I’m going to say ‘body corporate’ and ‘bodies corporate’ a lot below, so let’s shorten it to ‘BC’ and ‘BCs’ right off the bat.
BCs often get a bad rap in New Zealand. They can be seen as expensive, unwieldy, unaccountable, or stopping you from doing what you want with your property. As a result, some people are a bit afraid of them, or just want to steer clear of homes that are part of a BC.
Still, there are tens of thousands of homes across New Zealand which are part of a BC. And there are going to be a lot more in the future. Auckland needs 300,000-400,000 more homes in the next 30 years, and up to half of them could be part of a BC too. So it’s good to know a little bit about BCs, especially if you think you might like to buy a home in Auckland in the next few decades.
What is a body corporate?
First, what are they? A body corporate is a legal structure, like a company or charity. When you’ve got multiple homes or units on a single piece of land, a BC is usually the way to go. BCs are governed by the Unit Titles Act 2010, which started to get reviewed under the previous National government but then got shelved under the current one; hopefully it will be revisited sometime soon, as the aim is to make the system work better for everyone.
A body corporate is made up of all the unit owners. That’s right: if you own a unit in a block of apartments or terraces, you’re part of the big bad body corp, and together with all your neighbours you are the big bad body corp. Pretty simple, really.
Generally people get one vote per unit, whereas costs normally get allocated based on the size of the unit (i.e. a 3-bedroom apartment pays more than a 1-bedroom apartment in the same building).
What’s the time Mr Wolf?
How much do body corporate fees cost?
Based on the reliable metric of Herald article comments, one of the things people are most wary of with BCs is the cost, so I want to expand on this a bit. Body corporate levies can range substantially. Things like common facilities (gyms, pools, tennis courts, etc), the building’s age and condition, and the level of services can all affect the cost.
Here’s an example of BC levies, for a 14-year old building in the city centre with 100+ units (and no common facilities). The average levy is $3635 per unit. The key point here is that many of these costs are things you’d have to pay for yourself in a detached house; in a BC situation, they instead get packaged up in the body corp fee:
|Item||Price per unit|
|Long Term Maintenance Fund||$900|
|Common Area Electricity||$400|
|Passenger Lift Maintenance||$100|
|Repairs & Maintenance||$90|
|Window & Exterior Cleaning||$75|
|Fire Alarm/Sprinkler Testing||$60|
If you have your own house, you pay your own insurance for the building. In a BC situation, the BC takes out insurance for the whole building and recovers that cost through levies. If there’s a fire, or someone crashes a car into the building, the BC’s insurance will deal with it.
The Long Term Maintenance Fund is another important one. BCs have to plan for long term maintenance of the building – things like repainting, replacing the roof every 20 years or so, etc. Ideally, the BC will build up this fund over time, so that when it’s time to carry out the maintenance, there’s already enough money in the kitty. Again, this is something you’d have to take care of yourself in a house (and likewise Repairs & Maintenance).
Some of these things you’d probably just take care of yourself in a house – e.g. doing your own cleaning – and you also wouldn’t have any Building Manager or Secretarial costs of course. Still, looking at the costs above, probably less than half of the $3,115 levy is ‘additional’ cost compared to what you would have in a house.
Side note: this body corp also pays about $200 per unit for rubbish and recycling collection through a private provider – but also means it doesn’t pay the council’s ‘targeted rates’ for rubbish. I haven’t shown the costs in the table above, since that part of the BC fee essentially cancels out with the lower rates bill.
Overall: being part of a BC is a little more expensive, but not drastically so. And much of the ‘additional’ cost is just because you’re outsourcing cleaning, landscaping, etc, and avoiding the hassle of doing it yourself.
Lastly, out of all the guff I’ve read on bodies corporate, probably the best basic intro I’ve seen is this one from Crockers on the Ockham Residential website. Have a read of that and don’t be afraid of the big bad body corp.