NAT: Levy arrears in strata: fairness, reform and respectful recovery

This article discusses fair and effective levy arrears management in strata schemes and the impact of new NSW reforms promoting transparency and accountability.

Levy arrears are reaching record levels across Australia, placing increasing pressure on strata schemes and prompting urgent legal reform. At last week’s LookUpStrata webinar, Petra Lohmann, General Manager of LevyCollect at Bugden Allen Group Legal, and Nancy Torry, Senior Associate at the same firm, addressed the issue head-on. Together, they explored how committees and strata managers can manage levy collection with fairness, efficiency and legal integrity, while navigating the changing legislative landscape.

The session drew strong interest nationwide, with participants keen to understand what the new NSW reforms mean in practice and what they signal for other states. Petra reminded attendees that NSW is often the testing ground for reform, and what happens there tends to influence the rest of the country.

Why levies matter

Petra opened the session by grounding the discussion in the basics with the statement that levies are the lifeblood of every strata scheme. Without timely payments, schemes cannot pay bills, insure the property, or maintain essential services. When owners fall behind, it not only affects the budget but also impacts everyone’s investment.

Nancy added that arrears do not always stem from unwillingness to pay. In many cases, confusion, hardship or poor communication are the real causes, which is why consistency and empathy are just as important as compliance.

Both presenters emphasised that levy management is a financial and a community issue. A well managed arrears process protects the scheme’s solvency and supports fairness among owners.

Understanding the causes

Across their decades of combined experience, Petra and Nancy have seen common themes in arrears cases. Among the most frequent causes:

• Economic pressures: rising interest rates and living costs continue to stretch household budgets.
• Misunderstanding of responsibilities: many owners do not realise levies are a legal obligation, not an optional contribution.
• Inconsistent follow up: committees sometimes delay debt recovery due to discomfort or a lack of a clear policy.
• Lack of transparency: poor communication about how levies are set or spent can breed distrust and non payment.

Petra explained that levy recovery should be about fairness, not punishment, and that owners who pay on time should not be left to subsidise those who do not.

The NSW reforms: a national wake up call

A major focus of the webinar was the recent changes to NSW strata law, which tighten requirements around levy notices, recovery processes and owner protections. While the reforms are state specific, Petra and Nancy explained that they reflect a national trend toward stronger consumer safeguards and procedural fairness.

Nancy highlighted three key shifts in the NSW approach:

• Clearer notice obligations, requiring schemes to issue levy reminders before taking legal action.
• Emphasis on hardship consideration, encouraging proactive communication before arrears escalate.
• Greater transparency in cost recovery, ensuring legal and administrative fees are reasonable and clearly disclosed.

Petra noted that these changes are about building trust. When owners see fairness and transparency in the system, they are more likely to engage and pay.

The presenters cautioned that other states are watching closely, with similar reforms expected in the coming years. They encouraged all strata managers and committees to align their practices with the emerging national standard now, rather than waiting for local legislation to catch up.

Respectful, effective recovery

One of the most powerful sections of the session focused on what professional, respectful debt recovery looks like. Petra shared that schemes that act early, communicate clearly and treat owners with dignity are far more likely to recover funds without damaging relationships.

She outlined a best practice framework:

1. Act quickly and consistently: follow up on arrears as soon as they appear.
2. Communicate with clarity: provide clear statements showing what is owed and why.
3. Offer pathways to resolution: where appropriate, discuss repayment plans or hardship arrangements.
4. Engage professional help early: specialist legal or recovery services can help ensure compliance and fairness.
5. Keep the committee informed: transparency avoids confusion and ensures consistent decision making.

Nancy observed that poor communication often turns a manageable arrears issue into a costly dispute. Owners deserve to know where they stand, and managers need the confidence to follow through. Having documented policies helps take the emotion out of the process.

Action points for committees and strata managers

Petra and Nancy closed the session by outlining clear, practical actions:

• Review your arrears policy to ensure it aligns with current legislation and best practice.
• Communicate proactively with owners about levy obligations and due dates.
• Document all steps, from reminders to recovery, to protect both the scheme and individual owners.
• Train committees on their obligations and on how to respond to arrears consistently.
• Monitor NSW’s approach and prepare for similar frameworks in your state.

These actions can help schemes maintain solvency, reduce conflict, and demonstrate fairness to all owners.

A message for every state

Although the reforms are NSW based, Petra and Nancy’s insights carry national significance. Arrears are increasing everywhere, and governments across Australia are closely examining how to strike a balance between owner protections and the financial needs of strata schemes.

Petra concluded that every state is moving in the same direction: toward fairness, transparency and accountability. Now is the time for schemes to review their systems and ensure they are ready for reform.

Link to presentation: NAT: Levy collection in strata

Petra Lohmann
Bugden Allen
E: petra@bagl.com.au
P: 02 9199 1055

Nancy Torry
Bugden Allen
E: nancy@bagl.com.au
P: 02 9199 1055

This post appears in Strata News #764.

Have a question or something to add to the article? Leave a comment below.

Read next:

• NSW: Q&A Special Levies, Levy Payments and Overdue Levies
• ACT: Q&A Levy Payments, Arrears and Interest for Overdues
• QLD: Q&A Levy Debt Strategies for Dealing with Late Paying Owners

Visit our Your Strata Levies OR state-specific strata information, take a look here.

After a free PDF of this article? Log into your existing LookUpStrata Account to download the printable file. Not a member? Simple – join for free on our Registration page.