Can trustees increase levies without owner approval?

Levy increases are never popular, especially when they appear to arrive without warning or proper explanation. One of the most common concerns we hear from owners is this: “Can our trustees increase levies without asking us first?”

The answer is: yes, but only under certain conditions — and always within the framework of the sectional title laws. At this stage, it is important to understand whether the increase in the levies payable by an owner is attributable to an increase in the operational levy or as a result of a special levy which has been raised. In this blog post, we focus on increases to operational levies and the process to be followed.

Let’s explore what the law allows, what good governance requires, and what you can do if you suspect the process hasn’t been followed correctly.

In a sectional title scheme, trustees are responsible for managing the financial affairs of the body corporate, which they sometimes delegate to managing agents, in whole or in part. This includes preparing a budget and setting levies to ensure the scheme remains fiscally sound.

However, they cannot impose levy increases arbitrarily. All operational, normal levy increases must be:

• Based on an approved budget for the relevant financial year;
• Presented to owners at the Annual General Meeting (AGM) for approval by ordinary resolution; and
• Properly recorded in the minutes.

In other words, the increase must be tied to the scheme’s actual running costs and formally presented to owners as part of the body corporate’s annual financial planning process.

There is one exception that allows trustees to implement a levy increase without owner approval, but it comes with conditions.

If:

• The financial year-end has passed; and
• The AGM has not yet taken place; and
• The scheme still needs to function financially…

…then the trustees may increase levies by up to 10% of the current amount, to ensure continued operation.

This is considered a temporary and limited measure, and the increase must be regularised when the AGM is held and the formal budget is approved.

If you receive a levy increase that seems unjustified or not tied to an approved budget, you are entitled to ask questions. Here’s what to do:

1. Request the budget and meeting minutes

Ask the trustees or managing agent for a copy of the approved budget and the minutes of the AGM or trustee meeting where the increase was discussed.

2. Review the scheme’s rules

Some schemes may have additional rules governing how and when levies can be increased. These must be followed in addition to the standard legal requirements.

3. Raise the concern formally

If you believe the process was irregular or that trustees exceeded their powers, put your concerns in writing. Ask the trustees to explain the basis of the increase.

4. Escalate to CSOS

If your concerns are not resolved, you may lodge a dispute with the Community Schemes Ombud Service (CSOS). Under s 39 of the CSOS Act, the Ombud can investigate levy disputes and issue binding orders, including a review or reversal of improperly imposed increases.

Trustees must always act in the best interests of the body corporate, but that doesn’t mean acting behind closed doors. Financial transparency is a cornerstone of good governance in community schemes. This includes:

• Giving notice of meetings and levy changes;
• Circulating approved budgets;
• Providing owners with reasonable access to financial records.

When levy increases happen without communication, owners feel blindsided and trust breaks down.

Trustees can increase levies — but only when they follow the correct procedures. If an increase is imposed without budget approval, proper notice, or clear justification, owners are well within their rights to challenge it.

Ultimately, the goal is not to avoid levy increases altogether, it’s to ensure they are fair and reasonable, lawful, and transparent. Failure to properly manage levy increases to match the requirements of the body corporate’s budget and maintenance requirements could spell disaster for the body corporate and the owners in the future.

If you’re unsure whether your recent levy increase was properly implemented, start by asking for the paperwork. And if the answers aren’t satisfactory, know that CSOS should be there to help.

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