Are you looking at strata properties as an investment or a new home? Many properties with multiple lots or apartments are part of a strata scheme. These individual living spaces are owned by individual people or parties, while all common property is subject to shared responsibility and ownership by the collective.
Strata properties are a form of collective ownership. They consist of many units that are owned individually, plus common areas that are owned collectively.
You buy into the strata scheme by purchasing a strata lot or unit. This can be an apartment, townhouse, or house within a strata property. The "unit" includes everything that belongs to you as an individual, typically from the boundaries of walls inward.
Common property consists of the garden and parking areas as well as (if you are in a strata multi-unit building) the larger building itself, including the corridors, stairwells, roofing, and (typically) the interior electric wiring and plumbing systems. You and the other owners will pay fees called strata levies to cover the upkeep and repair of common property.
You may buy into either a property that is self-managed by an owners corporation (made up of all owners, and represented by an owner committee) or by a strata manager or strata management company. Common property decisions are voted on at regular meetings. You can vote yourself, or assign your vote to someone else as your proxy.
Strata living isn't for everyone, but many Australians find it to be perfect for their personal comfort. However, there are several questions you should ask before buying into any strata scheme.
1. What is individually owned and what is common property?
Strata properties can vary somewhat in what is considered individually owned and what is common property. Avoid any surprises by getting a detailed list of who is responsible for what so you can estimate your individual upkeep costs.
2. How much are the levies, and how are they determined?
How much your levies are and what they have been allotted to cover will affect your ongoing costs for living in a strata property. Also ask how raises in levies are determined and how often levies are raised, and what upcoming costs are anticipated. The amount you pay in levies is usually tied to your "unit entitlement", and will vary on the size of your unit.
3. What is considered a renovation?
Cosmetic renovations only require notifying the strata committee. Minor renovations require notification followed by approval by vote of the committee at any meeting. Major renovations (structural changes) require a special resolution to be put forth at the annual general meeting for a vote. Find out what your strata committee considers cosmetic, minor, and major renovations.
4. Are there any upcoming changes?
Decisions are made by the owner committee jointly, representing all owners, and require a 75% majority. Major decisions can include plans to expand the strata by adding more units or lots, or selling the strata block to developers. Ask if there are major changes being discussed before you buy into a strata scheme.
5. What are the bylaws, and how are they enforced?
When you live in a strata property, you must abide by bylaws that dictate various circumstances, such as noise control, pet ownership, smoke drift, and parking. Ask what bylaws are currently in place and how they are typically enforced. Bylaws are agreed on by the owner committee and must be legally registered.
Interested in buying into a strata managed property? Contact Ray White Surfer's Paradise today.