Things to consider before buying into strata in NSW

A strata purchase is more than just buying a unit. You are also buying into a community, a budget and a legal framework. Strata refers to ownership of an individual property within a larger complex, where responsibility for common areas is shared. It is a popular choice in NSW thanks to urban density, relative affordability compared to standalone homes and overall convenience. However, there are important things to consider before signing any contracts.

At All Suburbs Strata Management, we bring over 40 years of experience in residential strata management in Greater Sydney, Nepean and the Central Coast. There are vast differences between owning a freestanding property and one that is part of a strata community, and while strata offers many advantages, it’s essential that potential buyers make a fully informed decision.

One of the first things to get familiar with in strata living is how levies work. These contributions fund the ongoing maintenance and management of the property and come in three main types. Administrative fund levies cover day-to-day costs like cleaning, gardening and insurance. Capital works fund levies, formerly known as sinking funds, are set aside for major repairs and long-term upgrades based on a 10-year plan. Special levies may be raised for unexpected expenses that fall outside the approved budget.

Levy amounts are usually based on unit entitlements (market value at the time of registration by a registered valuer), which also determine each owner’s voting power and share in common property. The owners corporation sets these amounts through the annual budget at the AGM, with payments usually made quarterly after notice is issued.

Strata living is also governed by a set of by-laws. These are rules adopted by the scheme to manage common property and guide resident behaviour. By-laws are legally enforceable and apply to everyone in the building. They typically cover things like noise, pets, parking, renovations, smoking and short-term letting. By-laws can only be created or changed by special resolution at a general meeting (GM), and any updates must be registered with NSW Land Registry Services to take effect.

Before any real estate purchase, you need to look beyond the glowing sales pitch. For strata properties, one of the best ways to assess the scheme’s condition and potential risks is by reviewing the strata report. This report is an independent review of the records held by the owners corporation, and it can uncover past building issues, major repairs, insurance claims and internal disputes. It also highlights planned works, special levies and any financial concerns.

Next, check whether the scheme is financially equipped to handle long-term maintenance. You can do this by evaluating the capital works fund balance and any planned works noted in the meeting minutes or strata report. This fund covers major repairs and long-term upgrades to common property, such as roofing, repainting or lift replacement. It follows a 10-year plan to manage costs without relying on special levies.

Reading through AGM minutes can also be helpful and revealing. These are official records of decisions made at each meeting, including financial approvals and by-law changes. Signs of dysfunction or ongoing disputes could be a red flag. A list of upcoming projects can also offer insight into the scheme’s financial priorities and the overall condition of the property.

You’ll also want to know how the building has been managed and what costs might be on the horizon. Strata records will show what works have been completed recently, from plumbing to roofing and lift servicing. Look for delayed repairs or repeatedly postponed maintenance, as this may signal financial constraints or poor management by the owners corporation. Neglected maintenance can also lead to urgent repairs and higher levies after you move in.

Ensure that safety certifications and fire systems are up to date. These systems must be maintained regularly by qualified professionals. Check that the scheme holds a current Annual Fire Safety Statement (AFSS), confirming all alarms, extinguishers and exits have been inspected and meet compliance requirements. You also need to be certain the building complies with relevant codes and standards. This is especially important for newer developments or those with a history of defects.

Lastly, be aware of asbestos, defects and cladding risks. Asbestos wasn’t fully banned in NSW until 31 December 2003, so buildings constructed before then may contain it in materials like eaves, ceilings or pipes. It’s worth checking the records for any reports or removal history.

Defects are more common in newer developments and might include waterproofing failures, structural cracks or poor workmanship. Strata reports and past claims can help reveal whether the building has a history of issues. For high-rise or recently built properties, ask whether non-compliant cladding has been assessed, and if any rectification work is required or already completed.

Before you buy in, you should also understand what you’re entitled to and what you’re accountable for, as a strata owner. Cosmetic changes like painting or installing blinds usually don’t need approval, but anything that affects waterproofing, structure or common property will. That includes renovations within your unit, such as moving walls or upgrading a bathroom. External walls, balconies and ceilings are typically common property and can’t be altered without approval, even if they fall inside your lot.

Know what’s included under strata insurance and what you’ll need to arrange privately by reviewing the current insurance certificate and product disclosure statement. The owners corporation is responsible for insuring the building, including common property, shared services and structural elements within individual lots. Individual owners should take out contents insurance for personal belongings, fixtures not covered by strata, such as carpets and light fittings, and liability within their own space.

Dispute resolution is also something you’ll want to be familiar with prior to making your decision. The process typically involves trying to resolve issues informally first through the strata committee or owners corporation. If they aren’t able to resolve the problem, parties can request further mediation through NSW Fair Trading and ongoing disputes are typically escalated to the NSW Civil and Administrative Tribunal (NCAT) for a binding decision.

Doing your due diligence before buying into strata can help uncover hidden costs, risks or restrictions you may not be happy with long-term. It’s also in your best interest to understand levies, maintenance and compliance to avoid surprises after settlement.

Living in strata offers many advantages, and it can be a great choice for those suited to the structure. Just make sure you get the right advice first. Have legal professionals review the contract, by-laws and strata records to protect your interests.

If you’re looking for a reliable strata manager, ASSM has over 40 years of experience in strata management for residential, community, commercial and industrial properties.

Are you considering buying into a strata scheme or would you like to secure a professional and qualified team? Contact ASSM today.