Table of Contents:
- What is Strata?
- The meaning of strata
- What is a Strata Scheme?
- Buying into a strata scheme
- Strata title: What does it mean?
- What is a strata titled property?
- What is the History of Strata?
- How do strata title properties work in practice?
- Do schemes work the same way in every Australian state?
- Buying a strata title property
- Strata Facts: Numbers on strata living in Australia
- Terminology to help you understand
This is a great page to start on if you are researching some basic information about strata. Wondering what strata is all about? Explore this article for the main information on strata, strata schemes and property ownership. Towards the bottom of this article, you will also find our terminology on strata, to get you familiarised with all the important terms of strata living. After exploring these resources, feel free to view our other Information Pages for more specific information or to find out more about legislation around Australia.
The meaning of strata
Strata or strata title in Australia is a model of property ownership that allows for individual ownership of certain parts of a property or parcel of land and shared ownership of others.
Strata title and strata schemes
The strata title is a legal document of your ownership for an apartment, a building or an office, also referred to as strata lots. The totality of strata lots (apartments or buildings) is defined as a strata scheme. Each homeowner can buy into an individual strata lot.
What is a Strata Scheme?
In the recently published book The Politics and Practices of Apartment Living, Hazel Easthope describes strata schemes as “multi-unit properties with multiple owners. As joint owners, they are jointly responsible for the management and upkeep of their buildings. On purchasing an apartment in the development, owners automatically join a legal entity that has responsibilities for the upkeep of the property and the proper management of the finances. This entity is usually in the form of an owners corporation and its actions are governed by legislation.“.
In other words, the strata scheme constitutes the totality of the strata lots and common areas with its joint rules and regulations. In turn, every strata scheme must be compiled into a strata plan.
What is a strata plan?
A strata scheme must be represented by a strata plan. The strata plan is a subdivision of a parcel of Real Property land. The plan represents the lots and the common property of the strata scheme. The plan must include minimum one building facility including the boundaries of the individual strata lots.
Where can you find the schemes?
Stata Title Schemes are used successfully in many different residential settings, including residential complexes, serviced apartments, retirement villages and caravan parks.
They are also used in industrial complexes, commercial buildings and retail precincts.
Buying into a strata scheme
A strata scheme consists of strata lots and the common property. Buying into a strata scheme means owning the individual lot while also taking on responsibility for the shared areas of a building or collection of buildings.
What is the difference between strata ownership and owning a house?
When buying a house you own the entire property including all interior and exterior areas. In a strata scheme, you, as a lot owner, do not own the exterior areas such as the external walls, roof or the floor. In turn, the ownership and maintenance of these areas befalls the owners corporation.
Buying into a strata scheme as a lot owner, you become part of the owners corporation also known as a body corporate. The body corporate is usually made up of all the lot owners – not the tenants! – and holds the legal responsibility for the management and maintenance of the shared areas of the strata-titled property.
What is the difference between a strata manager and property manager?
You will find that each strata scheme is managed by a strata manager. However, this is not the same as a property manager.
The strata manager is tasked with responsibility for common areas including the administration, finances and social roles of the strata scheme. Read more about the role of strata management here.
Property managers take on the responsibilities of managing the individual strata properties for the owners. As an owner, you are likely to rent your lot to tenants, and here the property manager acts on your behalf ensuring that the tenants keep your place in good condition and pays the rent.
Strata title: What does it mean?
The strata title includes ownership for strata lots and the common property, such as stairwells, driveways and garden areas. The strata title holds responsibilities for these shared areas of the building, which are jointly owned and managed by the lot owners.
Strata title schemes clarify ownership. They also provide a comprehensive framework for the management of a development from its planning through to its eventual termination.
The strata title sets out the rights and responsibilities of all parties. This not only ensures the smooth running of the scheme but provides protection for all parties under law.
Legislation has had to keep pace with a constantly evolving industry. Legislation now includes provisions for every style of scheme from residential apartments to marine berths.
For more on Legislation, visit our ByLaws and Legislation.
What is a strata titled property?
A strata titled property refers to a property owned with a strata title. A strata property consists of any building or collection of buildings owned by a strata owners corporation. Owning a strata titled property enables ownership of the individual property parts (lots) as well and the common property.
Why strata titles are important?
It is important to have a strata title because the title serves as legal proof of your ownership of the apartment or building. Thereby, the strata title gives the homeowners more control over their property.
To learn more about the strata title and ownership you can also read our article on strata 101 here.
What is the History of Strata?
Strata title as a term was first used by the NSW Parliament when they passed the Conveyancing (Strata Titles) Act of 1961.
Prior to this, it was necessary to use cumbersome structures to define the ownership of single units or apartments within a larger complex. This arrangement caused banks to became increasingly reluctant to provide lending for units or apartments.
The concept of strata title was gradually adopted by the other Australian states. This lead to adoption in other countries including parts of Canada, Singapore, New Zealand, Indonesia and many others.
Schemes have grown in complexity over the years to cope with the increasingly complex nature of developments. Along with this growth has seen a range of specialised professions such as strata managers, strata lawyers, searchers and other industry professionals.
How do strata title properties work in practice?
If you are looking at purchasing your first unit or apartment, you may be wondering how strata works. This style of living may not be something you have encountered before. Owning a lot within a strata title property is very different from owning a free-standing house or building.
