An investor in a Mt Eden apartment building noticed her annual levy had gone up 34% over three years. She asked for a breakdown. It took six weeks and three follow-up emails to receive one — and when it arrived, the numbers didn't reconcile with the annual financial statements she had obtained from the body corporate register. She wasn't trying to avoid paying. She just wanted to understand what she was paying for.
Body corporate levies are how the body corporate funds everything it does. Understanding where they go, how they are set, and what happens when they change isn't just useful — it is your right as an owner.
The operating account covers the day-to-day running of the building: insurance premiums, cleaning of common areas, gardening and landscaping, utility costs for shared spaces, routine maintenance that happens at least once a year (like pool servicing or lift inspections), compliance costs, and the body corporate manager's fees. This is the part of the levy that keeps the lights on and the building functional.
Most bodies corporate also have a long-term maintenance fund, which holds money for larger, less frequent repairs — roof replacement, lift upgrades, cladding work, major plumbing jobs. The body corporate's LTM plan determines how much should be in this fund and what it is intended to cover. If the plan says a lift replacement is coming in year six and the LTM fund has almost nothing in it, that is a problem worth asking about.
Beyond those two, a body corporate can hold contingency funds for unexpected spending, and a capital improvement fund for upgrades that go beyond maintenance. The specific structure varies by building — what matters is that each fund has a clear purpose and that money from one fund isn't being used for something it wasn't intended for.
How are levies actually set? At the AGM, the body corporate votes on the annual budget. The budget determines the total amount the body corporate needs to collect, and that total is divided among owners according to their utility interests. The committee proposes a budget; owners vote to approve it. If they don't approve it, the body corporate has to go back and try again — which is one reason committees sometimes hesitate to propose the levy increases the maintenance plan actually calls for.
The levy amount in your pre-contract disclosure statement is what was current at the time of sale. If there has been a budget change since then, the current levy may be different. As an owner, you can request the most recent annual accounts from the body corporate — this is a document you're legally entitled to, and it tells you far more about the building's financial health than the levy notice does.
What happens when an owner doesn't pay? The body corporate can charge interest on overdue levies, add the reasonable costs of collection to the debt, and apply to the Tenancy Tribunal to recover it. And unpaid levies can be recovered from the person who owned the unit when the levy fell due or from whoever owns it when proceedings begin — which is exactly why levy arrears surface in the disclosure documents when a unit is sold. These mechanisms exist because levy arrears in a building aren't just the non-paying owner's problem. Everyone else ends up covering the shortfall.
Quarter is the new body corporate — transparent, owner-first, and built for the way people actually live together. See how it works at quarter.nz.