What are strata fees?

If you're considering buying a strata property—such as an apartment or townhouse—you’re probably aware that it's different from buying a freestanding property. One major distinction is the need to pay strata fees! 

It can be daunting to embark on any type of property purchase, especially if you’re buying a strata property, which may be subject to unique sets of rules and regulations. To help you navigate the strata system with ease, we’ve written this blog to cover everything you need to know about strata fees - ranging from your responsibilities as an owner to the intricacies of strata fees and more.

What is a strata scheme?

A strata scheme involves dividing a building or group of buildings into 'lots'. Common types of strata properties include apartments, townhouses, serviced apartments, retirement villages, and commercial buildings. Each lot owner holds individual ownership of their property while sharing ownership of common areas with other owners. However, the specifics of what is owned by the individual and what is communal can vary depending on the state and the type of strata scheme.

What happens when you buy a strata property?

When you buy into a strata scheme, you become a lot owner. What you own as part of your property will depend on the type of strata title.

Lot owners may share ownership of common areas like gardens, pools, driveways, and stairwells with other owners, though this is not the case in every strata scheme.

Be sure to check your strata plan to understand what you own.

Additionally, lot owners usually become members of the owner’s corporation (sometimes called a body corporate), which manages the strata scheme using the fees owners pay.

However, some strata schemes may not have an owner’s corporation or operate under different management structures.

What can and can’t you do in a strata property?

Strata schemes are governed by a set of bylaws intended to ensure harmonious living and protect the property. These bylaws outline owners' obligations, covering areas such as noise, rubbish disposal, and parking, as well as the extent to which alterations or additions can be made to your property. Some bylaws may also regulate pet ownership and the use of shared amenities like BBQs, playgrounds, and pools.

Bylaws vary between schemes, so it is important to review the specific rules for any property you are considering purchasing. These rules must be attached to the contract of sale and can be obtained from the selling agent.

What do strata fees cover?

Strata fees, also known as levies, are paid to the owner’s corporation (if one exists) to cover the management and upkeep of the building and its common areas. These fees can vary based on factors like location, property size, and amenities (such as pools and gyms). It's important to factor these fees into your decision when buying a strata property and assess whether they are reasonable, given the condition of the building and its facilities.

How are strata fees managed?

Strata fees are typically divided between an administrative fund, which covers day-to-day expenses (e.g., maintenance, insurance), and a sinking fund, reserved for major capital works (e.g., roof replacements or structural repairs). Special levies may also be imposed to cover unexpected expenses when necessary.

Strata reports

Before purchasing a strata property, obtaining a strata search report is crucial. This report provides insight into the financial health of the strata scheme, any planned or outstanding maintenance work, and potential legal disputes. You can either enlist the help of a professional strata searcher or conveyancer or inspect the strata records yourself with permission from the seller.

Do townhouses have strata?

Some townhouses are part of a strata scheme, where owners share common areas like gardens and driveways and contribute to strata fees for maintenance. However, not all townhouses fall under strata title. Some have a Torrens title, meaning the owner wholly owns the land and the building.

Buying a strata property doesn't have to be intimidating. By understanding the intricacies of the strata system, you'll be well-prepared to make an informed buying decision, ensuring your homeownership experience is smooth and rewarding.

For help and advice on buying property of all types, contact your local Hockingstuart office or agent today.