In short, your body corporate levy is generally split across three funds: the Operating (or Administrative) Fund, which covers day-to-day running costs such as common area power, cleaning and management fees; the Long-Term Maintenance Fund (LTMF), which sets aside money for future capital works like painting, roofing and structural repairs under your building’s Long-Term Maintenance Plan (LTMP); and Building Insurance, which covers the physical structure, including seismic risk. How clearly these three funds are planned, funded and reported determines whether your next AGM is a straightforward sign-off, or a difficult conversation.
Table of Contents
Introduction
Ask any unit owner what their body corporate levy costs each quarter, and most will tell you within a few dollars. Ask the same owner what that levy actually pays for, and the answer is usually a shrug. That gap, between what owners pay and what they understand they are paying for, is where AGM friction begins.
Committees know the feeling well. A budget goes up on the screen, a single blanket figure sits next to each owner’s name, and before the meeting has properly started, someone is asking why the levy has gone up again. It is rarely that the number itself is unreasonable. It is that nobody in the room has shown the working.
A body corporate levy in New Zealand is not one lump sum. It is a contribution split across (at minimum) three distinct funds, each with its own purpose, its own rules under the Unit Titles Act 2010, and its own reporting obligations. Understanding that split, and seeing it reported clearly, is what turns a levy from a source of suspicion into a number owners can genuinely get behind.
Related reading: Body Corporate Management Fees: What to Expect
The Three Pillars of Your Body Corporate Levy
1. The Operating (or Administrative) Fund
This is the fund most owners picture when they think about their levy, because it covers the costs a building incurs simply by being lived in and looked after week to week. Typical Operating Fund spending includes:
- Power and water for common areas: lobbies, lifts, corridors and car parks
- Cleaning and grounds maintenance
- Body corporate management fees
- Minor, routine repairs and general administration
- Compliance costs, including the annual Building Warrant of Fitness (BWOF) sign-off for the building’s Specified Systems
Compliance schedules and BWOF renewals, which confirm a building’s specified systems (fire protection, lifts, mechanical ventilation and similar life-safety equipment) have been maintained to the required standard, sit under this fund and are worth understanding on their own terms. Building Performance (MBIE) publishes guidance on specified systems and compliance schedules for owners who want the detail. A well-run Operating Fund is designed to be topped up every year through the regular annual levy, so it should rarely carry a large surplus or a shortfall from one AGM to the next.
2. The Long-Term Maintenance Fund (LTMF)
This is where levy transparency tends to break down, and where an underfunded body corporate creates the most risk for owners down the track. The Long-Term Maintenance Fund exists to pay for the big, infrequent items: repainting the exterior, replacing a roof, restoring cladding, a lift overhaul, or structural repairs.
Under the Unit Titles Act 2010, bodies corporate with 10 or more principal units are generally required to prepare a Long-Term Maintenance Plan (LTMP) covering a 30-year outlook, with detailed costings for at least the first ten years and a formal review at least every three years. Smaller bodies corporate face a lighter obligation but still need a plan covering a minimum of ten years. A Long-Term Maintenance Fund is then established to fund that plan (unless owners specifically opt out by special resolution), and that money can generally only be spent on items the LTMP identifies, rather than day-to-day running costs.
For committees, this is the fund that most determines whether owners face a Special Levy down the line, which we cover in more detail below.
3. Building Insurance
Wellington sits in one of the country’s most active seismic zones, and that reality shows up directly in body corporate insurance premiums. Multi-unit buildings, particularly older ones or those with a known seismic rating, have seen insurance costs rise as insurers reprice risk and revalue buildings against current rebuild costs rather than historic valuations.
For committees, this means the insurance line of the levy is often the least predictable of the three pillars. Premiums are shaped by factors including:
- The building’s seismic rating, and any strengthening work already completed or still required
- Current, independently assessed rebuild valuations, rather than original purchase price or an outdated valuation
- The insurance market’s overall appetite for covering multi-unit residential risk in Wellington specifically
Because this fund reacts to external market conditions rather than internal committee decisions, it deserves its own clearly separated line in AGM reporting, so owners can see it for what it is: a cost the committee is managing, not one it has created. Premium movements vary considerably building to building, so we would always recommend confirming your building’s current position directly with your insurance broker rather than relying on a general industry figure.
Proactive Planning vs. Surprise Special Levies
A Special Levy is what happens when the Long-Term Maintenance Fund has not kept pace with reality. If the LTMF is underfunded, whether because the LTMP was never updated, contributions were kept artificially low to minimise annual levies, or an unexpected item (storm damage, a failed lift motor, a defect discovered during other works) falls outside the plan entirely, the shortfall has to be found somewhere. That is a Special Levy: an additional, often unbudgeted, contribution requested from owners outside the normal annual levy cycle.
Special Levies are stressful for everyone involved. Owners are asked to find money they had not planned for, sometimes at short notice. Committees have to justify a number nobody saw coming. And the underlying maintenance work, having been deferred, is usually now more expensive to complete than it would have been if it had been budgeted for years in advance.
A realistic, fully funded LTMF is the alternative. It spreads the true lifecycle cost of a building (a new roof every few decades, repainting on a known cycle, lift replacement when it falls due) across many years of manageable, predictable contributions, rather than one large, disruptive bill. It also protects capital value: a building with a demonstrably funded maintenance plan is a more attractive prospect for buyers and lenders than one with a history of Special Levies and deferred works.
