Understanding Your Strata Lot Allocation

26-Jun-2014

In a strata plan, if your share of the levies isn't a fair representation of your unit's share of the complex's value it can be frustrating and end up being very expensive- particularly if a large special levy comes along. 

The calculation of levies is done based on the "Unit of each Entitlement", or UOE. Each strata will have a total number of entitlements, with each apartment allocated a split based on the value of each compared to the whole. Floor space is an important factor in the calculation, but units with views, car parking or better aspect will attract a higher UOE than those of a similar size without. 

UOE isn't just used to determine levies - it also established each owner's voting rights, interest in common property, the distribution of surplus monies and each owner's entitlements if  scheme is terminated. Also important for investors, UOE is the basis on which the Valuer General calculates the land tax and council rates applicable to each unit.

There are a number of reasons why an allocation may become unreasonable over time, such as if the use of the property has changed after the date of registration of the plan. In other cases, the allocation may be deemed unreasonable at the time of registration, such as if a developer may have allocated favorable levies for units they are retaining, or to make properties more attractive for sale. In this case, ancillary orders may be made at a tribunal hearing for the developer to pay costs and repay any overpayment by unit holders.

While allocations can be changed if owners unanimously agree to a special resolution, it's rare that an owner will vote to increase their split of the levies. In most cases, application to change an unreasonable allocation must be made to the tribunal and must be accompanied by a valuation made by a registered valuer.