What Is A Strata Title?

Property titles are a way for the Australian government to track property ownership and uses. A strata title is commonly attached to properties such as apartments or townhouses, and grants sole ownership of a property and shared ownership of common areas.

If you purchase an apartment or townhouse, you are the strata title holder. This means you are the legal owner of the apartment, which is called a ‘lot’. While you have individual ownership of your lot, you share the ownership of common areas within the apartment complex like hallways, stairways, elevators and gardens.

What is a strata property?

Strata properties can be both commercial, residential and even mixed. An apartment where you live would be an example of a common strata property. An office in a large building would be an example of a commercial strata property, where you would have ownership of your office space but not of the building itself or the lobby, elevator, hallways, etc.

Strata titles are used for:

apartments
townhouses
commercial offices
factory units
caravan park lots.

There are also cases where a strata property can be mixed. For example, if your home was also your place of business or a building is used for residential and commercial purposes.

Examples of mixed strata properties could be homes that are also used for places of business such as:

cafes
pilates/yoga studios
medical practices.

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How does a strata title work?

Torrens title vs. strata

A Torrens, or Freehold, property title is more common for freestanding houses and land properties. You are the legal owner and have control over its use. You have the freedom to sell it, renovate, lease or pass it on to a family member in your will.

This is different to a strata property, which is for an individual property but not the land or communal spaces. It is, therefore, more difficult to renovate, rebuild or boost the value of a strata title property by adding a pool or deck, for example.

Company title vs. strata

A company title property is when a company rather than an individual owns property such as a block of apartments, for example. A prospective buyer can buy shares in that company and that shareholder has the right to occupy one of the units.

This is different to a strata title, where you are the sole owner of one ‘lot’.

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Living in a strata titled property

As a strata title holder in an apartment complex, gated community or even caravan park, you have individual ownership of your lot. However, the shared spaces, like elevators, pools, gym facilities, etc., are managed by a separate entity often called a ‘body corporate’ or ‘strata company.’

As a shared owner, you will most likely pay fees for the ongoing maintenance and management of these common spaces. How much you pay will depend on the facilities themselves. For example, an apartment in a building with a pool, elevator and gym will likely have high body corporate costs.

These body corporate, or management, fees are payable regardless of how often you use these facilities. The cost and rules for the shared spaces will be outlined in a contract when you buy the property.

What to consider before buying a strata-titled property

When you are looking to buy a strata-titled property there are a few things to consider.

Your lot

Firstly, you need to understand what is considered part of your lot and part of the shared spaces when you buy. Walls, doorways, etc., are also often considered shared spaces. This means you may not be able to make big changes to your apartment, like knocking down a wall or adding a bedroom if it infringes on shared structural parts of the building.

Ongoing costs

Secondly, you need to calculate the cost of buying the property, including the ongoing body corporate fees. It’s important to remember you will need to make your mortgage repayments, and strata fees will be an added expense on top of this.

By-laws and common responsibilities

Thirdly, make sure you read the by-laws of the body corporate carefully. That way, you’ll understand what you are paying for and what restrictions exist regarding making changes to your property. Changing the by-laws can also be a long process and difficult to approve, as all owners will have a say.

Common responsibilities of a body corporate include:

Maintaining and repairing common property
Upholding the by-laws and holding meetings for tenants to discuss the laws
Managing insurance for the building
Handling disputes between tenants.

You need to decide for yourself if these fees are within your budget and if you believe they are worth the expense.

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Pros and cons of buying a strata property

Pros

Affordability. Strata title properties like apartments and townhouses are often more affordable than house and land properties. This means you may be able to break into the market sooner and for less money.
Low maintenance. You won’t be responsible for the upkeep of many facilities like a pool, mowing the lawn or cleaning the footpaths as these are taken care of by the body corporate.
More perks. You may be able to buy a strata-titled property that has access to pools, BBQ, gyms, etc. These may be luxuries you could not afford if you were purchasing your own house or installing them yourself.
Safety. Many strata-titled properties can be safer to live in than stand-alone properties because of features such as gated buildings and locked front access.

Cons

Extras can add up. Body corporate fees can be expensive and might be for facilities you don’t use.
Lack of privacy. You may live in close proximity to neighbours, which can reduce privacy or lead to noise issues.
Limited control. You may not be able to add value to your property with renovations.
Slow timelines. Changes you may propose to the body corporate can be denied or take time to be implemented.