Obtain a strata report before buying into an owners corporation
Buying into a residential strata scheme is a popular real estate investment in New South Wales. A residential strata scheme incorporates villas, units and townhouses, and belonging to one is often a worthy and fruitful experience.
Before committing to buying a property in a residential strata scheme, we highly recommend that you obtain a strata report. Knowing if the intended scheme is properly managed, financially secure, suitably maintained and well-planned is worth knowing. The last thing you want is to find out that the scheme has a poor history or outstanding issues that may impact your investment.
Before buying into a residential strata scheme, contact All Suburbs Strata Management and request a strata report.
What is a strata report?
Buying into a residential strata scheme differs from buying a house. There are several elements you should consider when doing your due diligence, and one of the most important is obtaining a strata report. When purchasing, you own not just the unit, villa, or townhouse. You also share the common property determined by your property entitlement. Your strata fees help pay for maintaining and repairing the common property for which you are responsible.
Several factors influence your strata management fees.
- The age and size of the building
- The condition of the building and if it requires works or repairs
- The type of common property facilities. These may include a swimming pool, a gym, car parks, a gated environment or other shared amenities.
A strata report details the building’s history. This includes pending building works that you should be aware of, previously completed building works, any additional levies and a financial record of the past two years. The strata report should include a capital works plan, by-laws and unresolved disputes.
Armed with this information, you are better informed of the opportunity and potential risks of buying into the residential strata scheme you have your eye on.
Key things to look for in a strata report
When obtaining a strata report for a property you are considering purchasing, the primary things you should be looking for are the following:
The financial health of the strata scheme. As an owner, you, along with the other owners, must pay quarterly strata fees. These fees help cover the costs of day-to-day maintenance such as cleaning, gardening and any minor repair works that need attending to. Having sufficient funds to cover these expenses is an essential part of ensuring proper maintenance of the property and not allowing small problems to become large ones. The insurance must be current and relevant to the valuation, which must be at most five years old.
Every residential strata scheme must have a capital works fund. The capital works plan must be for ten years and reviewed every five years. The strata report should detail the current plan and its last review. Knowing what capital works are expected is critical to your planning.
A good overview of the residential strata schemes by-laws. By-laws will differ between schemes and must be adhered to by owners and tenants. By-laws cover pet ownership, parking arrangements, noise, renovations and other living conditions that may influence your lifestyle and, therefore, your decision to buy in a particular strata scheme.
Planned building works or major defects. Reviewing the past capital works will give you a good indication of the condition of the building and if any major defects are present or have been rectified. It is also good to know any future planned building works that may impact your lifestyle due to noise or other interruptions.
Any tenant disputes. Everyone wants to live in a harmonious community. The records can indicate how the strata scheme is run and how disputes are handled by the owners corporation, whether the community is peaceful or if there are ongoing disputes.
Poor strata management is one of the most frustrating aspects of belonging to a residential strata scheme. Some schemes are managed solely by the committee, and others employ a strata management company such as All Suburbs Strata Management. Accessing and reviewing the minutes of meetings and correspondence relevant to the strata management is important. This will provide insight into how they respond to issues and whether or not problems are rectified promptly.
Strata reports are very important when agreeing to purchase a unit, villa or townhouse within a complex.
Talk to one of our professional and friendly team members today to learn more.
