Are you looking into buying a new apartment? This can be such an exciting time, but you also need to do your homework. A host of hidden costs can creep up on you and put a serious dent in your budget. Understanding these hidden costs before you sign anything will help keep you from falling into a dept trap. 

Body Corporate Fees and Sinking Funds

Body corporate fees are one of the biggest ongoing costs you can have when owning an apartment in Australia. These fees cover the day to day, ongoing building maintenance and administration of common property within an apartment building. A portion of the fees that you pay to the body corporate should also contribute to a “sinking” or “capital works” fund that accumulates funds for significant capital expenses – think major roof repairs, driveway maintenance or building painting. 

The actual amount you as the owner will be paying depends on a range of things like the size of the unit, the amenities and overall condition of the building. Obviously high-end buildings with pools, gyms, and other services will have higher body corporate fees, but buildings that may seem like they should be more affordable can hide a nasty surprise. Buildings like this may have poor management, a lack of ongoing building maintenance that results in expensive repairs or aging infrastructure. 

Poorly Maintained Buildings Invite Budget Blowouts

Poorly maintained apartment buildings can be debt traps because they force their owners to pay unexpected fees for structural repairs that haven’t had the ongoing maintenance they require. Maintenance work is crucial for keeping body corporate fees low. When maintenance is ignored or significant problems are discovered, the body corporate will impose a large and often urgent fee. You could be looking at anything from concrete repairs, to waterproofing, roof leaks, and façade repairs. 

Regular upkeep means any shared spaces will stay clean and functional and lead to fewer maintenance calls and complaints. It will also mean lower body corporate fees as they won’t have to cover any quick repairs. Regular maintenance ensures that minor problems don’t snowball into something major – like roof leaks becoming a roof replacement or driveway cracks becoming major potholes and a complete driveway resurface job. 

Poor management from the body corporate can also lead to plummeting property value. A tired looking building is simply not going to attract the same kind of offers as the smart building next door. And poor budgeting and record keeping by a body corporate should be a red flag for any potential purchaser.

Look Carefully at the Body Corp Before You Leap

To avoid falling into one of these traps, it is essential that you review the body corporate’s financials, their meeting minutes and any maintenance plans they have before you sign a contract. Beyond a thorough apartment inspection by reputable pre-purchase building inspectors, you should also get a specialist rope access inspection, that can access every part of the building - including the façade and roof. Without doing any of these things to protect yourself and your hard-earned savings, you may find yourself buying a new apartment and then getting billed for thousands for repairs.