What You Need to Know When Buying an Apartment

With housing demand significantly increasing in Sydney’s property market, apartment living is fast becoming the new norm. According to the Australian Bureau of Statistics, figures show that there were approximately 28,527 apartments completed in Australia between December 2016 and March 2017. This compares to 28,102 houses built during that same quarter. With the size and popularity of dwellings rapidly changing, buyers need to know what to look out for when purchasing an apartment. That is why we always recommend that you order a strata report.

What is a strata report?

A strata report provides prospective buyers with an overview of the building and finances of the strata plan. It also contains important information about the insurances, building structure, past works and proposed major works in the years ahead.  

Why do you need a strata report?

Purchasing a property is usually one of the biggest investments of our lives. Because of this, it’s important to be across all factors to ensure you're making the right decision. A strata report provides you with that insight, giving you everything you need to know to make an educated decision on whether to purchase an apartment. It outlines key information like levies, unit entitlement and details of the strata managers looking after the property.   

Some of this information is available free-of-charge, but here is what you need to know: A strata report provides a comprehensive summary of the strata plans past and future financial position.  For example, it will detail past repair works, proposed major works, ongoing maintenance costs and any information about current legal proceedings. All these factors can have serious financial consequences, so it’s important to be across any red flags before committing to your purchase.

The below anecdotes demonstrate the importance of purchasing a strata report:

Imagine moving into your dream apartment, purchasing all your furniture and setting up your life. A few months into your occupation, you receive a letter requesting 4 quarterly payments of $3,000 to perform structural repair works to your building.  

As an owner, you are obligated to pay special levies as and when they fall due. If you do not pay the levies, the owners corporation can commence debt recovery proceedings against you to recover the unpaid levies, interest and to make matters worse, legal costs.

On the other hand, imagine moving into a building where a substantial number of owners are in levy arrears? Are you prepared to foot the bill for your neighbours?

A smart buyer / investor will always order a strata report to understand the nature of any past works and details of any proposed major works. They will also review any capital works plans that forecast future levies and have a general understanding of the condition of the building.  

How must does a strata report cost?

A strata report typically costs anywhere between $200 - $300.

 

Need help understanding your strata report? Fern Lawyers include a free strata report review for your purchase, so you can be confident that your investment is a safe one.