Strata in Australia: what it means when you buy or rent an apartment

If you are looking to buy or rent an apartment in Australia, you will often come across the word strata. This is a distinctive form of property ownership — different from buying a standalone house and land — and understanding it properly will help you avoid plenty of unwelcome surprises.

What is strata title?

Under strata, you own a “lot” — that is, your apartment, unit or townhouse — but you do not own the whole building. The rest of the building, known as common property, is owned collectively by all of the owners in the complex.

This means that when you buy a strata apartment, you are buying individual ownership of your own lot and, at the same time, becoming part of a collective of owners with a shared responsibility for all of the common property.

What does common property include?

Common property usually includes:

The foyer and entrance (lobby)
Lifts and corridors
The roof and external walls of the building
Gardens, the pool and shared BBQ areas
Shared car parking (where it is not a separate lot)
Shared plumbing and electrical systems in the building

What is the owners corporation?

Every owner in a strata building automatically becomes a member of the owners corporation (in Queensland and some other states it is called the body corporate). This is the legal body responsible for:

Maintaining and repairing the common property
Taking out insurance for the building (building insurance)
Collecting and managing levies from members
Enforcing the by-laws (internal rules)
Making decisions on matters that affect the whole building

What is a strata levy?

Every owner must pay a strata levy (also called an owners corporation fee) on a regular basis. This money is used to:

Cover the day-to-day maintenance of common property (the administrative fund)
Set aside money for major repairs in the future (the sinking fund, or capital works fund)

Levies vary enormously from building to building — a small block with no lift or pool will have significantly lower levies than a high-rise apartment with many facilities. Before you buy, it is important to know what the levies are and how healthy the funds are.

By-laws: the rules of living in a strata building

Every strata building has by-laws — a set of rules that apply to all residents, including tenants. By-laws commonly cover:

Pets: whether they are allowed, what kind, and on what conditions
Renovations: which works need approval from the owners corporation
Noise: quiet hours
Parking: who may use which parking space
Smoking: where it is permitted and where it is banned

When you buy into strata, you agree to follow the by-laws in force. By-laws can be changed by a majority of owners at the AGM.

Strata report: checking before you buy

Before signing a contract to buy a strata apartment, you should request and read a strata report (strata inspection) carefully. The report gives you:

A record of meeting minutes — the issues that have been discussed and decided
The financial position of the funds — are they well funded, or short?
Any current disputes — are there any lawsuits or complaints?
Upcoming special levies — are any additional charges expected?
Outstanding maintenance issues — which items have not yet been repaired?

This is one of the most important steps when buying into strata. A good strata report prepared by a specialist can help you uncover hidden problems before you sign.

Rules differ from state to state

Strata law in Australia is governed by each state and territory, not the Commonwealth:

NSW: Strata Schemes Management Act
Victoria: Owners Corporations Act
Queensland: Body Corporate and Community Management Act
WA, SA, ACT, NT: each has its own legislation

As a result, the names, processes and specific rights can differ depending on where you buy. When you research, make sure you are reading the information for the correct state.