Body Corporate Water and Rates

body corporate waterUPDATE: 13/4/2015 – see the end of the article.

As with many things body corporate water rates are complicated. Whether your water bill comes from the Council or the body corporate will be determined by whether or not a water meter is installed.

By contrast, your rates bill will definitely come from your local Council, but, it’s calculated in a slightly different way than other properties.

Rates

One question I see regularly is “Do I need to pay both rates and body corporate levies?” It’s an excellent question.

The answer is yes, yes you do pay both council rates and body corporate fees.

Body corporate fees are the costs of running your particular body corporate. Levies are paid to the body corporate who then use those funds to on pay the costs.

Rates are local government taxes. All dwellings and blocks of land are taxed individually.

Calculating Rates

In Queensland council rates for properties are calculated by multiplying the council designated rate times the value of the lot. The rate payable varies depending on the rate category the property falls into.

So, for instance Logan City Council base rate charge by cents in the dollar was 0.3262 (0.003262) for the “residential and other land / owner occupiers” category.

On a valuation of $215,512 the calculation would be:

$215,512 x 0.003262 = $703.00 per annum or $351.50 per half year

So, where does the valuation come from?

The valuations used for rate calculations are the annual land valuations issued by the Department of Natural Resources & Mines (DNRM).

Which is where we hit a snag for body corporates because community title schemes are issued only one land valuation and that is for the body corporate as a whole, yet each lot owner receives a rate bill.

Calculating Rates for Lots in a Community Title Scheme

The body corporate itself does not get charged rates, notwithstanding the fact the body corporate receives the only land valuation for the scheme.

The amount of rates payable by the body corporate as a whole is calculated exactly as set out above. It is not charged to the body corporate though.

Instead the Council calculate the percentage of the cost each lot owner needs to pay.

To allocate proportions of the scheme’s taxable rate Interest Schedule Lot Entitlements of the body corporate are used.

Lot Entitlements as a Way To Calculate Cost Allocations

Queensland body corporates are registered with Contribution Schedule Lot Entitlements (CSLE) and Interest Schedule Lot Entitlements (ISLE).

CSLE are used to calculate the amount each lot must contribute to the upkeep of the scheme. CSLE are required to be as close to equal as is possible without being unequitable.

By contrast ISLE can be as varied as the different lots themselves.

ISLE are used to indicate the value of the lot. If the building were to be destroyed completely, the value of any payout would be split amongst lot owners using the ISLE.

Consequently the rateable amount each lot must pay is calculated using the value of each lot as a proportion of the whole.

Body Corporates and Water Rates

body corporate waterIf you buy a lot in a body corporate you may or may not receive a water bill.

Whether or not you receive a water bill will depend on whether or not your lot has an individual water meter.

Water meters may not be installed during construction.

For the developer a water meter is an added cost that eats into profit margins which they really like to avoid. Consequently many body corporates are registered without individual water meters.

If There Are No Individual Water Meters Installed

Ironically if there are no water meters installed then you will receive a water bill from the local Council and they will be responsible for ensuring you pay. The meter is on the body corporate common property and is read like any other meter.

The Council then splits the water usage cost amongst the lots within the body corporate and bills each separately.

To work out how much each lot owner individually needs to pay the Council uses the Contribution Lot Entitlements of the body corporate.

What that means is regardless of how much water you use, or don’t use for that matter, you will be charged a percentage of everyone’s water usage, including the common property.

With the common property usage, it doesn’t matter. You’d pay the same percentage of those costs anyway, through the body corporate levies.

But you’ll be paying a percentage of everyone else’s use. It’s great if you use a lot of water, not so much if you don’t.

Can Water Meters Be Installed?

It is certainly possible for the body corporate to install their own meters at their own cost, and many do.

The installation cost is covered by the body corporate if the scheme is a building format plan, or the lot owner if a standard format plan.

The cost can be quite prohibitive.

When Individual Meters Are Installed

Installation is only the first step. Then the meters need to be read.

Unfortunately this is where the local Council bows out. They will only read the one water meter for the building as a whole, which they continue to do, but now they bill the body corporate directly.

It is up to the body corporate to read the individual water meters.

It’s also up to the body corporate to pay the water bill to Council, raise invoices to the individual lot owners for their usage and percentage of costs and then chase those lot owners for payment.

Again this regularly recurring cost can be prohibitive.

Conclusion

Finding out your body corporate water arrangements is pretty simple: ask the body corporate manager, or if self-managed the Secretary.

I’m not altogether sure how it will help you as a lot owner, but it’s nice to understand how these things work.

UPDATE 13th April 2015

If your body corporate was registered prior to 1st January 2008 then on the Gold Coast you will be able to enter into a sub-metering agreement with the Gold Coast City Council.

Essentially the body corporate enters into an agreement to have the individual water meters read and billed by the Council. There are a number of conditions that need to be complied with, including the need for an Automatic Reading System and the replacement of the meters every eight years.

It does eliminates the need to arrange separate water meter reading and billing which may be of benefit to some schemes.

If you’re not located on the Gold Coast it’s well worth approaching your own Council. This is a touchy subject and they may have formulated their own systems for dealing with body corporate water rates.

Body corporates registered after 1st January 2008 will include individual water meters.

photo credit: Thomas Hawk via photopin cc

THE BASICS OF BODY CORPORATES

A little knowledge can go a long way


I see so many stressful and frustrating issues in body corporate records that result from simple misunderstandings it hurts my head. If I could do one thing to help it would be to teach everyone the basic rules, so they can avoid all these dramas.


With that in mind I've put together a short eBook that sets out the basics everyone owning in a body corporate really should know. It won't make those big issues go away, but it will give you a firm grounding from which to communicate.


It's completely free, so please, download it now!

