Strata: 10 top tips
Here are 10 things to consider if you are planning on buying or renting in a strata titled property on Sydney’s Upper North Shore.
1. Strata is simply a system of ownership
Strata is a system of legal ownership that allows people to own a portion or part of a building or structure. It is commonly used for property like units, townhouses and villas. Individual “lots” (eg: apartments) are privately owned, while common areas are shared (eg: lifts, foyers, driveways, etc).
Strata title schemes were introduced into Australia in 1961. Before this, the system of company title was used to purchase shares in a building. Some older apartments are still run under company title but it is becoming increasingly rare, as most have switched over to Strata schemes.
2. How does Strata actually work?
Strata often sounds confusing, but once you get your head around the way it works it’s a little bit like a miniature council or government system.
An owner owns their “lot” in the building (typically the unit/townhouse/villa itself). The owners collectively form an Owners Corporation which shares ownership and responsibility for “common property”. These common areas usually include the exterior of the building including the roof, windows, exterior walls and exterior doors, foyers, lifts and stairwells, gardens, pools, rubbish rooms, communal laundries, gyms and driveways.
The Owners Corporation elect an executive committee to deal with the everyday running of the building. Costs for the communal areas – and the scheme itself – are paid for through levies which are usually paid by owners quarterly, and the amount varies between different strata schemes. Each strata scheme also has bylaws, to keep things running smoothly.
3. The number of strata schemes is growing
Six years ago, in 2015, for the first time ever Australia built more “attached” dwellings – things like units, townhouses and villas – than freestanding houses. With a large proportion of attached dwellings destined to come under strata schemes, there are more buyers and renters than ever before who will call a strata titled building home. In fact, there are 316,227 strata schemes nationally. Across the country 9% of the population lives in units, but in NSW this rises to 15%. According to 2016 Census data, in Ku-Ring-Gai Council area 22.2% of all dwellings are units, and another 4% are townhouses, semis or villas. So a quarter of dwellings in our council area could come under strata.
4. Strata is an industry
A Strata scheme or building can be self-run. However, most schemes employ a Strata Management company. It’s estimated that in NSW alone there are more than 3,000 strata managers and support staff employed by strata management companies. They can be a great source of information and advice, and help with the running of the scheme, including collecting levies, organising an Annual General Meeting or tradesmen to undertake repairs and maintenance.
5. What about these bylaws?
Bylaws sound onerous, but in reality they exist to keep the peace, and facilitate smooth, safe, harmonious communal living among neighbours. Bylaws can cover a range of things, with common ones being parking, whether pets are allowed in the building, permissible property upgrades, noise restrictions, and even whether it’s ok to hang laundry on your balcony. A Strata Scheme can create their own special bylaws and NSW also has standard bylaws to cover all strata schemes. Owners and renters should make themselves aware of the bylaws for their particular building.
6. If you’re buying into a strata scheme, get a strata inspection report
If you are planning to buy a strata titled property, part of your due diligence should include a strata search. There are specialist strata agents who conduct these searches, or you can obtain the information from the Owners Corporation.
The strata inspection report will tell you what the levies are, the level of funds available to maintain the common areas, any upcoming special levies, outline a 10 year budget/plan, and the scheme’s insurance, finances, bylaws, neighbourdisputes or any other matters.
Don’t be put off by small grievances or infighting. Most buildings will require capital expenditure at some point, it just depends on when, and what type. You’re looking for evidence that:
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the strata building is being properly run and well-managed
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there is enough money to maintain the common areas and cover running costs
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there is a plan to address any major building defects (and to find out if special levies may be coming up, to pay for any major projects)
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that the scheme is adequately planning for the future
7. What if you rent in a strata building?
If you are renting in a strata building, your landlord will pay the strata levies, and usually your managing agent or landlord will be the one to deal with strata matters. As a resident, you need to abide by the bylaws. Any repairs to common property (communal laundries, gyms, stairs, lifts, windows, etc) will be organised and paid for by strata, not your landlord directly. Usually there will be a noticeboard in a communal area displaying the minutes of the AGM. However, a little known fact is that tenants can attend a strataAGM, but cannot vote.
8. The rules around pets in Strata has changed
Some strata buildings have previously had a blanket ban on all pets, regardless of whether the pet belonged to an owner-occupier or a tenant. But, thanks to a change of law in 2020, that’s no longer the case, and no blanket bans on pets will be permitted in any building anywhere in NSW. While this is good news for animal lovers, it doesn’t mean that all restrictions around pets in strata were dissolved overnight. Renters still need permission from their landlord. Owner-occupiers and renters still need to abide by their strata scheme bylaws, but it’s looking likely the rules will become more accommodating over time.
9. The costs of living in a Strata building
If you own your own freestanding home, you are responsible for all repairs and costs. If you own in a Strata building, you only pay a share of the communal costs for running the overall building, and these are covered by regular quarterly levies and fees. They’re calculated based on the size of the lot, so someone with a larger apartment will pay proportionally more. The Strata Manager will usually collect the funds, and the Executive Committee of the Owners Corporation will elect a Treasurer to look after the finances. There are three main types of levies:
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Administrative, to cover day-to-day operation and maintenance. This fee will often be higher if the building is more expensive to run, and has pools, gyms, or lifts.
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Capital works fund, where money is reserved for larger repairs and renovations, previously known as the “sinking fund”. It’s like a rainy day fund, for typical work that may crop up.
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Special levies, which are raised on an as-needed basis for major works and repairs if there aren’t enough funds in the other accounts. These can run from a few hundred dollars, into tens of thousands of dollars, if major building work is required (eg: a new roof, plumbing, concrete cancer remediation etc).
10. Strata life has some perks
If you buy or rent in a well-run scheme, life in a strata complex can be pretty stress free and low maintenance. Most strata buildings employ a strata management company, and many buildings on the Upper North Shore arrange and pay for regular services like cleaners for the common areas, garden maintenance, and even bin collection. So unlike owning your own freestanding home, someone else will be charged with mowing the lawn, taking the bins out, cleaning the pool, trimming the hedges, sweeping the drive, and even changing the light globes in the foyer. You and your neighbours can just sit back and enjoy, which is why many downsizers find strata living very appealing.
For more information about buying or renting on the Upper North Shore, contact our team today.
