Do your research to completely grasp the property you’re buying before you buy it, especially if it’s a strata property. When purchasing within a strata scheme, unlike when buying a house, you own more than simply the lot or flat. Your unit entitlement will also grant you a portion of the common property, for which you are liable for its upkeep and repair through the payment of quarterly strata levies. Reviewing the owners corporate records can help you learn crucial details about the plan, such as its financial situation, which will help you decide whether investing in this plan makes sense.
Keep in mind that a strata report is compiled by the strata committee and owners corporation and the level of detail provided will differ from scheme to scheme. Record-keeping can be hit and miss, especially if there is no strata manager to help, so even if the strata report looks promising, this doesn’t necessarily mean everything within the building is fine.Here are just some of the key things to pay particular attention to when buying a strata title property:
- Shared Ownership: Purchasing a strata-titled property means that, unlike the typical suburban home, ownership of the common property in a complex is shared, and you must collaborate with other owners to maintain the property’s value.
- Strata Plan: You may determine what property you actually possess with the aid of the strata plan. It will display all of the apartments, common areas, property lines, and whether a parking space has been assigned to your unit. Particularly when estimating the worth of the unit, the ownership of car bays can be crucial.
- Fund for Capital Works: Every building must have a finished Capital Works Fund. This 10-year plan must be revised every five years and is effective as of the first Annual General Meeting (AGM). Make sure to ascertain how current this is and go over the anticipated categories of work needed in the ensuing years. This can give you a decent idea of how much money you’ll need to pay for these expenses and how well the building is doing.
- Check by-laws: All owners and tenants are required to abide by the by-laws that govern the property. Pet ownership, noise, parking, smoking, remodeling, short-term rentals, and other issues are all prohibited. Each strata plan has its own set of by-laws, so be sure to study them all carefully to see if there are any that could affect your lot or the kind of life you choose to lead.
- Tenant conflicts: How well-adjusted are the tenants? The kind of strata community and whether or not there are numerous continuing issues can be determined by looking over committee minutes and email correspondence. The information in the records might provide potential buyers a sense of how the strata scheme is managed and how the owners company resolves problems. If issues can’t be resolved internally, mediation and applications to NCAT (NSW Civil and Administrative Tribunal) might not be a smart idea.
- Age of complex: The older the complex, the more maintenance and updating it may require i.e. new security gates for car parking. Higher keeping costs over the long run may need to be taken into account if you are purchasing an older strata titled apartment.
- Tax depreciation: Buying a strata property typically offers greater tax depreciation advantages than buying a conventional stand-alone home. When purchasing this kind of property class, it is crucial to claim all of your tax depreciation benefits because they might equal up to 60% of the property’s worth.
- Poor strata management: In addition to tenant issues, it’s critical to assess how proactive your strata committee is. Make sure to study all meeting minutes that are accessible as well as any written correspondence to ascertain how they address concerns and whether issues are quickly resolved. Pay particular attention to other crucial documents, such as financial records, to see if they are up to date and in compliance with applicable laws.
- Strata charges: You must pay strata fees as the owner of a strata-titled unit in order to cover expenditures such as insurances and general complex maintenance. You should find out how much these strata fees cost and if there are any special levies slated, such as those to upgrade the lifts or build a pool for the complex. Complexes with more amenities like elevators or pools typically have higher strata fees.
- For renovation purposes, you can think about purchasing an older unit. However, it’s crucial to keep in mind that you could require the strata company’s permission for externally apparent upgrades, such as a pergola for the balcony. For instance, at their annual general meetings, several strata corporations have enacted resolutions prohibiting the use of skylights. All owners must abide by the AGM resolutions that are approved.
To obtain more info regarding finding the best investment property or a suitable development site for your specific needs and goals, arrange a free strategy session with our buyer’s advocate.
A strategy session includes the following:
- Assessment of your current situation
- Discover property investment strategy options
- Recommendations related to the right property investment strategy for your specific situation
- Confirm next steps
Call 0411 70 3682 or email to arrange a discussion.