If you own or are considering buying a unit, townhouse or villa, chances are that it will be administered by a strata title or a company title.
Prior to the 1960s, it was standard for units to be bought and sold within a company title. It allowed people to buy a unit rather than a house and provide for separate shares of the space within the one property. These shares give you exclusive use and occupation of the unit. It is however increasingly rare as most buildings convert to strata title due to the many benefits it offers.
Strata title was introduced in the 1960s to give legal ownership of a portion of the building. It is suitable for both residential and commercial properties.
Naturally, both strata and company titles are legally different. They come with their own list of pros and cons which also varies from state to state. It is vital that you gain advice as to the financial and legal implications of owning either type of property.
- Owners are required to pay quarterly levies to manage, insure and maintain the property, vote at AGM’s and abide by any bylaws (not really a negative but it is something to consider).
- It is a trusted, fair and transparent system used by almost all buildings.
- Owners get an equal vote on large decisions.
- There is a clear surveyed diagram showing which parts of the property are common areas and which are owned by individuals.
- Properties under a strata title are generally worth 10% to 20% more than properties under a company title.
- It can sometimes be difficult to borrow to purchase a company title property with some lenders requesting a larger deposit to buy. This then lowers the risk to the bank on the property value.
- Owners don’t own the property title, instead, they own a share in a company that owns the title.
- They can be slower to sell than strata title properties.
- Company constitutions can limit who can buy into the property if the property can be rented out and even what changes can be made.
- Investors may make money if purchasing and later the company title is changes to a strata title, adding instant value.
- Properties can be cheaper to buy.
There is also another option – Stratum Title – This is a combination of both of the above with the owners having a property title and a company owning the common property.
Select Conveyancing Lane Cove is here to help you every step of the way with your property purchase or sale. Contact us today to discuss your needs.