As the density of housing increases in Perth, so does the amount of properties sold that are strata titled.
What is strata title?
Strata title is a form of title where a property, which can include areas both below and above the ground (stratum being a layer or level – think apartment buildings), is subdivided between two or more lot owners.
When it comes to residential property in WA, there are two primary forms of strata title: built or building strata schemes and survey strata schemes. The strata plan itself will tell you whether it’s a strata scheme or survey strata scheme.
Built strata schemes and survey strata schemes
Built or building strata schemes are where an actual dwelling, be that a house, unit or apartment, is shown on the strata plan and survey strata are where you’ll only see the external dimensions of your land or lot on the strata plan even though there may be buildings on it.
In a strata title, there may also be common property that is jointly owned by the strata owners, such as driveways and gardens. Common property may or may not be identified on the strata plan, depending upon the age of the strata scheme.
How does it differ from green title?
There are a lot of misconceptions and often negative assumptions about strata titles, but essentially, you have the same kinds of issues as you do with a green title property – you’ll always have ongoing maintenance costs when you own property, you often still need approvals from council or neighbours if you want to make external changes and you can still have issues with your next-door neighbours!
Around 83% of strata lots in WA have 4 lots or less within them. In the case of small strata schemes, such as Two (2) lot schemes where there are only two lot owners and, in some instances, also Three to Five (3 to 5) lot schemes, there is no need to hold annual meetings, prepare annual accounts or have strata levies. It might be that the only thing the strata owners organise together is their building insurance so that the buildings themselves and any common property within the strata is adequately covered.
New WA Strata Living Guide
One of the best ways to understand strata is to download & read Landgate’s new WA Strata Living Guide. The guide covers lots of the questions usually asked by purchasers of strata properties as well as some areas you may not have thought of. It covers areas like building alterations, which are often misunderstood by strata buyers, insurance, by-laws, and how disputes are resolved.
Buying a strata property
If you’re looking to buy a strata property, the selling agent must provide you with a strata disclosure statement and all the relevant strata information BEFORE you sign an Offer and Acceptance or else you MAY have grounds to terminate the contract. Those documents typically include the strata plan, unit entitlement, copies of all notifications and non-standard by-laws, standard by-laws, and if it’s a scheme that has Annual General Meetings (AGM’s) and has a bank account, you must receive copies of the minutes of the last AGM (and any Extraordinary General Meetings) so you can see if there are any ongoing issues you need to be aware of as well as the budget and financials so you can see where the strata sits financially.
Not all strata properties have strata levies or fees. For example, two lot schemes (when there are only two properties) won’t have fees.
If there are strata fees, remember that low strata fees aren’t always a good thing – if the strata doesn’t have a reserve fund, it could mean that you’ll need to pay special levies any time building repairs are needed. But again, that’s no different from owning a non-strata-titled property – you still have to spend money on maintenance!
Under changes to the Strata Titles Act introduced on the 1st of May 2020 strata schemes with ten lots or more are also now required to have a 10-year maintenance plan and reserve fund, as are schemes with a $5 million replacement cost for building/s or improvements on the common property.
Strata-titled properties will, in the not-too-distant future, outnumber green-titled properties in WA, so if you’re looking to buy, get familiar with how they work and what it means for you as a homeowner.