Are you interested in buying a strata property in New South Wales? Before going any further, there are a few things you should consider. There are now more apartments being built than single-family homes, due to both the growing population and limited land supply. This is one of the main reasons that people are now choosing strata-titled townhouses or units.
Now we will look at how the strata property ownership works, the pre-requirements, how the buying process may be affected as well as if a strata scheme is the best option for you.
What Is A Strata Property?
A strata property can be defined as any building or collection of units that are not sold as a whole, however are sold as individuals. For example, if a development has 20 units, you may choose to purchase 1 of these 20 instead of buying them all. Whilst you will have ownership of that individual unit, you will also share the ownership of the entire common property. This can include various extras, such as a community garden, roof of the apartment or construction of a new swimming pool.
Strata schemes can reduce some of the responsibility for the property owners. As these obligations are shared amongst all owners, you will most likely not need to worry about having to organize repairs for the community property. On the other hand, however, there will be more restrictions on a strata property. For example, you may be limited on how much you can renovate your own property, or where you are allowed to park your car.
What Is The Difference Between Owning A House And Strata Ownership?
By owning a Strata Property, you will have a more community-style environment that has some differences from living in your own home. The main difference is that you won’t have full ownership over certain things, which results in you having less power over what might happen to the building or collection of buildings. For example, if the property owner’s firm hires a contractor that you don’t know or approve of to make repairs to the apartment building’s roof, you will have less power in trying to discourage the decision. Unless you decide to become part of the owner’s firm, you will have less power as your voice will be one of many.
In the majority of cases, Strata property owners trust the other owners they share the unit with and can relax knowing they have less obligations as well as less repairs to carry out. However, it is important that you realise that there will be limitations of what you can or cannot do. If you do become a Strata owner, you may be prohibited from replacing locks, carrying out internal construction such as removing walls or being able to install additional services. It is important to consider beforehand if you want the freedom to be able to do these without possible refusal.
What To Know Before You Buy A Strata Property
Your first consideration will be the property boundaries. For a definitive answer regarding your own strata scheme, you can get in touch with The NSW Land and Property Information who are a registry service. It is important at this stage that you do not assume what you are or are not responsible for, as well as what the responsibilities are for the owner’s firm. If you are unsure, it is best to get in touch with a professional who can advise you about the boundaries.
It is important to consider the fees that you will have to pay, which will be charged for the upkeep and administration of the strata arrangement. The operational responsibilities of the owner’s commission are typically granted an allowance, and for bigger outflows the capital works fund can be used. For example, you might start paying into this fund in order to build up a larger amount over time, which might be needed to pay for any future, loftier repairs.
The capital works fund is a plan that usually lasts 10 years. Let’s see how this may play out with the below scenario. If the apartment’s roof will last 25 years, and you purchase the unit with the roof having already been there for 20 years, then it is highly certain that you will be contributing towards a fund that will eventually replace the roof. The figure to be paid by the owners is decided by a majority at every Annual General Meeting (AGM).
Strata levies are assigned depending on each unit’s entitlements and are generally paid every three months. Levies can pay for a wide range of things, such as liability insurance for the unit to electricity in the common area. It will consider the litigation costs for any official disputes of the strata scheme, the compensation insurance for maintenance workers as well as any costs involved for an evaluation of the property’s worth. The owners will also hold all legal accountability of management as well as the upkeep of common areas – not their tenants.
Lastly, before deciding to buy, it is recommended that you review the by-laws of the property to see how it is supervised. For example, you may not be permitted to have pets inside. The Strata Schemes Management Act 2015 does, however, make it possible to change these existing laws or implement new ones through the owner’s corporation.
What To Do Before You Buy A Strata Property
First and foremost, before buying a strata property, you will want to get a strata inspection report. This report will detail any major issues of the property, for example whether there are any pre-agreements on future renovations, or if there are any physical defects. This report will also cover any legal issues, as well as any property expenses over the previous 3 years.
Overall, the strata report is valuable as it will help you to see if you are getting good value before purchasing. Usually, the process would see a strata inspection company being brought in before any purchase or auction. In some cases, the current owners may make a strata report available to any potential buyers. In other cases, the company would need to carry out an inspection to evaluate any current issues of the property.
Requesting a strata report will ultimately save you money, as any hidden problems will be surfaced before you make the buying decision, and not after when it’s too late.
Finhub Solutions: Your Partner In Strategic Property Ownership
Property strata schemes in Sydney can vary. Some are very relaxed and allow a large amount of freedom, whilst others are very restricted. It can be extremely helpful at this stage to speak to a property expert who can provide you the best advice on what you are looking for.
Here at Finhub Solutions, we know from experience the common pitfalls and key details behind choosing the right strata property. We tailor our service to you and what you are specifically looking for, so you will always know what you will be getting from any strata property deal.
Contact our Sydney Property Experts for more information and see how we can help you.