7 Things to Look for When Buying a Strata Property

Thinking of buying a strata property?

If you are, there’s several important things to look at before taking the plunge.

Every property will have unique attributes that impact how the strata committee works, the building’s financial health and its current condition. Before signing the dotted line, at the least you should look closely at the corporation’s finances, review any sinking fund plan, inspect meeting minutes for recurring disputes or building issues, read the resolutions, articles and by-laws for lifestyle restrictions, and check common areas like the garage and roof for maintenance issues.

1. Standard Strata Levies

Standard strata levies are regular, mandatory fees paid by property owners in a strata scheme. They are calculated via a proposed budget and voted on by owners at the annual general meeting (AGM). Individual levies are based on your property’s unit entitlement, so larger lots generally pay a higher percentage, with the bill usually paid on a quarterly basis.

Strata levies fund the ongoing day-to-day operations, insurances, management, and long-term maintenance of shared common property like hallways, gardens, lifts, pools and building exteriors. Typically, there’s an administrative fund that covers regular, day-to-day running costs, and then a sinking fund which sets aside money for long-term or major capital works such as painting the building’s exterior.

2. Any Special Levies Being Considered

A special levy is a one-off, additional fee charged to property owners when the existing administrative or capital works funds do not have enough money to cover unexpected, urgent, or major costs. These will be found in the search report.

3. Condition of the Building

When visiting the building, be sure to inspect as many of the community areas, exterior spaces, lifts, pool, gym and accessible areas as possible. Look for damage like cracks, faded paint, corrosion, water leaks or other wear and tear that will require repair. It’s also good to get a building report done by an independent provider to assess the condition of the property.

4. Understand the Strata Rules

The strata articles and by-laws are rules that all residents living in a strata scheme must follow. By-laws are legally binding and cover things like pets, parking, noise, renovations and smoking. They apply to not only those living in the building, but tenants, owners and visitors too. They are established to help maintain harmony in the community and consistency in how spaces are used or renovated.

While looking into the strata rules, it’s also good to check that all the relevant government compliance paperwork is up to date, like fire safety certification – including extinguisher testing and alarm tests. Check for potential gaps in insurances, for example under-insuring the building or not having up-to-date public liability. Lastly, check that there’s an adequate sinking fund to maintain a maintenance plan.

5. Understand the Management Process

It is very important to understand the strata management process, because it not only determines ongoing systems used to run and care for the property, but it also covers how financial decisions are made, the process for building repairs, legal rules, and how and when meetings are conducted. Typically, owners work with an elected committee and a professional manager to keep the property safe and well managed.

6. Physical Inspection of the Entire Property

Never make a purchase decision just by reading reports and looking at images. These are of course important parts of the process, but there’s nothing better than casting your eye over the entire property. You need to look under rugs, inside cupboards, on balconies and inside fire exits. You should walk through all the shared spaces and take your own photos of anything of concern, like potential water leaks. It’s wise to test all the lifts and any shared elements like barbecues, gym equipment and even doorways. Something as simple as a faulty fire door can cost thousands to repair. Look for non-compliant things like missing fire alarms or unauthorised renovations – they can be indicative of other issues with building management and implementation of by-laws.

Final Thoughts

The key for anyone buying a strata property is to arm yourself with as much information as possible. Every detail, from management processes and financials, to the thoughts of tenants and aesthetic of the building will impact you not only financially, but also how you ‘experience’ being an owner.