Body Corporate Explained: What Every Australian Property Buyer Needs to Know

If you are buying an apartment, unit, townhouse, or any property within a strata scheme in Australia, you will encounter the body corporate — also known as the owners corporation. Understanding how the body corporate works, what levies you will pay, and what to look for in the strata records before you buy is essential to avoiding nasty surprises after settlement. This guide explains everything buyers need to know about body corporate in Australia, including levies, by-laws, strata reports, and common red flags.

What Is a Body Corporate?

A body corporate (or owners corporation) is the legal entity made up of all the owners of lots within a strata scheme. When you buy a strata-titled property — such as an apartment, unit, or townhouse in a complex — you automatically become a member of the body corporate. The body corporate is responsible for managing and maintaining the common property shared by all lot owners.

Common property typically includes:

• Building structure (roof, external walls, foundations)
• Hallways, stairwells, lifts, and lobbies
• Swimming pools, gyms, gardens, and barbecue areas
• Car parks and driveways (unless individually titled)
• Shared plumbing, electrical, and fire safety systems
• Building insurance for the common property and structure

State Terminology Differences

Different states use different terminology for what is essentially the same concept:

• NSW: Owners Corporation (formerly Body Corporate), governed by the Strata Schemes Management Act 2015
• VIC: Owners Corporation, governed by the Owners Corporations Act 2006
• QLD: Body Corporate, governed by the Body Corporate and Community Management Act 1997
• WA: Strata Company, governed by the Strata Titles Act 1985
• SA: Strata Corporation or Community Corporation
• TAS, ACT, NT: Body Corporate or Owners Corporation (varies by legislation)

Regardless of the name, the function is the same: managing common property and enforcing the rules of the scheme.

Understanding Levies

As an owner in a strata scheme, you are required to pay regular levies (also called contributions or fees) to the body corporate. These fund the ongoing management and maintenance of the common property. Levies are typically divided into two categories:

Administration Fund (Operational Levies)

The administration fund covers the day-to-day running costs of the body corporate, including:

• Building insurance premiums
• Strata management fees (if a professional strata manager is engaged)
• Cleaning and gardening of common areas
• Electricity for common areas (lifts, hallway lights, pool pumps)
• Minor maintenance and repairs
• Administrative costs (AGM preparation, record-keeping)

Sinking Fund (Capital Works Fund)

The sinking fund is a reserve set aside for major repairs and long-term maintenance, such as:

• Roof replacement or waterproofing
• Lift refurbishment or replacement
• External painting
• Car park resurfacing
• Plumbing or electrical upgrades

A well-funded sinking fund is crucial. If the fund is inadequate when major works are needed, the body corporate may raise a special levy — an additional one-off payment from each owner that can run into thousands or even tens of thousands of dollars.

How Levies Are Calculated

Levies are usually calculated based on each lot's unit entitlement (also called lot entitlement). This is a figure set when the strata plan is registered, based on the relative value or size of each lot. A larger penthouse will typically have a higher unit entitlement — and therefore pay higher levies — than a smaller one-bedroom apartment in the same building.

Annual levies for a standard apartment in a major Australian city typically range from $2,000 to $8,000 per year, though they can be much higher in large complexes with extensive facilities (pools, gyms, concierge services).

By-Laws and Rules

Every strata scheme has by-laws (also called rules or articles) that all owners and occupants must follow. By-laws govern the use and enjoyment of both individual lots and common property. Common by-laws include:

• Noise restrictions: Quiet hours, restrictions on loud music and parties
• Pet policies: Some schemes prohibit pets entirely, others allow them with approval or restrictions on size and type
• Renovation approvals: Most schemes require body corporate approval before making changes to your lot (especially anything affecting the structure, plumbing, or external appearance)
• Parking rules: Allocated spaces, visitor parking restrictions, no commercial vehicles
• Short-term letting: Some schemes restrict or prohibit Airbnb-style short-term rentals
• Common area usage: Rules for using the pool, gym, barbecue, and other shared facilities
• Appearance: Restrictions on hanging laundry on balconies, external aerials, window treatments visible from outside

Before buying, read the by-laws carefully. If you plan to keep a pet, renovate, or rent the property on Airbnb, confirm the by-laws allow it. By-laws are enforceable and breaching them can result in fines or tribunal orders.

The Strata Report: Essential Before Buying

A strata report (also called a strata inspection report or body corporate records search) is a detailed review of the body corporate's records. It is one of the most important pieces of due diligence when buying a strata property — arguably as important as a building inspection. A professional strata searcher examines the records and provides a report covering:

• Current levies (quarterly or annual) and whether the lot has any outstanding levies
• Sinking fund balance and 10-year capital works plan
• Insurance details (building sum insured, excess amounts, claims history)
• Minutes of recent AGMs and committee meetings (revealing disputes, planned works, and issues)
• Any current or pending litigation involving the body corporate
• By-laws and any recent amendments
• Any special levies proposed or recently raised
• Defect reports and rectification history

A strata report typically costs $200-$400 and is well worth the investment. Include a "subject to satisfactory strata report" condition in your contract if possible. For a full list of what to check before buying, see our property due diligence checklist.

AGMs and Committee Roles

The body corporate is governed by an annual general meeting (AGM) where owners vote on the budget, levies, by-law changes, major works, and the election of the committee. Key roles on the committee include:

• Chairperson: Runs meetings and oversees the committee's operations
• Secretary: Handles correspondence, maintains records, and ensures compliance with legislation
• Treasurer: Manages the body corporate's finances, prepares budgets, and oversees levy collection

Attending AGMs is your opportunity to have a say in how the building is managed, what works are undertaken, and how your levies are spent. Many owners do not attend, which means a small number of active owners often make decisions that affect everyone.

Common Disputes in Strata Schemes

Strata living inevitably involves shared decision-making, which can lead to disputes. The most common issues include:

• Noise complaints between neighbours
• Disagreements over renovation approvals
• Disputes about pet ownership
• Arguments over levy amounts or special levies
• Maintenance responsibilities (is the leak from common property or the individual lot?)
• Short-term rental conflicts
• Parking disputes

Most states have a strata dispute resolution process, typically starting with internal mediation and escalating to a tribunal (such as NCAT in NSW or VCAT in Victoria) if not resolved.

Red Flags in Strata Records

When reviewing the strata report or body corporate records, watch for these warning signs:

• Low sinking fund balance: If the sinking fund is underfunded relative to the building's age and the capital works plan, expect special levies in the future
• Upcoming special levies: Check AGM minutes for any proposed or approved special levies — these are additional costs you will inherit
• Active litigation: Ongoing legal disputes can be expensive and destabilising. Check what the litigation is about and who is funding it
• Building defects: Particularly in newer buildings (under 10 years old), check for defect claims against the developer. Waterproofing and cladding defects are common
• High levies relative to comparable buildings: Unusually high levies may indicate poor financial management, an aging building with high maintenance costs, or expensive facilities
• Unpaid levies by other owners: A high rate of levy arrears suggests financial stress in the scheme, which can affect maintenance and insurance
• Restrictive by-laws: Check for restrictions that may affect your plans — pet bans, renovation restrictions, or short-term rental prohibitions
• Frequent committee turnover: If committee members change constantly, it may indicate internal conflict or management problems

For more on identifying contract and property issues, see our guide to property contract red flags.

Disclaimer: This article provides general information only and does not constitute legal or financial advice. Strata legislation varies between Australian states and territories. Always consult a qualified solicitor or conveyancer for advice specific to your situation.