Understanding Strata Property in Australia: Everything You Need to Know

Strata property has become a popular form of ownership in Australia, particularly in urban areas where space is at a premium. It suits a lot of people's lifestyles as we live busy lives and don't have the desire to do all the work of maintaining a house and garden on our own. 

This type of property ownership offers an appealing mix of private ownership and shared responsibility.  Strata Property is often in the form of apartments, townhouses, a block of units or villas and commercial developments. 

Here’s an in-depth look at what a strata property is, how it works, and the key aspects every buyer should know.

What is a Strata Property? 

Strata property refers to a form of real estate ownership where multiple individuals each hold title to a specific unit or apartment, known as a Lot, within a property or building, while sharing ownership of the property and building which is not part of a Lot, known as the Common Property. 

These common areas are commonly seen as gardens, hallways, swimming pools, gyms, and other facilities., but they can also include the external walls, windows, roof and floor of the individual Lots.  

In essence, each owner has exclusive rights to their Lot but collectively shares responsibility for maintaining and managing shared spaces. 

In Australia, this system is often known as a strata scheme or community title (in some states) and is governed by state-specific legislation. This legal framework outlines the rights and responsibilities of property owners and the management of common property, ensuring a balanced approach to private and communal interests.

How Strata Ownership Works

Individual and Shared Ownership

When you purchase a strata property, you receive a title for your unit and a proportionate share in the Strata Company that owns the Common Property. This means that while you own your living space outright, you also become part owner of a Company that manages shared amenities and often the building your title is within. 

The space that you own is outlined in the Strata Plan. This plan is held by Landgate in WA, and a copy is given to all owners when they purchase the property. On this plan is a map and instructions that will either refer you to a section of the Strata Titles Act or explain where the boundary of your lot is and what is common property. 

Strata Company

The management of a strata scheme is typically overseen by a Strata Company (also known as body corporate or owners corporation). This company is made up of all the Lot owners within that property. They are responsible for making decisions about the maintenance of common areas, budgeting for repairs, and enforcing the by-laws that govern the property. The Strata Company generally runs off mutual income, meaning the owners fund the company instead of generating profit like a typical company would. 

Key Features of Strata Title 

Ownership of Your Unit

As an owner, you have control over your Lot. This includes the freedom to modify the interior to suit your tastes, but it is not complete or exclusive control. There are still rules to follow and restrictions on what you must and can't do within your property. 

These rules are designed to protect the integrity of the building, maintain a cohesive and consistent theme to the property and also protect everyone from the impacts of changes made to one unit, which could have adverse effects on another. Such as changing the flooring, and the residents below can now hear every footstep made on it. 

Shared Responsibility for Common Areas

Common property areas are owned and maintained by the Strata Company, which is owned by all of the owners of the Lots. This shared responsibility is managed through regular contributions referred to as Strata Levies that fund ongoing maintenance, repairs, and improvements. Due to the shared nature of Strata and various legislation surrounding Companies, often the work for the property is outsourced, and professional services do the work. This includes Gardeners, Cleaners, Tradesmen and a manager to look after the administration duties - Your Strata Manager. 

By-Laws and Rules:

Every strata scheme has its own set of by-laws or rules that govern aspects such as noise control, pet ownership, parking, and the use of common areas. These rules are designed to maintain harmony within the community and protect the interests of all owners. 

To find the by-laws for your property, refer to the Strata Plan; it has a page that advises of all the formal documents registered for the Strata Scheme If there are no By-laws registered, then the standard by-laws within the Strata Titles Act are the rules that apply to your strata. Registered Documents can be obtained from Landgate if you don't have a copy. 

Financial Considerations

Strata Fees and Levies

Owners are required to pay a Strata Levy, which contributes to the cost of managing and maintaining the Strata Company since it doesn't generate income from external sources. Potential buyers need to review the financial history of a strata scheme, including budgets and maintenance records, to understand future financial obligations. 

The amount the Strata Levy is each year is decided by the owners of the Strata Company at the Annual General Meeting and generally is determined by the expected costs outlined in the budget. 

Reserve Fund

A well-funded Reserve (sinking) fund is a good indicator of a healthy strata scheme. This reserve fund is set aside for future capital expenditures and large-scale maintenance projects, ensuring that the property remains in good condition over time. 

In properties with more than 10 lots, a 10-year maintenance plan is required to be held. This assists owners and potential buyers in knowing what to plan for and what priority should be given to major maintenance tasks. 

Advantages and Considerations

Advantages

• Maintained for You: Owners benefit from shared maintenance responsibilities, reducing the burden of individual upkeep. If you are time-poor, don't live nearby or are inexperienced, having your property maintained and serviced for you is a huge advantage. 

• Amenities: Many strata properties come with attractive shared facilities such as pools, gyms, and landscaped gardens. These are luxuries few people can afford to have at their own expense, but much more is achievable when it is shared. 

• Community Living: Strata living fosters a sense of community and can be especially appealing for added security. In a lonely society, it can be the little everyday interactions that create a sense of belonging. 

Considerations

• Limited Control over your Property: While you own your unit, decisions about the property are made collectively, which can sometimes lead to conflicts or delays.

• By-Law Restrictions: The rules governing a strata scheme can impact your lifestyle—for example, restrictions on renovations or the types of pets allowed.

• Financial Commitments: Ongoing strata levies mean that financial planning is essential. There is a reduction in the costs for individual owners to pay the insurance and the maintenance they would have to do if they owned a house, but the decision of when the work is done is made as a group and doesn't consider everyone's situation.

Conclusion

Strata property ownership in Australia offers a unique blend of private independence and communal support, making it an attractive option for many buyers. By understanding the structure, responsibilities, and financial commitments involved, you can make an informed decision that suits your lifestyle and investment goals. Whether you’re a first-time buyer or an experienced investor, knowing the ins and outs of strata living will help ensure that your experience is both enjoyable and financially sound.