Most apartments in Sydney are strata titled.
But what does that really mean? Strata can seem complex, but it’s actually an efficient way to manage a building and it can make apartment owners’ lives much easier. Here is everything you need to know about strata property in Sydney.
What is strata?
Strata is a type of property title that combines individual ownership of part of a property, (for example an apartment), with shared ownership of the remainder of the property (like foyers, lifts, stairs and more).
The individually owned portion of the building is known as a ‘lot’ and the shared part of the property, such as the foyer, stairwell, lift and driveway, is called ‘common property’.
Strata is generally used for properties like apartments, townhouses and villas and, in Sydney, strata-titled properties comprise more than half of all residential sales and leases.
What is an owner’s corporation?
The lot or apartment owners collectively form the owner’s corporation, sometimes known as the body corporate, and this group shares ownership and responsibility for the common property.
Lot owners can make decisions about common areas by voting as a member of the owner’s corporation at strata meetings. There is an annual general meeting, and the owner’s corporation elects a committee to manage the everyday running of the building.
What you need to know about owning a strata property
Strata is a huge field and there’s a lot to know, which is why strata schemes usually employ a strata manager.
There are several key things to know:
Strata property owners are responsible for looking after the inside of their own lot (or apartment) as well as sharing the expense of maintaining the common areas with the other owners in the building.
The upkeep of the common property is paid for by strata levies, which are regular (usually quarterly) financial contributions payable by all the owners in the building. Special levies are raised when needed to pay for “extraordinary” or large projects such as replacing a roof or rendering exterior walls.
Each strata scheme is governed by bylaws. They function like the rules of the building, designed to ensure residents’ safety and security and protect the building and its surrounds. They can cover everything from noise restrictions to parking, through to garbage disposal and where residents can – and cannot – hang their washing.
If you buy a strata property as an investment, your rights and responsibilities are the same as if you were an owner occupier.
What to look for before you buy
Before you buy a strata property, it’s important to conduct a strata search. A strata search can be conducted by a specialised strata inspector, or the owner’s corporation can supply the information to your conveyancer or solicitor.
A strata search should turn up, at a minimum, financial reports for the scheme, meeting minutes and a record of any disputes in the scheme, particularly concerning the lot you are considering buying.
You can use the strata report to find out about fees, special levies, fund balances, building works, insurance details, by-laws. You’ll want to factor any levies into your budget and costs, if you’re buying into strata. Remember, buildings with more amenities – lifts, pools, gyms, tennis courts – usually cost more to run.
Read through the committee minutes and correspondence to find out about any ongoing issues, problems or disputes.
You will want to know:
- whether the scheme is being properly managed (how the records are kept is important, and sometimes the fact that information is missing can be telling)
- whether there are major projects coming up that might require a special levy or additional funds (these can be costly, and unavoidable, so you’ll want to factor it in)
- whether the finances are being run properly (for example are there sufficient funds to maintain the common areas?)
- whether the scheme has a plan in place to address any major building defects
- whether it is planning for the future (a 10-year forecast of expected works is required by law).
And, like any property purchase, always get a thorough, independent building inspection done before you buy.
Strata schemes may seem daunting, but buying into a well-run strata building shouldn’t be anything to be worried about.
If you’d like to know more about strata properties or are thinking of buying or selling strata property in Sydney, contact our expert team today.