“A fully funded Long-Term Maintenance Plan is not about spending more today. It’s about never having to ask owners for an emergency cheque tomorrow. That is how you protect a building’s value for the next generation of owners, not just this one.”– Tim Taylor, Managing Director, Hallmark & Stone
Proactive planning is not about inflating levies for the sake of it. It is about being honest, early, about what a building will actually cost to maintain over its lifetime, and giving owners the chance to fund that gradually rather than all at once.
Clear AGM Reporting: How Hallmark & Stone Supports Committees
Every part of the trust gap described at the start of this article comes back to reporting. Owners rarely push back on a levy because the underlying costs are unreasonable. They push back because they cannot see the connection between the number on the page and the work it is funding.
At Hallmark & Stone, our approach to committee reporting is built around making that connection visible. Ahead of every AGM, committees we work with receive:
- A clear, three-way breakdown of Operating Fund, LTMF and Insurance spend and forecast, in plain English rather than raw ledger exports
- Progress against the current Long-Term Maintenance Plan, so owners can see which items were budgeted for and which were not
- A defensible rationale for any proposed levy change, tied directly to LTMP timing, insurance market movement, or specific Operating Fund cost increases
- Documentation that stands up to scrutiny: from individual owners at the AGM, from prospective buyers’ due diligence, and from lenders assessing a building’s financial health
“When owners don’t understand where their levies are going, friction at the AGM is inevitable. Clear, transparent reporting turns a tense budget vote into a shared decision to protect the building’s future value.” – Sam Taylor, Director, Hallmark & Stone
This is not about avoiding difficult conversations at AGMs. It is about making sure the conversation, when it happens, is about the right thing: whether the building’s maintenance strategy makes sense, not whether anyone can trust the numbers behind it. Guidance from Tenancy Services on body corporate rules and finances reinforces the same principle: informed owners make faster, better decisions at general meetings.
Frequently Asked Questions (FAQ)
Can a Body Corporate increase levies without owner approval?
Not without limit. The annual budget, and the levy that funds it, is adopted at the AGM, and how contributions are calculated (generally using each unit’s utility interest) is set out in the Unit Titles Act 2010 and the body corporate’s own operational rules. Some spending can be actioned as ordinary business once a budget is approved; other decisions, particularly Special Levies for major, unbudgeted costs, generally require an ordinary or special resolution depending on the nature and scale of the decision. Because the exact threshold depends on your building’s own rules and the type of decision involved, committees should confirm the specific approval pathway with their body corporate manager or a legal adviser rather than assuming a blanket rule applies.
What is the difference between an Operating Fund and a Long-Term Maintenance Fund?
The Operating Fund pays for a building’s ongoing, day-to-day running costs, cleaning, common area power, grounds maintenance and management fees, and is topped up through the regular annual levy. The Long-Term Maintenance Fund (LTMF) is a dedicated reserve, tied to the building’s Long-Term Maintenance Plan (LTMP), set aside for future capital works such as roofing, painting or structural repairs. LTMF money is generally restricted to items identified in the LTMP: it is not available for day-to-day expenses, and the Operating Fund is not generally used to fund major capital works.
Why have insurance costs increased so significantly for Wellington unit owners?
Wellington’s seismic exposure is a major factor: insurers price multi-unit buildings against current earthquake risk modelling, rebuild-cost inflation, and each building’s own seismic rating, rather than historic valuations. More broadly, insurers and regulators have flagged rising reinsurance costs and tighter risk-based pricing for higher-risk regions in recent years. We do not have a verified, current figure for how much premiums have moved for a typical Wellington body corporate, and this varies considerably by building, so we would recommend checking current market movement directly with your insurance broker rather than relying on a general industry figure.
What happens if an owner fails to pay their Body Corporate levy on time?
An unpaid levy does not simply disappear from the books. It becomes a debt owed to the body corporate, and the Unit Titles Act 2010 sets out a recovery process, which can ultimately involve the Tenancy Tribunal if the debt is not resolved directly. Many bodies corporate also charge interest on overdue levies under their own operational rules. Because the exact process, and any interest payable, depends on your specific body corporate’s rules, an owner in this situation, or a committee dealing with a non-paying owner, should check those rules or speak with their body corporate manager before assuming a particular outcome.
Get Your Levy Breakdown Sorted Before Your Next AGM
A levy that owners understand is a levy owners are far more likely to support. If you are a committee member heading into budget season without a clear, defensible breakdown of where your building’s money goes, start with our free Levy Breakdown Template, the same structure we use to report to the bodies corporate we manage.
If you would like an experienced second opinion on your building’s current budgeting framework, whether that means reviewing your Long-Term Maintenance Plan, checking your insurance position, or simply making your AGM reporting easier to defend, the Hallmark & Stone team is here to help.
Get in touch with Hallmark & Stone to talk through your building’s levy structure today.
Note: Legislative references (Unit Titles Act 2010 provisions on Long-Term Maintenance Plans, levies, special levies and levy recovery, and BWOF/specified systems guidance) have been checked against current publicly available government guidance as of September 2026. Given how often this area of law and industry practice is amended, it is recommended that you check official sites relating to these legislative references at the time of reading.
