BEFORE YOU BUY INTO A STRATA SCHEME…WHAT YOU NEED TO KNOW



Written by Jamie Horner

For those new to it, Strata ownership can be an adjustment. Some people swear by strata, and all the benefits that come with owning part of a strata scheme. Others think it’s daunting, and balk at the idea of shared control. At Empire Estate Agents, we can confidently say that the pros of being part of a strata scheme can easily outweigh the cons!


Our strata owners enjoy the ability to handover the demanding and often stressful task of managing property maintenance (and managing the other owners) to us.

Ultimately, this is what you want: to be able to trust the management of your asset to a competent team who will act in the best interest of all the owners. So, for anyone looking to BUY INTO an existing scheme…what should you look for in the strata’s management before you take the leap?


LOOK:


It seems overly simplistic, but the appearance of a complex can be a HUGE indicator. Look at the building and check out the garden: is it well-maintained? Are the lawns green and mowed? Do the plants look happy? Or are there weeds sprouting up in the cracks of the concrete, with dead grass and lifeless plants everywhere? Good management will ensure the common buildings and gardens are maintained and will have funds allocated to achieve this.


Investigate the state of the garbage disposal area…This can be a huge source of tension in large and small complexes alike because one person’s trash can become an entire community’s problem. Is the current method abiding by the Strata Title Act? Is there even a clear procedure in place?

Common areas should be in good, clean, working condition. Areas like the foyer, elevators, car parks etc. If these are filthy or in a state of disrepair, then it shows a level of complacency from the management company and Council of Owners…which is absolutely not something you want.


ASK:


There are a number of important questions that need to be answered before you consider buying into a scheme. One of the first things you will need to know is who is managing the complex? Is it run by a fellow owner (volunteer strata manger), or is a strata management company employed—and who are they? A quick Google search can assist in finding out more about the management company, and reviews are a great tool to gain insight into their reputation.


We also recommend asking an existing resident to gain firsthand insight into how things are run, and how well the management is regarded by those who live there.


Some complexes have a high percentage of rental tenants. Here in Victoria Park, where Empire Estate Agents is based, a large portion of the apartment complexes are home to a significant number of renting tenants. This is NOT necessarily a bad thing. But it is worth noting that with a revolving door of tenants, it is harder to establish the sense of community that many people choose strata for. Some people also find the risk associated with having a constant stream of renters to be an unpleasant idea. A nice balance has a mix of investment tenanted properties and owner-occupiers.


Be sure to ask for the by-laws. By-laws will have a massive impact on your strata living (whether for you or any future tenant of yours). Some complexes have stricter by-laws than others, including what you can and cannot put on the balcony, how you can/cannot use certain spaces, etc. With the changes in the reformed Strata Title Act, a consolidated set of by-laws must be lodged with Landgate over the next four years, which will make it easier for you, the prospective buyer, to access them. Until there is a consolidated set of by-laws you may need to look at multiple registered by-laws.


If it’s a ‘designated’ strata complex, is the building/property compliant? Is there a 10-year maintenance plan and ample reserve funds to cover this? Sounds like a very obvious one, as you wouldn’t buy a non-strata home without being certain, but it’s easy to make the assumption that others will have done the right thing before you…and that’s not always the case. You don’t want the previous owner’s mistake to become a costly problem for you.


And lastly, with new reforms to the Western Australian Strata Titles Act 1985, there are new disclosure obligations for strata sellers. It’s important to know what data you are entitled to as a prospective strata buyer.


A seller will now need to provide estimated strata levy contributions over a 12-month period, the most recent statement of accounts, annual general meeting minutes, insurance and 10-year maintenance plans (if any), and any amounts already owed to the strata company by the current lot owner. This new transparency allows you to know exactly what you’re buying into, so there won’t be any nasty surprises down the track.



IN THE KNOW…


Strata management can either make, or break a strata complex, so it’s critical to know what you’re getting into when purchasing a strata lot. Don’t be shy about asking questions, and don’t be afraid to be nosy. Investigate thoroughly all aspects of the building: the common areas, the car park, gardens, elevators, pool – and examine for yourself the paperwork and management procedures.

If things are not looking good at the complex, were works discussed at the last Meeting or provisioned for with funds for future works? As an example a new lift can cost between $110,000 to $180,000 if there is one or multiple lifts at the end of their life span, does the reserve fund have contingency for this?


For your convenience, here’s a quick checklist you can copy and paste into your phone notes, and take with you to any strata home opens you attend.


LOOK FOR:

  • The state of the building (wear and tear, paint, water ingress etc)

  • Parking – is there ample parking bays or vehicles on the verge etc

  • The maintenance of the garden / communal rubbish space

  • The condition of car parks and common areas

ASK:

  • Who is managing the complex? Owner-managed or strata management company?

  • Ask for a copy of the strata plan and work out what you own and what is common

  • Ask about the by-laws, how restrictive or are they lacking? Request a copy

  • Ask to view documentation, like annual income/expenditure, estimated strata levies, budgets etc

  • Ratio of Owner-occupiers to tenanted properties

  • Any short-stay accommodation operating in the building (such as Airbnb)?

Still not sure? Ask a professional. There are a number of Strata Managers and Strata Professional companies that will answer your questions and assist you in understanding the information provided to you or can point you in the right direction.


Need help with your strata complex or is your strata management’s contract up for renewal? Or maybe you’re part of a new strata complex, and looking for an incredible team to take the reins? Our strata team are a capable group of professionals, your local experts in effective strata management. Get in touch today and see how we can transform the running of your strata scheme. Call and speak to Jamie on (08) 9262 0400 or drop her an email on jhorner@empireestateagents.com


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