For a start, each scheme has a unique set of rules called by-laws that lot owners/occupants are required to abide by whether they agree with them or not!
Owners and residents are required to comply with restrictions on the presentation and improvement of their own lot, and any behaviour that could impact on other residents. Examples include:
Over and above the scheme by-laws, each state has a comprehensive set of legislation concerning schemes. State Legislation covers issues as diverse as pest inspections, smoke alarms, fire safety, safety glass, asbestos management and lifts.
What about compliance to legislation?
The scheme and its’ compliance with state legislation and the scheme’s own by-laws is the responsibility of an Owners Corporation and a Strata Committee. The Committee meets regularly to decide on important issues.
Lot owners may be required to attend a variety of meetings to vote on important issues although this is not generally compulsory.
The compliance requirements of a scheme are so comprehensive, it’s often necessary to engage the services of a professional Strata Manager to ensure the smooth running of the scheme.
What do I need to know about Insurance?
Schemes are required to insure themselves against unforeseen events. Building insurance provides cover in the event of loss or damage to the buildings within the scheme. This includes the structures and fittings within each individual lot and all common property.
Schemes also require public liability insurance; workers compensation insurance and cover for voluntary workers. Requirements may vary from state to state, so it’s a good idea to check what the requirements are in your state or territory. Take a look at our state-specific Insurance page for more information.
Lot owners are required to pay quarterly levies that go towards the administration and upkeep of the scheme and capital works, either scheduled or emergency. Special levies can sometimes be imposed to cover significant unexpected expenses where no funds were allocated or available.
If this isn’t an option, it’s possible for a scheme to borrow money in the form of Strata Finance or a Strata Loan.
Do schemes work the same way in every Australian state?
Strata title legislation is specific to each state. This means that terminology or regulations that apply in one state may be irrelevant in another.
Legal advice on strata issues is state-specific so it’s important to bear this in mind before engaging the services of an expert.
To find out more about the legislation that applies in your state, take our look at our comprehensive Legislation page which is divided into states for easy reference.
Buying a strata title property
Experts recommend that buyers do their homework before purchasing a strata title property. This will help ensure they’re not buying into something with outstanding litigation matters, significant special levies planned or by-laws that are going to be unnecessarily restrictive.
The easiest way to do this is through a qualified strata searcher. A good inspection report will give you all the background information you should be aware of. The report should highlight any areas which may not be obvious from a simple inspection of the property.
To find a qualified strata searcher in your state, search in our Directory.
Strata Facts: Numbers on strata living in Australia
According to the 2020 Australasian Strata Insights, 9% of the Australian population live in strata apartments. At the time of the report, there were 340,601 strata schemes and over 2.8 million strata lots across Australia. A whopping 54% of these schemes were registered after 2000.
There are around 10,000 people directly employed within the strata industry around Australia. Over 4000 of those are strata managers. The total insured value of schemes is over $1,117 billion.
Looking forward, strata is a growing industry gaining more and more attraction from lot owners to strata managers. In 2021 in NSW, the 5-year statutory review of the Strata Schemes Management Act 2015 will take place. The review is likely to lead to more changes in the ways strata schemes are currently managed and estimate the effectiveness of the Act in the state of New South Wales.
Terminology to help you understand
BY-LAWS: A unique set of rules that apply to one specific strata title property which owners and tenants must abide by.
LOT: The area or dwelling owned by each individual lot owner.
UTILITY LOT: An area designated for something other than human habitation but noted on the strata plan eg. parking lots or storage areas.
COMMON PROPERTY: All areas within the strata plan that fall outside of individual lots.
STRATA MANAGER: A qualified, licenced professional who is trained in the day to day management of a scheme.
BUILDING MANAGER: Previously called a Caretaker, the building manager is usually located on-site and works under the direction of the Owners Corporation to ensure the smooth day-to-day running of the scheme.
LOT OWNER: The owner of the individual lot.
CAPITAL WORKS FUND: A portion of all levies paid, are allocated to a Capital Works Fund for major scheduled capital works or unexpected emergencies.
LEVY: Every owner is required to pay a quarterly levy that covers the administration of the scheme and the day-to-day running and maintenance of the property.
SPECIAL LEVY: An additional levy paid by owners, either as a lump sum or in instalments, to cover unplanned or underestimated expenses.
STRATA PLAN: The actual plan of the scheme showing the placement of individual lots, common property, boundaries and services, usually registered with the state land registry office.
STRATA ROLL: A register of all owners, registered tenants, mortgagees and other parties to the scheme.
Terminology: What do you call Strata – State by State
Not only Legislation but also terminology varies around Australia. What do you call strata in each state and territory?
- New South Wales Owners Corporations
- Queensland Body Corporate
- Victoria Owners Corporations
- Australian Capital Territory Owners Corporations
- South Australia Body Corporate
- Tasmania Body Corporate
- Western Australia Strata Company
- Northern Territory Body Corporate
We hope this brief explanation has assisted in your understanding of what is strata title and what you can expect from apartment living. If you still have questions, explore other pages on this site. A great place to start would be on your state or territories Information page.
You may also find this article covering the basics very useful – Strata title 101: what you need to know by Cathy Sherry, UNSW.