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Flat Chat

The Low Levies Lurk

There is a myth in strataland that Unit Entitlements are set in concrete (no pun intended). UEs are the figure on which your levies are calculated, based on the size and position of your apartment.

The bigger the apartment, the higher the UEs, the more you pay ... in theory. But a very common way of cheating strata owners is skewing UEs so that a lot of owners pay more while a fortunate few pay a lot less.

For instance, a small scale developer might build himself a little block with a penthouse on the top for himself. He might then decide to reward his ingenuity by keeping his UEs low while everyone below him pays proportionately more.

Or a big developer might skew the UEs so that shops and cafes have to pay much lower levies than residential properties, making them easier to sell.

The same applies to swish penthouses in big apartment blocks. The developer could induce purchasers to pay top dollar for the apartments by promising bargain basement levies. After all, it's the other owners who'll be making up the shortfall.

"There's a history in NSW of entitlements not appearing to be allocated correctly," says Leon Cheneval, in charge of valuations at levies specialist Total Strategic Solutions. "This can place a great burden on some lot owners.

"We had one case where a lady owned a ground-floor bedsitter unit with no views, while the developer had kept a penthouse apartment with fabulous views of the harbour - but she was paying more than him in strata levies."

In one controversial 100-plus unit building in Sydney's CBD, one small apartment's unit entitlement is greater than the five larger penthouses with up to 25 other apartments unfairly slugged for levies. Affected owners, however, can't get Executive Committee support to have the building re-evaluated because so many EC members benefit from the disparities and the rest don't care.

But if you do have a disparity in your building, it may be worth pursuing through the Consumer Traders and Tenancies Tribunal.

And don't worry about being outvoted by the lucky low-levies owners when you ask the Owners Corporation for its support. Ironically, if their levies are low, so too is their vote.

First published SMH March 2007