What is a Strata Title Property?
So, what is a strata title property? A strata title enables individual ownership of a part of a property, and is common in apartments, units or townhouses.
As the owner of a strata property, you will possess your own individual unit or apartment (commonly referred to as the ‘lot’) as well as sharing ownership and responsibility for common property, which includes all the areas of the land and building that aren’t included in any lot. Common property often includes all external or boundary walls, driveways, fences, and other shared spaces such as swimming pools and gardens.
What are the Risks?
Owning a strata property comes with some additional financial obligations in the form of levies. A levy is a fee paid by lot owners to cover any projected costs and expenses. The price of levies is discussed and agreed upon at the annual general meeting of the owner’s corporation. Levies are further calculated in proportion to the unit entitlements of each lot. This calculation is based on factors such as the lot size, position, number of rooms etc.
Regular levies are collected to form the ‘capital works fund’, which is used to pay for common repairs and maintenance. However, the body corporate or owner’s corporation of a property can also vote to introduce what is called a ‘special levy’ when there are insufficient funds available in the capital work funds to cover large or unforeseen works. Naturally, the older a building, the more likely the requirement for large and unforeseen repairs.
Further, in general owning a strata property often comes with some extra restrictions. As a member of a strata property, you must abide by the laws set out by the body corporate. For example, strata owners are often restricted in their ability to renovate their property and may be subject to extra rules regarding pets and noise control.
What are the Benefits?
Despite the added risks strata properties often make for incredible investments and are often an appropriate choice for first home buyers keen to enter the market. Strata properties often offer prime locations and may be relatively affordable in comparison to purchasing a house. Further, more modern strata buildings often include shared facilities such as swimming pools, gardens, and outdoor entertaining areas.
How Burgess Thomson can Help
As a result of the added risks that come with purchasing a strata property, it is important to ensure that due diligence is adhered to, and purchasers are aware of any financial obligations that may come with the purchase. By thoroughly reviewing the strata report a fair assessment as to the state of a property, and the likelihood of any required maintenance projects can be obtained, helping to foresee any future expenses.
The team at Burgess Thomson is incredibly experienced with assisting clients on the purchase of strata properties and can ensure you can make an informed decision. Still asking yourself, what is a strata title property? Give the team a call today and Book a consultation to discuss your options.