In this article
Kooky
Builder of Shaka, the payment router that pays every agent their commission on closing date.
About Kooky and Shaka →A house is bought alone. A unit is bought with neighbours, a shared building and an organisation that the buyer joins on the day of settlement whether they mean to or not. For an investor, that organisation, the body corporate, sets a cost that arrives every quarter, holds a savings account that may or may not be adequate, and enforces a set of rules that bind the tenant as well as the owner.
Units have drawn much of the attention of Queensland's investors. Cotality's June index put the median unit value in Greater Brisbane at $885,132, after a rise of 2.2 per cent in three months, and its May tables gave units a gross rental yield of 3.9 per cent against 3.1 per cent for houses. A higher yield on a lower price is the attraction. The levies are the part of the picture that a yield figure leaves out.
This guide explains how the money and the rules of a Queensland community titles scheme work, from an investor's side of the table: what is owned, how contributions are set and divided, what the administrative and sinking funds are for, what happens when levies are paid late, what by-laws can and cannot say, how they are enforced against a tenant, and which documents show all of this before a contract is signed. It draws on the Queensland Government's published guidance on bodies corporate. Buying off the plan has its own rules and is outside its scope. It describes the general position; a particular scheme's documents, read by a solicitor or conveyancer, decide the detail.
Related readInvestors now account for more than 40% of Brisbane home lendingQueensland Government, body corporate guidance on owners' contributions.
What the buyer of a unit owns
The buyer of an apartment or townhouse in a community titles scheme owns a lot. Everything outside the lots that the owners share, in the Queensland Government's examples the driveways, car parks and swimming pools, is common property, and it is controlled and managed by the body corporate, of which every lot owner is automatically a member.
Three documents define the arrangement. The plan shows where each lot ends. The community management statement, registered with Titles Queensland, records the by-laws and the lot entitlements for the scheme. And the body corporate's own records, its budgets, minutes and accounts, show how it has been run.
Not every scheme operates under the same procedural rules. The government's guidance refers to regulation modules, among them the Standard Module, the Accommodation Module, the Commercial Module, the Small Schemes Module and the Specified Two-lot Schemes Module. The module a scheme falls under affects how it must run its meetings and its money. The community management statement says which one applies, and it is one of the first things to check, because some of the rules described below differ for the smallest schemes.
Levies: three kinds of contribution
What owners call levies or body corporate fees, the law calls contributions. The Queensland Government's guidance on owners' contributions describes three kinds.
Regular contributions are the annual amounts for the administrative fund and the sinking fund. Special contributions are additional levies raised for costs that were not expected. Interim contributions are temporary levies that cover a shortfall until the next budget is set.
Related readInvestors turn to new builds and yield as 10 August deadline nearsThe regular contributions are decided once a year. At the annual general meeting, by ordinary resolution, the body corporate must approve a budget for the administrative fund and a budget for the sinking fund, work out from those budgets what each lot will pay, and decide the instalments and their due dates. An owner must then be given written notice at least 30 days before a payment is due. The notice has to state the amount, the due date, any discount for paying on time and any penalty for paying late.
For an investor, two consequences follow. The levy is not a fixed charge like a council rate set by someone else. It is the result of a vote on a budget, and an owner who does not attend or send a voting paper has left that decision to others. And the figure quoted by a selling agent is last year's decision. The next annual general meeting can change it.
Lot entitlements decide each owner's share
A budget says how much the body corporate needs. Lot entitlements say who pays what part of it. Every lot in a scheme has two entitlement numbers, set out in two schedules in the community management statement, and they do different jobs.
| Schedule | What it decides | The government's example, a scheme of 8 units |
|---|---|---|
| Contribution schedule | Each owner's share of most body corporate costs, and voting power when a poll is called on an ordinary resolution | Aggregate of 8 entitlements |
| Interest schedule | Each owner's share of the common property and assets if the scheme ends, the basis for council rates and charges, and the share of building insurance | Aggregate of 16 entitlements |
Queensland Government, About lot entitlements, and guidance on owners' contributions.
