Levies must be passed by a resolution at a general meeting of the owners corporation, as required by Part 5 Division 2 of the Strata Schemes Management Act 2015 (NSW); a committee or managing agent cannot impose a levy on their own.

The next step is to collect evidence showing the levy is unreasonable. For example, useful evidence might include:

• the building’s maintenance history, especially reports on deferred upkeep;
• records demonstrating long-term neglect of common property that could have been avoided.

Remember, the time limit for an owner to claim damages for failure to repair common property has been extended from two to six years, strengthening arguments based on prolonged neglect.

Step 3: Apply to the NSW Civil & Administrative Tribunal

When internal resolution attempts fail, you can apply to NCAT. Under Section 87 of the Strata Schemes Management Act 2015 (NSW), the Tribunal may adjust a levy it finds excessive or inadequate.

Keep the following principles in mind:

• your challenge must rest on a valid legal reason and not merely a sense of unfairness, as confirmed in Quo Warranto Pty Ltd v Goodman [2022] NSWCATAP 315;
• you carry the burden of proof to show the levy is unreasonable;
• NCAT can vary the total levy for the whole scheme but cannot alter an individual owner’s contribution determined by unit entitlement.me, not altering individual contributions.

Proactive Strategies for Reducing Your Strata Levies

Scrutinise Budgets & Optimise Service Contracts at the AGM

Owners can actively work to reduce their strata levies by attending the Annual General Meeting (AGM). This forum lets you scrutinise proposed expenses and challenge any waste before the budget is approved.

Overpriced or long-term service contracts for cleaning, lift maintenance, or building management can quickly inflate costs. The Strata Schemes Legislation Amendment Act 2025 (NSW), effective 1 July 2025, introduces new protections against unfair terms in standard-form contracts for strata schemes. Consequently, the Act bans the following terms:

• Automatic renewals that lock the scheme into ongoing agreements without review.
• Excessive penalties for terminating a contract early.
• One-sided clauses that unfairly limit a service provider’s liability.

These protections give the owners corporation solid grounds to challenge and renegotiate agreements, ensuring fair value for every dollar spent.

Demand Transparency on Strata Insurance Costs & Commissions

Strata insurance is a major expense, and strata managers commonly receive commissions of 20–25 % on the policies they arrange. The Strata Managing Agents Legislation Amendment Act 2024 (NSW) now empowers owners to demand greater transparency about these charges.

Under this Act, strata managers must supply a detailed insurance quote breakdown that clearly states:

• The base premium of the policy.
• Any government charges and taxes.
• The commissions or fees the strata manager will receive.

Armed with these figures, the owners corporation can compare quotes effectively and secure the best value policy for the scheme.

Embrace Sustainability & Preventative Maintenance for Long-Term Savings

Investing in sustainability and preventative maintenance can deliver significant long-term savings on strata levies. The Strata Schemes Legislation Amendment Act 2025 (NSW) stops by-laws from rejecting sustainability infrastructure—such as solar panels or EV chargers—based on appearance alone.

A proactive approach to maintenance is equally vital. Implementing a preventative maintenance schedule extends building infrastructure life and reduces costly breakdowns. Simple measures can also trim utility bills, including:

• Operating energy-consuming systems like pumps and HVAC during off-peak hours.
• Upgrading to energy-efficient systems, such as motion-sensor lighting in common areas.

Conclusion

Understanding how strata levies are determined, the reasons for increases, and the legal avenues available for a challenge is crucial for ensuring fairness within your strata scheme. By actively participating in your scheme’s management and knowing your rights, you can effectively address high costs and promote transparency.

If you are facing a dispute over unreasonable strata levies or need guidance on implementing cost-saving measures, contact PBL Law Group’s strata dispute lawyers in Sydney for trusted expertise and tailored legal support. For assistance with recovering unpaid levies, our strata levy recovery lawyers can provide dedicated support to help your owners corporation secure the funds it needs.

Frequently Asked Questions (FAQ)