What is strata? – Know more about residential properties in NSW

Strata is a type of property ownership and management in which a building or complex is divided into individual units, such as apartments or townhouses, that are owned by owners and sometimes companies (Typically a property developer).

What are the benefits of strata?

1. Shared responsibilities: In a strata property, the costs of maintaining and repairing the common property, such as hallways, elevators, recreational facilities, and insurance, are shared among all the unit owners, rather than being the responsibility of a single individual. This can help to keep the overall costs of maintaining the property lower for each unit owner.
2. Amenities: Strata properties often have shared amenities such as swimming pools, gyms, and recreation rooms that are available for use by the unit owners. This can help improve the quality of living for residents and increase the desirability of the property.
3. Professional management: Strata properties are usually managed by a professional strata manager or a body corporate, who is responsible for the day-to-day management of the property, including maintenance and repairs, enforcing the bylaws, and collecting fees.
4. Sense of community: Strata properties can often have a sense of community particularly if you have a desire to get involved by joining the strata committee. This will allow you to get to know some of your neighbours.
5. Location: Strata properties can often be located in denser population areas, such as city centers or near public transport, providing residents with easy access to amenities and services.

How much does strata cost?

The cost of strata in New South Wales (NSW), Australia can vary depending on several factors, such as the size and condition of the property, the number of units in the strata scheme, and the services and amenities provided. The strata levies are set by the owners corporation and are usually based on the budget for the upcoming financial year. The levies are typically paid on a quarterly or half-yearly basis and are divided among the unit owners based on the unit entitlement, which is determined by the size of the unit or the number of votes assigned to the unit.

On average, strata levies in New South Wales can range from $400 per quarter for a small unit in a low-rise building to $3000+ per quarter for a large unit in a high-rise building with extensive common property and amenities. However, these numbers can be affected by the size of the building, the services and amenities provided and the area of the building.

It’s important to note that strata levies can increase over time as the cost of maintenance, repairs and insurance increases. When making a purchase, factoring increases of strata costs can be valuable.

Why would I want to pay for higher strata costs?

In many cases, you would want to keep your strata costs down as much as possible. However there are a few reasons why you may justify a higher strata cost:

1. Amenities: Properties with higher strata costs may typically offer more amenities such as a swimming pool, gym, or recreational facilities. These amenities can add value to your property and provide a better quality of living for the residents.
2. Maintenance: Properties with higher strata costs may have a more comprehensive maintenance and repair program, which can help to keep the property in better condition and increase its value over time.
3. Security: Properties with higher strata costs may have additional security features such as security personnel, CCTV cameras, or gated access. This can provide a greater sense of safety and security for the residents.
4. Location: Properties with higher strata costs may be located in more desirable areas, such as city centers or near beaches, which can provide residents with easy access to amenities and services, and can increase the value of the property.
5. Professional management: Properties with higher strata costs may have a more professional management team, which can help to ensure that the property is well-maintained, and that any issues are quickly resolved.
6. Insurance: Properties with higher strata costs may have a more comprehensive insurance policy, which can provide greater protection for both the common property and individual units in the event of an accident or natural disaster.
7. Sinking Fund: Properties with higher strata costs may have a more robust sinking fund, which is set aside for future major repairs and maintenance. This can ensure that the property is well-maintained in the long term and can prevent unexpected and large expenses.

A minimum strata cost can mean that as the building gets older, there is a higher chance of ‘special levies’ which are additional costs to the owner that was not initially forecasted in a strata report budget.

Do you have an example of a strata report budget?

The below is an example of a strata budget for one year in New South Wales Australia. This budget is a cost forecast for the year, and costs are shared across every apartment unit owner. Costs differ for each owner and can be based on the size of our apartment.

What is important to know about strata? – Key takeaways

1. Strata laws vary by state: Each state in Australia has its own set of strata laws, so it’s important to be familiar with the specific laws and regulations in the state where the property is located.
2. Strata fees: Strata properties have ongoing costs called strata fees or levies, which are used to cover the costs of maintaining and repairing the common property, such as common hallways, elevators, recreational facilities, insurance, and management fees. These fees are set by the owners corporation and are usually based on the budget for the upcoming financial year.
3. Body corporate: The strata scheme is managed by an owners corporation, also known as a body corporate, which is made up of the unit owners. The body corporate is responsible for managing the common property, enforcing the bylaws, and collecting fees from the unit owners to cover the costs of maintenance, repairs, and insurance.
4. Bylaws: Strata properties have bylaws that govern the use and maintenance of the common property and the behavior of the unit owners. These bylaws must not contravene the law and must be consistent with the Strata Schemes Management Act of the state and the regulations of the state.
5. Meetings: The body corporate holds general meetings to discuss and vote on important matters, such as the budget, repairs, and bylaw changes. As an owner of an apartment / unit, it’s important to attend these meetings and stay informed about the decisions being made that may affect your property.
6. Insurance: As a unit owner, you are responsible for insuring your own personal property, while the body corporate is responsible for insuring the common property. It’s important to check that the body corporate has adequate insurance coverage in place.
7. Dispute resolution: Strata properties can sometimes lead to disputes among unit owners and the body corporate. It’s important to familiarise yourself with the dispute resolution process provided by the state laws and regulations, as well as the bylaws of the strata scheme, so that you know your rights and options in case of a dispute.
8. Property management: Strata properties are usually managed by a professional strata manager or a body corporate, who is responsible for the day-to-day management of the property, including maintenance and repairs, enforcing the bylaws, and collecting fees. It’s important to check the qualifications and the reputation of the property manager before engaging them.