If you are buying a strata property you will need to think about a number of different factors. A strata property is one within a building that is maintained and run by an owner’s corporation. Owners of individual units in the complex contribute fees on an ongoing basis and when needed to keep common areas and the building itself maintained.
There are plenty of benefits to living in a strata property. The maintenance and upkeep of the outside of the building and any surrounding outside areas will probably be taken care of for you and you get the benefit of living in part of a community, but it’s important that you do your homework before you commit to a purchase.
Strata properties are different from other property purchases as what you are purchasing is a portion of space within the building rather than the entire building. Because you may be asked to contribute to repairs or renovations to the building or common areas, it’s essential to know what condition the rest of the building is in and whether you are likely to face fees or bills in the future for upgrades or essential maintenance.
When you purchase a strata property you should certainly arrange inspection of the unit you wish to purchase to ensure it is in good condition, however you should also arrange a strata inspection report which will provide further detail about the building, its by-laws and the financial state of the owner’s corporation. Getting a strata report can help you reduce the risk of any unexpected expenses or nasty surprises.
What is included in a strata report?
A strata inspection report does not include a physical inspection of the building but rather viewing the records of the owners’ corporation. The strata report should look at issues including:
- Whether there are any major works planned or currently underway which may increase your costs.
- Whether there is adequate insurance for the strata scheme. Some lenders won’t agree to provide finance for a strata purchase without seeing a current insurance certificate verifying that there is adequate protection against loss occurring from fire, lightning, explosions or other events.
- If there are any evident structural or building problems which could mean more work will be required in the future.
- What the levies are, and what you will need to pay on a regular ongoing basis and any special levies that you will have to pay in addition.
- Whether or not there are adequate funds available in reserve to cover potential issues or work that may need to be done in future.
- If there is any history of disputes between owners or between the owners corporation and residents.
- What the strata regulations are regarding renovations, communal areas, pet ownership and any other circumstances that might be applicable.
- What previous works have been carried out on the building and when they were undertaken.
Strata inspections are conducted by careful examination of written records and accounts to ensure that everything is in order. A strata inspection can give buyers the information they need to make an informed decision as to whether or not to go ahead with a purchase. A building which needs work in the future, or one that is inadequately insured can cost owners thousands of dollars. It’s also important to have a full understanding of any by laws or disputes between owners that may be relevant to your unit and any plans you have to renovate in the future.
If you’re considering purchasing a strata property make sure you get a strata inspection before you make a commitment. Strata inspections are easy to organise through Compare Inspections and could save you from making an expensive mistake that could plague you for years.
By Darel McBride
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