More and more apartments and high-density developments are popping up to cater home buyers, investors, downsizers, and those who want to live in the heart of the city. So what do you need to look out for before buying into a Strata?
Over the past 25 years, occupied apartments (including flats and units, but excluding townhouses) have increased by 78% to 1,214,372 dwellings, and in South Australia, 73,309 people call an apartment home.*
Like many urbanised centres around the world, it looks like apartment living is here to stay, and if you're buying one, you're likely buying into a strata scheme too.
So what do you need to know before you sign on the dotted line?
What is a strata title?
Before you buy into a strata title, it's important to understand what it is and what your obligations will be.
Strata Title is a means of facilitating individual ownership of part of a property – generally an apartment, unit, or townhouse - while sharing ownership of the common property on which it stands.
When you buy a property that is part of a strata scheme, you are automatically a member of the Community Corporation. You will be required to regularly - usually quarterly - contribute to the cost of running the building by paying Strata Levies in addition to rates and taxes for your property.
Compared to owning a freestanding house, there could be lifestyle restrictions in a strata scheme. There are by-laws that may affect you doing renovations to your unit, where you can park your car, where you can dry washing, and whether you can keep pets.
Can I keep pets in my apartment? Read More...
Each owner has principle obligations to their lot and the common property, and any rental tenants must also comply with these by-laws and responsibilities.
Add it up
Buying a new property is exciting, but it's essential to take a moment to examine the books and records of the Body Corporate.
As a new owner, you will automatically be subject to any upcoming major expenses or pending group actions. It's also vital to ensure you're comfortable with how money is being spent and with the level of your contributions.
Make sure that you check out the financials before you buy.
Maintenance and Repairs
Similar to ensuring the finances are in check, you should also look into the history of the building. Has it got ongoing problems that will be costly to fix? Will you be landed with a share of the bill to get a new roof within weeks of buying the property?
While sellers legally have to disclose any material facts about a property, they don't have to reveal upcoming or ongoing repair problems.
Equally, some Body Corporates don't adequately plan for future maintenance, particularly if it's an older scheme in need of some upgrades.
To avoid inheriting a property that doesn't have a plan in place for regular maintenance, check whether the sinking fund is suitable to undertake a long-term maintenance regime. Contact your estate agent or future strata manager to ask about how you can access past committee meeting minutes to what state the building is in - does it need repairs?
A smart investment
There are many benefits to living in a strata title property but whether you're buying a unit or a townhouse, asking questions is the key to making a sound investment. A successful Strata is only as strong as the people in it and the Body Corporate Management in place.