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Comments

  1. Kaye Webb says:

    Isn’t it handy when Council, developers and all financial parties have reaped the maximum from pushing for and building a huge block of units and can then walk away from same and throw the huge cost and problem of water usage over to the unsuspecting owners? Some of these owners rent out and have a lot of people unknown to the owner occupiers merrily using up water that will be subsidised by single or two person/owners occupying and hoping to live frugally in their unit. Some of the latter people actually do all the work for the absent owners who also have big tax concessions for their “investment”. Why should the small minority have to pay for the profits of the developers and have to chase and fight for fair payment of water bills??

    • It’s certainly very frustrating. Particularly as buyers seldom find these things out before hand and it all comes as a nasty surprise

  2. Janice Markwell says:

    I am thinking about buying a unit in a block of 5. There are no individual water meters. At some time in the past, it was decided that as my potential unit is larger than the others, it should have 2 entitlements as far as body corporate levies are concerned. I know I will have one lot of council rates, but I am concerned that I may be responsible for double water rates. Am I worrying for nothing?

    • Hi Janice

      No you’re quite correct. With 2 lot entitlements to 1 for other lots you would pay double what everyone else pays for water… Assuming water is allocated per lot entitlements.

      Check with the manager or owner

    • I hope it’s not too late for this reply. If the other lots are mostly occuplied by tenants, and they cram 2-3 people per room and one in the living room and 1 in the laundry, your water bill will be exorbitant by the end of the quarter. I am experiencing the burn right now, paying close to $400 every quarter when there’s not even a running tap in there (under renovation)

      • Hi Sel

        I would think that this is going to come down to the body corporate taking action to address the overcrowding. If you’re paying that much then the other lots are too and hopefully the combined lot owners will take some action.

        Perhaps contact your body corporate manager and discuss with them to see what if anything is being done.

  3. Hi Lisa,
    I’m new at being part of a Body Corp and have been reading the various considerations in regard to water meters and billing. I will be attending a Committee Meeting in about a week and want to submit an item for disucssion on the daily fee charged by the Service company on behalf of the Body Corp to read the meters and process the Water Bill. We have individual meters and there is a master meter for the development. The daily fee (Administrative Fee) charged is close to 29 cents, which adds substantially to the Water Bill. I would appreciate any suggestions on how to best approach this.

    • Hi Lynne

      I would suggest that you bring up the issue of the cost and suggest some alternatives. That could mean another company to read the bills, at a different cost or another solution altogether. I gather GCCC and BCC now offer some different solutions for schemes with individual water meters where they can be read and billed by the council. It will depend on your infrastructure of course but that might be a place to start. Find out a little more about that.

  4. Craig Corner says:

    I was wondering if anyone could give me advice, as a landlord in a body corporate with only one water meter for the complex and as you say the water usage is split regardless of usage. Am I able to charge my tenant the water usage in whole or percentage or not at all at the units are not individually metered?

    • Hi Craig

      Oooh … good question. I don’t know the answer I’m afraid. Maybe someone else does?

      My property manager tells me that on-charging water costs depends on the water saving devices on the property. If its not water saving you can’t charge. I wonder how that would change with a body corporate. Does that mean the whole scheme needs to be water safe? If there are any property managers out there I’d love to know.

  5. our body corporate is involved in a rare situation, where the original block has been divided into three house blocks, plus a common. average block size is in excess of 1000mtrs. currently all three units are supplied by one meter, which is read and divided equally. the water utilities are willing to install a individual meter for me and deduct this from the main meter and the balance being shared between the others.
    question being :- can this be done without installing meters on all units at the same time?

    • Hi Larry

      There’s a lot of variables around this question. If you’re planning on putting a sub meter on your own property that’s your own business and its not anything to do with the body corporate. Its your property after all. Reading of the sub meter is a problem but if, as you say, the utility company is willing to read and deduct, then that’s great. It’s unusual they would without all three being done.

      As to the actual physicality of installing only one; you’ll need to speak with a plumber.

      Even if you can install I would still discuss with the other owners. There might be other factors you don’t know about or they might be interested in taking up the offer as well.

  6. I note know one has mentioned the issue of GST.
    If the body corporate is registered for GST and is on-charging the waters rates to owners based on units of entitlement say, then the character of the transaction has changed and the body corporate must remit 10% of the fee to the ATO.
    Therefore, the body corporate should bill to owners with an additional charge for GST.

  7. Hi Garry,

    I understand that paying the water sage is, in our complex’s case having 34 units, 1/34th of the meter but why do we all pay the water service charge. There is only one service coming into the property and we all pay the full service charge so the council gets 34 times the rate for the property. Am I missing something here or are we being ripped off?

    Thanks in advance for your assistance.

  8. Sutton Murray says:

    I need advice Please. My Unitywater bill $471 for a Villa(townhouse) i have just bought. The townhouse had no water usages(tenants) in this period of time. (Awaiting renovations). Unitywater explained that the share is 2.2% between units. This seems to be an extreme amount. Is this correct? This amount is much higher than my energy bill!

    • Hi Sutton

      It sounds like your scheme does not have individual water meters so the usage for the scheme is shared between the individual lot owners in accordance with their contribution lot entitlements. That is the subject of the article you’ve commented on.

      What can you do about it? In the short term, nothing. You could ask for relief from your scheme but since everyone is in the same boat don’t hold your breath.

      Long term, you could spearhead a movement in your scheme to install water meters so usage can be calculated.

Trackbacks

  1. […] Contribution and interest lot entitlements are also used to calculate rate costs and sometimes water costs. […]

  2. […] corporate water meters are a subject of great interest to many lot owners given the way water usage is allocated when meters are not present; by use of contribution lot […]

  3. […] This article was first published to the mybodycorpreport.com.au website. […]

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