If you’re looking at buying an apartment or townhouse, it’s a good idea to brush up on what strata titles are. Here are some pros and cons to get you thinking before you make your decision.
What is a strata title?
Strata is a system for handling the legal ownership of a ‘portion’ of a building or structure. These ‘portions’ are known as ‘lots’ and can be applied to different property types, including units, townhouses and shops, where there is multiple ownership of lots within the building.
These multiple ownerships of the lots are combined in a legal entity often called the owners’ corporation, body corporate, strata company or community association, depending on the state or territory.
The owners’ corporation is responsible for the management of the strata scheme. All owners of lots within the property automatically become members of the owners’ corporation.
When you buy into a strata building you’ll be required to pay levies to fund your share of the annual running costs of the owners corporation and any maintenance. Occasionally, additional special levies may need to be imposed to fund unexpected or any expensive maintenance.
The benefits of strata titles
With strata titles, there is a legal entity to look after any major repairs or maintenance within the building. These costs are usually split between all of the lot owners. Strata buildings can also offer affordability, with units typically offering smaller price tags compared to houses in a similar location.
Some people also enjoy the sense of community and security a strata apartment block can offer.
Potential pitfalls of strata titles
Strata title expenses are often highest for complexes with access to extensive amenities, such as gyms, pools and concierge services. You should consider whether these extras are important to you and if the cost is warranted.
In some cases, older buildings may attract more expensive strata costs as a result of any required maintenance.
When it comes to disagreements about co-owned parts of the property, (the stairs, the lighting in the hallway, the colour of fence) the best strategy is open communication.
Your owners’ corporation will have an internal dispute resolution process which you must follow before making any applications to the relevant court in your state or territory.
It’s a good idea to submit any complaints to your owners’ corporation in writing, as this will provide a record of your dispute.
Understanding your rights and obligations
When purchasing a lot within a strata building it’s important to understand exactly what is yours and what your rights and responsibilities are.
In most cases, you will own the air space within a unit, its contents and any internal walls and fixtures. The outside walls, the roof, any stairs, hallways, foyers, gardens, lifts and so on, will be collectively owned by all owners who are part of the scheme.
All Australian states and territories have different legislation governing the strata schemes and details for compliance can be complex. Terminology also varies from state to state. It is your responsibility to understand how the law works in your state or territory and what your rights and responsibilities are before committing to any strata purchase.
When it comes time to purchase, be sure to review a full copy of the by-laws specific to your owners corporation. You and your tenants will be required to follow these by-laws so it’s important you understand them.
Get the right advice
If you’re thinking about buying an apartment, a Choice Home Loans broker can help advise you on body corporate issues, and help find a loan that suits your circumstances. Make an appointment today.
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This article is written to provide a summary and general overview of the subject matter covered for your information only. Every effort has been made to ensure the information in the articles is current, accurate and reliable. This article has been prepared without taking into account your objectives, personal circumstances, financial situation or needs. You should consider whether it is appropriate for your circumstances. You should seek your own independent legal, financial and taxation advice before acting or relying on any of the content contained in the articles and review any relevant Product Disclosure Statement (PDS), Terms and Conditions (T&C) or Financial Services Guide (FSG).