Some people prefer the comfort of living in apartments or property units. However, it is essential to know what you are investing in especially when it has something to deal with strata scheme. Purchasing a property investment, either through a home loan or a business loan that has been acquired with a strata scheme is very different from buying one, which has none. This is of great concern especially for those who are planning to live in it. There are laws that govern this type of property ownership, and it would be very helpful if you know all the relevant provisions before signing a purchase contract.
Strata Scheme – What is it?
A strata scheme is a property or a building or a collection of buildings where each tenant owns a small part of the property (unit), sometimes referred to as a lot, and where there’s also a common property in which every unit owner has a share of ownership over.
The Owners Corporation is the body which represents the owners of the lots/units, and the one which organises the strata scheme. Most often, the body hires the services of a licensed strata managing agent to execute the daily process of the strata scheme.
Important Things to be Aware Of
What does each owner actually own?
The significant difference between owning a property and buying a unit in a strata scheme is that most of the roof, floorings, and exterior walls are not owned by the unit owner.
These property features are considered as a common property and are owned by the Owners Corporation. They are responsible for the maintenance of the common property. Hence, if a unit owner would not be able to pursue any renovation in the property or install air conditioning units unless approved by the Owners Corporation.
Most commonly, in a strata scheme, unit owners particularly own only the interior of the unit but not the whole structure of the property. The roof, floor, four main walls, and ceilings are considered as a common property. In other words anything that is included inside the airspace of the unit, the furniture and fixtures of the unit, belongs to the unit owner.
Airspace can extend up to the courtyards and balconies as well. Every unit owner must get an appropriate advice with regards to owning a balcony or courtyard since they would be responsible for its maintenance and other related costs.
The organisation is responsible for the processes of the strata scheme. The members must manage and establish an administrative fund for the daily operational expenses of the property, and a long-term fund for other future expenses. They must carry out an estimated amount of the expenses needed for the annual strata scheme. The amount will then be divided to the unit owners also known as the “levies”. The levies are brought during the annual general meeting, carried out by a majority vote and vary depending on the amount of common property and its maintenance costs. Levies are carried out based on each unit entitlement and are normally paid quarterly.
Every buyer must pay attention to the building construction of the property since the arrangement of the strata scheme is to share the expenses for the upkeep of the property by paying through the levies. Unit buyers must take a look at the exteriors of the building including gyms, tennis courts, lifts, swimming pools, foyer areas, and many others.
It is also essential for unit owners to attend the annual general meeting together with the Owners Corporation to be able to know if there are new plans, expenses, and updates on the property.
To learn more about property investments and strata schemes, you may contact your Kwinana mortgage brokers.