Buy an apartment or townhouse in Australia and you’ll almost certainly join a strata scheme. Here’s how strata works, what your fees pay for, and the questions to ask before you buy.
Strata title is the system that lets people own part of a building. It was pioneered in New South Wales in 1961 and has since been adopted across Australia and in many other countries.
When you buy a strata property, such as an apartment or townhouse, you own your individual lot. You also share ownership of the common property, which usually includes the building’s structure, roof, lifts, stairwells, driveways, gardens and pools.
All the owners together form a body that manages the common property. It’s called an owners corporation in New South Wales and Victoria, and a body corporate in Queensland and some other states.
What strata fees pay for
Owners pay regular fees, usually called levies, based on the size or value of their lot.
The administrative fund covers day-to-day costs, such as cleaning, gardening, building insurance, electricity for common areas and strata management fees.
The capital works fund, sometimes called a sinking fund, saves for big future expenses, such as painting the building, replacing lifts or fixing the roof. If there isn’t enough in the fund when a big repair is needed, owners can be asked to pay a special levy, which can run into thousands of dollars.
How decisions are made
Owners meet at least once a year at an annual general meeting, where they vote on budgets, levies and major decisions, and elect a strata committee to handle day-to-day matters. Many schemes hire a professional strata manager to run the administration.
Each scheme has by-laws, its own rules covering things like pets, noise, parking, renovations and short-term rentals. By-laws can be changed by a vote of owners, within limits set by state laws.
Disputes between owners, or with the committee, can go to state tribunals.
Building defects
Building defects, such as water leaks, cracking and flammable cladding, have become one of the biggest issues in strata living. High-profile cases, including Sydney’s Opal Tower and Mascot Towers, which were evacuated in 2018 and 2019, led to major reforms, including the creation of a building commissioner in New South Wales with powers to stop defective buildings from being occupied.
Before you buy
Buyers can order a strata report, which shows the scheme’s finances, the balance of the capital works fund, any special levies planned, minutes of recent meetings and known defects or disputes.
A low levy can look attractive, but it may mean the scheme isn’t saving enough for future repairs, which could mean big bills later.