The government's guidance is direct on the first point: the contributions levied on each lot must be based on the contribution schedule lot entitlements. The exception is building insurance, which is shared according to the interest schedule.
To see how this works, take an invented scheme of eight units with one contribution entitlement each. If the meeting approves an administrative budget of $40,000 and a sinking fund budget of $24,000, the total of $64,000 is divided by eight, and each owner pays $8,000 for the year, before the insurance share is added. If one lot held two of ten entitlements instead, its owner would pay a fifth of the budget.
Related readMinimum housing standards: what a Queensland rental owner must provideThat last case is why the schedule deserves a look before buying. Entitlements are not always equal, and a penthouse or a larger townhouse may carry a larger number than the lot next door. The government's guidance also notes a historical quirk: schemes registered before 13 July 1997 have only one schedule in their original plan, and both sets of entitlements match it.
Entitlements can be adjusted, but only through the processes the legislation sets out. A buyer should take the numbers in the community management statement as the ones that will apply.
The administrative fund and the sinking fund
A body corporate keeps its money in separate funds, and the separation is strict. The Queensland Government's guidance lists three: the administrative fund, the sinking fund and, in some schemes only, a promotion fund.
The sinking fund is the one with the detailed rules. It exists, in the guidance's words, for big or one-off items, like painting or structural repairs, and for replacing major items, like common property fences or carpets. Owners' sinking fund contributions go into it, along with interest earned on its investments and any insurance money paid out for major capital items that were destroyed or damaged. Its money can be spent on capital and non-recurrent repairs to common property, on replacing major capital items, and on other things that should reasonably be met from capital. The guidance offers pool furniture as an example of the last.
The administrative fund has its own budget and its own contributions, set at the same annual general meeting. Where the sinking fund is reserved for capital and non-recurrent spending, the administrative fund is the one that carries the recurring costs of running the scheme from year to year.
Related readNegative gearing and depreciation: how tax rules treat a rental property| Point | Administrative fund | Sinking fund |
|---|---|---|
| Kind of spending | Recurring running costs | Big, one-off and capital items |
| Budget | Approved each year at the annual general meeting | Approved each year, and must look at least nine further years ahead |
| Typical item | The year's regular outgoings | Repainting, structural repairs, replacing fences or carpets |
| Transfers | None to the sinking fund | None to the administrative fund |
Queensland Government, guidance on the sinking fund and on owners' contributions. The sinking fund is not required under the Specified Two-lot Schemes Module.
The rule against transfers matters more than it looks. The guidance states that money cannot be moved between the sinking fund and the administrative fund. A body corporate that has under-budgeted its running costs cannot quietly dip into its savings, and one with a healthy administrative surplus cannot use it to patch a hole in the capital plan. Each shortfall has to be met by the owners, through that fund's contributions.
How to read a sinking fund
The sinking fund is where a careful buyer spends the most time, because it is where the future bills are either provided for or not.
The annual sinking fund budget has two jobs under the government's guidance. It must cover the necessary and reasonable capital spending for the current year. And it must reserve an appropriate amount for likely spending over at least the following nine years. That makes a planning horizon of ten years, covering capital or non-recurrent spending such as painting the building, the replacement of major capital items such as boundary fences, and other costs that should reasonably be met from capital.
The guidance says a body corporate may engage a professional to prepare the forecast or may estimate the spending itself. A specialist's forecast is not compulsory, and the quality of the estimate varies with the people who made it.
What a buyer is looking for is the gap between the plan and the balance. As an illustration with invented figures: a forecast that shows a $240,000 repaint and waterproofing job in three years, in a 40-lot building with $60,000 in the sinking fund, has $180,000 still to find. Unless contributions rise sharply, that is a special levy in waiting, averaging $4,500 a lot if entitlements are equal. The same forecast with $220,000 already saved tells a different story.
Related readWhat the bill limiting rental losses to new homes says, line by lineA low levy is therefore not always good news. A scheme can keep its contributions down for years by under-funding its sinking fund, and the owners at the time the roof membrane fails are the ones who pay. An investor comparing two units on yield alone can easily prefer the one whose low levies are borrowed from its own future.
