Living the Great Australian Dream for most aspiring homeowners entails securing a house and land in a good neighbourhood. But interestingly, another large segment of Australians prefer owning or living in multi-dwelling homes.
The latest strata data report, 2020 Australasian Strata Insights states that 9% of the Australian population live in Strata. That’s 2,200,793 Australian residents or 15% of all Australian households living in a strata property. No doubt these figures have increased since the report.
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Inner-city dwellers prefer units than stand-alone houses as they are more affordable. Multi-unit investors tend to rent out the apartments and sell them off at a profit when the economy is at its peak.
Owning a unit in a strata community is different from owning a house. Strata unit owners only own a portion of the building contrary to when you buy a house and take ownership of the property and the land it sits on.
Multi-unit residences create neighbourhoods comprising of unit owners and renters. People in strata communities live right next to each other, sharing certain amenities and areas. For this community set up to work well, a body known as the owners corporation oversees a strata scheme’s operations, making sure that residents live harmoniously and that arising disputes are settled amicably. A strata committee heads the owners corp or body corp (depending on which state in Australia you reside in).
Before delving deeper into the strata owners corporation, and the strata committee and how they work, let’s define an owners corporation.
What is the owners corporation or Body Corporate?
Also known as a body corporate in some states of Australia, an owners corporation runs a strata scheme’s common property. An owners corporation runs all schemes including residential, commercial, retail, mixed-use and industrial.
If you’re looking to own a unit, an apartment or a flat, you’ll most likely join an owners corporation.
Your state’s strata legislation details the responsibilities of the owners corporation regarding financial matters, maintenance of the strata complex, assets management, insurance, and more. The Act provides that an owners corporation must always act in good faith in exercising its powers and functions.
What is the difference between an owners corporation and strata committee?
An owners corporation, just like the name suggests, consists of owners of the units or lots in a strata community. Together, the strata buildings’ owners are responsible for the maintenance of the lots, shared assets, and the infrastructure.
Property or lot owners in strata are automatically registered in the respective owners corporation. One cannot opt-out of duties and responsibilities that come with being a strata property owner. Regardless of the state you choose to invest in, here are some common responsibilities of the owners corporation:
- Managing the scheme’s funds
- Maintenance of the common assets and shared amenities in a strata community
- Vetting and appointing the strata committee
- Issuance of notices to owners for meetings and owners corporation fees
- Maintaining financial and accounting records of the scheme
- Managing insurance policies and building requirements for the common assets
The owners corporation is responsible for ensuring that its entire membership obtains copies of the corporation’s duties and responsibilities.
A strata committee represents the entire owners corporation membership and undertakes key decisions and responsibilities on its behalf. The committee collaborates with the strata and building management to ensure that the strata complex operates smoothly. The committee’s actions must always align with the owners corporation’s requirements and aspirations as well as the federal, state and local council laws.
Whenever individual strata lot owners have a matter that requires the other members’ attention, the first point of contact is the strata committee. The committee listens to and discusses issues relating to individual ownerships, including maintenance queries, insurance claims, and more.
The strata committee is charged with the following responsibilities:
- Depending on the power vested in them, undertaking certain decisions on behalf of the owners corporation.
- Enforcing owners corporation regulations and bylaws as well as attending to the breach of these bylaws.
- Administering periodic maintenance and daily running of the strata complex.
- Working together with the building manager and strata manager to achieve the objectives of the owners corporation.
- Attending to lot owners’ daily requests, including pets’ applications, renovation applications, etc.
- Sharing reports with the corporation, organising meetings, setting meetings and agendas, etc.
- Reviewing and approving financial transactions, including invoices.
- Installing into office various office holders in the strata scheme.
Do you need to be a part of the owners corporation?
Perhaps the core reason why the strata space is attracting a lot of investment has to do with its cost implication compared to stand alone housing. Strata units are typically less costly, especially in the populated cities.
Owners enjoy economies of scale on most costs, including maintenance of the common areas. All unit owners must make periodic contributions to the owners corporation to maintain the common assets and common areas.
So, when do you need to become a member of an owners corporation?
If you own strata property, you automatically become a member of the owners corporation. The same applies to being a committee member although an “outsider” can also be appointed to a strata committee upon being recommended by an owner not vying for the position.
Becoming a member of an owners corporation allows you to share in other like-minded property owners’ common goals. This way, costs can be shared and problems can be managed better as a group. Get involved in your owners corporation or body corporate by attending meetings and taking part in the decision making process. Have your say in the running of your scheme. This may impact the value of your investment and have an effect on the levies you pay each quarter. You may even consider joining the committee!
If you also dread having to deal with individual needs for your properties in a building setup, then belonging to an owners corporation is a great idea. The strata committee, possibly assisted by a strata manager and building manager, execute certain tasks on its behalf, including dealing with tenant issues, insurance management, maintenance of common areas, installing various office holders into office, and much more.
Owners corporations help regulate the operations of a strata scheme and help maintain harmony among lot owners and tenants. In case of disputes, there are well-documented channels for listening to and resolving problems. This spares individual owners time and money that may otherwise have been spent on court battles or hiring independent mediators.
So, if you feel that you want to own an apartment, a villa, or a building unit in a populated area such as a city, strata with its owners corporation might be just what you are after.
Who can be a part of the owners corporation?
If you own a unit in a strata scheme, then you automatically become a member of the owners corporation or body corporate. Members have financial and legal obligations towards the owners corporation and members may be elected to the strata committee, for example in chairman and secretary positions.
What are the responsibilities of the owners corporation?
The owners corporation, under your state’s legislation, has the following responsibilities towards managing strata schemes:
- Managing and maintaining the operations of the scheme’s common property and common areas.
- Formulating and enforcing by-laws and rules guide the strata community on what they can and cannot do.
- Setting an individual member’s contribution towards the scheme’s continued operation includes paying staff, insurance premiums, and sustaining the committee activities.
- Safekeeping of the assets of the owners corporation.
- Maintains records for the strata community including minutes of meetings, financial records, strata roll, engagements of various parties as well as the corresponding authorisations, and records of renovations of members’ units.
- Sources insurance covers on behalf of the lot owners for the common assets.
Either through the committee or the annual general election, the owners corporation makes the above decisions plus a range of others.
How to buy property within an owners corporation
The real estate space can be quite challenging for novice investors. When looking for a property, the first thing you want to do is to check the title. The title will tell you important details about the unit, including the scheme’s bylaws and any conditions you may need to be aware of before purchasing. For a small fee, you can employ the services of a Strata Search professional to carry out a Strata Report, which will supply you with the necessary information. This is in addition to the information supplied by your property lawyer or conveyance.
If you’re purchasing a strata apartment, townhouse or a unit you will automatically become a member of the owners corporation or body corporate. Be sure you understand how a strata title differs from, for example, a Torrens title. While strata titles are common legal land ownership documents in Australia, they are only issued for units with shared spaces and amenities including apartments and townhouses.
Interestingly, the strata-titled property is a concept that originated in Australia and has over the years gained traction in other parts of the world, including in New Zealand, Canada and India. For a more in-depth look into the history of strata, see our What is Strata page.
