Listen up! 6 things you need to know about strata if you buy an apartment
So you’re looking for a new home – a place that offers you a convenient, low maintenance lifestyle and is close to your favourite shops, restaurants and cafes.
Obviously, an apartment or townhouse would be ideal. However, if you’ve never lived in or owned one of these types of properties, there are a few things you should be aware of about how strata plans work.
1. What exactly is a strata plan?
After you buy an apartment or a townhouse, you also become a part-owner of the common property. The common property includes things like the building exteriors, driveways, lobbies, staircases, gardens, grounds, pools, gym equipment and other facilities – all the things you share with the other owners in the complex.
A strata plan provides rules for owners regarding their responsibility towards the common property and its maintenance through an Owners Corporation or a Body Corporate.
2. Okay, so what is an Owners Corporation?
The Owners Corporation is made up of all the registered owners of all the individual properties that are part of the strata plan. The Owners Corporation, which is also known as the Body Corporate, is responsible for administering and maintaining the common property and ensuring everyone follows the rules of the property.
Each year, the Owners Corporations appoint an Executive Committee to oversee the day-to-day administration needs of the property. The Executive Committee may also engage the services of a Strata Manager to provide financial and administration support and to arrange for repairs and maintenance.
3. What are your annual expenses?
Each year a draft budget, which covers the costs of running the Owners Corporation for the upcoming year, will be presented to the owners. After the budget is approved at the Annual General Meeting, a levy payment will be set for each owner.
There are 3 main types of levies:
Administrative fund levies.
These cover the day-to-day running of the building – things like gardening, cleaning, maintaining shared facilities, strata management and insurance.
Sinking fund levies.
This has nothing to do with the building sinking. These funds are used to cover large projects, major repairs and buildings works, as well as unexpected emergency costs.
These are issued when major work is required, but there are insufficient funds in the sinking and administrative funds to cover the costs.
4. How does insurance work?
The Executive Committee, on behalf on the Owners Corporation, will arrange for insurance to cover the building as well as public liability insurance for the common property. As an owner, you should organise your own insurance to cover the contents of your apartment or townhouse.
5. Are there any rules to living in a strata plan?
To look after the interests, safety and well-being of owners and residents, life in a strata plan is governed by a set of Bylaws or House Rules. While each strata plan can create their own set of House Rules, they usually cover things like noise restrictions, pets, garbage disposal and renovations.
6. What if you are planning on renting out your property?
As the property owner, it’s your responsibility to ensure your tenants abide by the House Rules of the building. You should also make sure you still go to Owners Corporation meetings, or vote by proxy if you are unable to attend in person.