Buying

What do you need to know before buying a strata property?

Are you thinking of buying a strata property? Well we’ve compiled the three things you need to know about buying a strata property so there are no surprises. Here is everything you need to know.

When buying a property the two most common forms of property are:

  • “Torrens” title; and
  • “strata” title

Torrens title is the stats land registration and transfer system. It is the conclusive evidence of title of the owner. Now on to ‘Strata’…

Regent Apartment

1. What is a strata title?

In real terms a strata is a system that is put in place to deal with the ownership and maintenance of multi-level apartment blocks and subdivisions with shared areas. For example if there are 10 units in a building you are required to pay a portion of the outgoings to own and maintain that building and land.

Strata fees apply for residential and commercial properties and include  apartment blocks, villas, townhouses, duplexes, storage units, and factories.

2. What is the body corporate?

When you buy into a strata title scheme, you also buy into a body corporate. An ‘owners’ corporation’ is the formal name for the people that make up the tenants in a strata building, and all share the property’s responsibility and the upkeep of the communal areas used. Whereas the owner or people that own portions of a strata building are called a ‘body corporate’ and must contribute to the strata fees.

3. What do strata fees cover?

The strata fees essentially cover everything that will ensure your property and the building remains in good shape for use by the owner/tenant. The management’s responsibility is to pay for these expenses, including maintenance, insurance, management fees, repairs and upkeep of utilities.

There are three main types of levies that make up what strata fees cover:

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  1. Administrative fund levies
    Daily and regular expenses in nature and would cover the cost of maintenance, gardening, shared utility bills and body corporate insurance.
  2. Sinking fund levies
    For larger expenses, including the replacement of gutters or the roof.
  3. Special levies
    Designed to cover unexpected or extraordinary expenditures such as damage or termite infestation.

4. What are the benefits of buying a strata property?

Buying into a strata complex you have the added benefits of an instant community, providing connections and a shared space where you can entertain and kids can play.

Strata properties are great for first home buyers wanting a more cost effective alternative to a stand alone house. But read on to find out what to look for before purchasing. They are also fantastic for those who have adult children that have moved out and are wanting a closer community or downsizing empty nesters.

Many complexes are near also near main town centres and villages that provide residents with convenience to shops, cafes and restaurants giving them a lifestyle that they may not get further out.

In modern strata complexes residents can have access to luxury amenities that they would not be able to afford in a stand alone home such as pools, gyms and tennis courts.

5. Should I buy a strata property?

Chances are if you are looking for a smaller property like a unit, townhouse or villa, especially in our Illawarra region, there is a good chance it will be a strata property. Each property will have its pros and cons but we’ve compiled a list of important things to consider when it comes to a strata property before you buy.

  • How many owners vs how many investors
    It will be no surprise that owner occupiers are going to be more active in ensuring the building is maintained to a high standard. Investors will mean there are tenants renting in the building who do not have vested interest in the upkeep of the whole building.Investors aren’t living on-site and can’t physically see the property as regularly as owner occupiers do, so they just don’t see what needs maintaining as well as the residents do.It’s also good to consider the number of properties within the strata. A smaller complex will provide added value for future owner occupiers meaning that your re-sale value may be higher than a large complex.
  • The financials
    When buying a unit it is important to make sure you review the financial records of the body corporate. Occasionally first home buyers or investors can get caught up in the rush to gain ownership of the property that they don’t have a professional review the books which can leave them open to taking on major expenses and lawsuits with neighbours.
  • Building History
    Ensure you not only have a building and pest inspection, but you get a thorough history of the buildings repairs. Check whether there are ongoing problems, and how much they will cost to fix. It could just be that there are updates that are required that are common given the age of a complex, or there could be much more costly issues.A past committee meeting minutes is a good place to start to check what things are being discussed so you can gauge whether the property is a good purchase.
  • Maintenance Schedule
    Unfortunately with older strata properties some body corporates haven’t adequately planned for future maintenance and there are large costs that can arise. Ensure you do your due diligence and check that the sinking fund is in good shape to accomodate long-term maintenance.

That being said, there are great reasons to buy a strata property but do your research and make sure you know the state of affairs before you purchase. If you are a person that hates anything communal, then it is probably best to avoid them, but otherwise they can be great communities where you can share tools and ask for a bit of milk if you run out.

If you would like to know more feel free to get in touch.

Trever Molenaar
Trever has worked in the industry selling property for over two decades. This lifelong profession has enabled him to master the art of negotiation. Trever’s own personal values relate through to his professional life 
  • The client comes first every time 
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Molenaar x McNeice
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