What is a strata title property?
A strata title property can see a person own an individual unit within a multi-unit building or lot, sharing ownership of ‘common property’, such as driveways, foyers, and gardens, with other unit-owners. The common property is managed by a legal entity, called a body corporate or owners corporation.
Beyond apartments, units, and townhouses, other types of properties that can exist under strata titles include caravan parks, serviced apartments, retirement villages, commercial, retail, and mixed-use premises.
What is a community title?
Community titles are similar to strata titles, but the insurance set up may be different. Under community titles, owners are typically responsible for insuring their own lot, while the community corporation is generally responsible for insuring common areas.
This differs from strata titles, where the buildings belonging to individual lot owners are also covered by this broader insurance.
What is an owners corporation or body corporate?
An owners corporation, also known as a body corporate, is the legal entity responsible for managing and maintaining the common areas of a strata-titled property.
Some owners corporations hire a body corporate manager to assist with administrative requirements.
The responsibilities of an owners corporation or body corporate include:
- Upholding all rules and by-laws of the property
- Managing insurance for the building and common property, and administering the common funds
- Maintaining and repairing common property
- Keeping records, such as budgets, financial records, minutes of meetings, and a register of lot owners and committee members
What are your responsibilities as a strata lot owner?
Owning a strata title property isn’t dramatically different to owning a stand-alone house on an individual block of land. Though, owners of strata properties must ensure they:
- Obey by-laws set by the body corporate.
These may include things like restrictions on where you and your guests can park cars or where you can hang washing. - Notify the owners corporation if the lot changes ownership, or if the tenants in a rental lot change.
- Pay all required fees and levies, as agreed. These levies cover the cost of maintaining and repairing the property, as well as contributing to a ‘sinking fund’, which can be accessed to pay for major, unforeseen expenses or damage.
Owners may also choose to vote on proposals regarding common property or bylaws. They can also attend annual general meetings (AGMs), where office bearers are appointed, committees are formed, and decisions on larger-scale issues are made. It’s not compulsory to attend the AGM or vote on proposals, and you can appoint a proxy to attend on your behalf if you wish.
It is also important to note that you maintain all responsibility for your own private-use lot, including maintenance and upgrades. You will also be responsible for your own contents, which may involve considering purchasing contents insurance as this is not usually covered under the body corporate’s building or public liability insurance.
Property investors may want to consider specialist landlord insurance policies, which also cover risks associated with renting a property to tenants. Meanwhile, tenants may be able to opt for a renters insurance policy, which may cover your contents as well as offer temporary accommodation if your rented home is rendered uninhabitable by an insured event.
What are the pros and cons of owning strata title property?
When deciding whether a strata-titled property is for you, consider what your responsibilities could be as a lot owner and whether the communal-style living would suit your individual circumstances and needs. It’s generally a good idea to do your own research on the property you’re interested in and to seek professional advice before making any purchase.
Here is a list of some general pros and cons typically involved in owning a property which falls under strata title:
Pros:
- Typically, units, apartments and townhouses are cheaper than houses.
- You won’t need to maintain common areas, as this is undertaken by the owners corporation.
- You may be able to access facilities like pools, gyms, or secure parking, without having to front the entire cost of purchasing and maintaining these yourself.
- The property may offer greater security than a stand-alone property.
Cons:
- You’ll generally need to pay strata levies, which can be expensive. Additionally, if major repairs or expenses occur, you may face hefty, once-off special levies.
- You may find yourself living in close proximity to neighbours, which can bring issues such as noise disturbances.
- You may be bound by certain restrictions, depending on the strata by-laws. For example, you may be limited by where you can park, the types of pets you can own, and the renovations or modifications you can perform.
- Owners corporations can be slow to make decisions or enact change, and your ideas or preferred course of action could be voted down by other members.
What should I find out before I buy a strata title property?
Before you purchase a strata title property, you may want to ask:
- What strata fees are involved?
- Are there major repairs to the building or common areas scheduled in the near future?
- What rules impact how you may use common areas?
- Are there any restrictions on the types of renovations or cosmetic alterations you can make to your property?
- Are you allowed to have a pet?
- Are there restrictions on where you and your guests can park your car or hang washing for instance?