Sinking fund money that is not needed immediately can be invested, the guidance notes, and the interest goes back into the fund.
Discounts, penalties and unpaid levies
The body corporate may reward punctual payment and penalise late payment, within limits the government's guidance sets out.
The discount can be no more than 20 per cent of the contribution, and it applies only if the amount is paid by the due date. The penalty can be no more than 2.5 per cent simple interest for each month the contribution is overdue. Whether a scheme offers a discount, charges a penalty, or does both is for the body corporate to decide, and the levy notice must say.
A missed due date can cost a fifth of the levy
Where a scheme offers the full 20 per cent discount, a $2,000 quarterly levy is $1,600 if paid on time. Paid late, it is $2,000, and penalty interest of up to 2.5 per cent a month, or $50 on that amount, can be added. Illustrative figures.
Investors who leave everything to a property manager should check who actually receives the levy notice. The contribution is the owner's debt, not the tenant's.
If a contribution is not paid, the body corporate can recover it as a debt, through the Queensland Civil and Administrative Tribunal or the courts, and the guidance says the costs of recovery, such as legal fees and a body corporate manager's charges, can be recovered as well. There is also a duty on the body corporate itself: where a contribution has been outstanding for two years, it must begin recovery action within two months. Conciliation is available unless court proceedings have started.
Related readNegative gearing changes pass Parliament with a super fund lending banFor a buyer, arrears elsewhere in the building are a warning sign. A scheme in which several owners are behind is a scheme that may have to raise more from the rest.
Special contributions and what triggers them
A special contribution is the levy nobody budgeted for. The government's guidance describes it as an additional levy for unexpected costs. It is raised on the same basis as the regular contributions, the contribution schedule, and it carries the same notice and recovery rules.
The usual causes are a repair that the sinking fund forecast missed or under-priced, or a problem with the building itself. An owner has no right to opt out. The body corporate decides to raise the money, and each lot owes its share.
An investor cannot predict a special levy, but the records make it possible to judge the risk. Minutes that mention water entering the building, engineering reports, disputes with a builder or repeated insurance claims are the places such costs first appear, often years before the levy does.
By-laws: where they are and what they cannot do
By-laws are, in the Queensland Government's description, the rules a body corporate makes to control and manage common property. They are recorded in the community management statement. If a scheme established after July 1997 has none listed there, the standard by-laws in Schedule 4 of the Body Corporate and Community Management Act apply.
They bind owners and occupiers alike. A tenant is an occupier, and the by-laws apply to the tenant from the day the tenancy starts.
For an investor, what by-laws cannot do is at least as important as what they say. The government's guidance on making by-laws lists the limits. A by-law cannot:
Related readOwn name, company or trust: how a Queensland rental can be held- restrict the type of residential use of a residential lot;
- discriminate between types of occupier, for example between owners and tenants;
- impose a monetary liability on an owner or occupier, except in an exclusive use by-law;
- be unreasonable, having regard to the interests of all owners and occupiers and the use of the common property;
- conflict with legislation;
- prohibit dealings with a lot.
Several things follow. A scheme cannot adopt a by-law that says lots must be owner-occupied, or that tenants may not use the pool. It cannot fine anyone under a by-law. And because the type of residential use cannot be restricted, a by-law is not the tool by which other owners can simply prohibit letting a lot to short-stay guests. Whatever other rules apply to that kind of letting, they are not made by by-law.
Smoking is treated specifically. A by-law may restrict or prohibit smoking on common property and body corporate assets, and in the outdoor areas of a lot such as a balcony, courtyard, patio or verandah. It cannot restrict or prohibit smoking in an enclosed part of the lot.
By-laws can change after purchase. A new or amended by-law generally needs a special resolution at a general meeting, and an exclusive use by-law, which gives one owner rights over part of the common property such as a car space or courtyard, needs a resolution without dissent. The body corporate then has three months to lodge the new community management statement with Titles Queensland, and the by-law takes effect when the statement is recorded, or later if it says so.
How by-laws are enforced, including against a tenant
The body corporate is responsible for enforcing its by-laws. The government's guidance sets out the path it must follow, and an investor should know it, because the owner is drawn in even when the tenant is the one at fault.
- An informal approachThe body corporate first tries to resolve the matter with the owner or occupier.
- A contravention noticeThe committee, or a general meeting, issues a formal notice: one form for a breach that is continuing, another for one likely to be repeated.
- A copy to the ownerIf the notice names an occupier, the lot owner must be given a copy as soon as possible.
- Conciliation or courtIf the notice is not complied with, the body corporate can apply for conciliation or start proceedings in the Magistrates Court.
- A fineFailing to comply with a contravention notice is an offence that the court can punish with a fine.
A continuing contravention notice is for something that is still going on, such as an unauthorised change to the outside of a lot, and it gives a period within which the problem must be fixed. A future contravention notice is for conduct that has happened and is likely to happen again, such as repeated noise, and it directs the person not to repeat it. The government's guidance puts the fine a court can impose for failing to comply with a notice at $3,454, a figure it gives as current from 1 July 2026.
Related readQueensland accounts for 37 per cent of investor sales in PIPA surveyAnother owner or occupier can set the process in motion. They give the body corporate a written notice on the approved form asking it to act, and the committee has 14 days to tell them whether a contravention notice has been issued. If it has not, they must first try to raise the matter directly with the person concerned and can then apply for conciliation. An owner or occupier cannot go straight to the Magistrates Court; that requires an adjudicator's order first. In urgent cases, such as a breach likely to cause injury or serious damage, the preliminary steps can be skipped.
The investor's practical interest is in the tenancy. A tenant who repeatedly breaches a by-law creates a file at the body corporate in which the owner's lot is named. Giving the tenant a copy of the by-laws at the start, and making sure the property manager knows the scheme's rules on parking, noise, pets and moving furniture, is the cheapest form of prevention.
What the levies do to the return
Levies come straight off the rent, and on a unit they are often among the larger holding costs. A worked example, with invented figures, shows the size of the effect.
| Line | Amount | As a share of a $650,000 price |
|---|---|---|
| Rent at $620 a week | $32,240 | 4.96% |
| Levies, both funds and insurance share | $6,000 | 0.92% |
| Rent left after levies | $26,240 | 4.04% |
Worked example. The price, rent and levies are assumptions, not market figures.
In this example the levies take nearly a percentage point off the yield before council rates, the agent's fee, repairs inside the lot or interest are counted. A building with a lift, a pool, a gym and an on-site manager will generally cost more to run than a walk-up block of six, and the difference shows up here.
The tax treatment of each levy is a separate question, and it depends on what the levy is for. Regular contributions and levies raised for capital works are not necessarily treated alike, and that is a matter to raise with a registered tax agent, who will want to see the levy notices.
The documents to read before signing
Almost everything in this guide can be checked in advance. Since 1 August 2025, Queensland's seller disclosure scheme has required a seller to give the buyer a disclosure statement before the contract is signed. According to the Queensland Government's page on the scheme, the statement says whether the property is in a community titles scheme, and for a lot in a scheme it is accompanied by a body corporate certificate.
Beyond that certificate, the body corporate's records can be inspected, for a fee, and a buyer's solicitor or a search agent can do it. The reading list is short:
- The community management statement, for the regulation module, both lot entitlement schedules, the by-laws and any exclusive use areas attached to the lot.
- The body corporate certificate, for what it records about the lot and its contributions.
- The latest administrative and sinking fund budgets and the financial statements, for the fund balances.
- The sinking fund forecast, for the work planned over the next ten years and what it is expected to cost.
- The minutes of recent general and committee meetings, for defects, disputes, insurance claims and any special contribution under discussion.
- The insurance details, since the building insurance premium is shared through the interest schedule.
A unit's price and rent are set by the market. Its levies, its savings and its rules are set by the owners, and they are all written down before the sale.
Kooky, from Shaka
Kooky edits Queensland Estate and builds Shaka, the payment router he made for Queensland property professionals. One payment comes in, and every agent, agency and party in the deal receives their signed share on closing date.
