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Understanding the Different Types of Strata in Australia

In Australia, the two most common forms of property ownership are freehold ownership and strata title purchasing. 

Freehold purchasing is when you purchase the land and own it outright, meaning you hold the ‘Torrens Title’ to the land itself as well as any dwellings on that land. These are traditionally single-family or detached homes.

Strata on the other hand is more complex and differs state to state. Strata title ownership involves shared ownership of a property, typically in multi-unit complexes, where individuals own specific portions of the property called the strata “lot”. A strata lot can be an apartment, unit, villa or townhouse. Strata title ownership also provides shared ownership in the remainder of the property, which is called 'Common Property' which may include driveways, foyers, gyms, pools, gardens and so forth.

This article delves into some of the intricacies of strata ownership in Australia, exploring its types, governance, financial aspects, legal considerations, and best practices.

What is strata?

Strata title ownership refers to a property ownership structure where individuals own a portion of a larger property, typically seen in multi-unit developments like apartment complexes. Each individual owns a specific portion of the building called a strata “lot ” (which can be an apartment, unit, villa or townhouse) while sharing ownership of common areas such as lobbies, gardens and recreational facilities. 

The collective ownership and management of these shared spaces are overseen by a body corporate or owners corporation, depending on the terminology used in the respective Australian state.

What are the types of strata?

In Australia, strata ownership encompasses both residential and commercial properties. 

Residential strata commonly includes apartment buildings, townhouses, villas and duplexes, where individual units are owned by occupants or investors. Commercial strata involves ownership of commercial spaces such as offices, retail outlets, and industrial units usually  within a larger complex. 

You can have buildings that have a combination of both residential and commercial strata.

Each type of strata property operates under specific by-laws and regulations tailored to its intended use and occupancy, which also varies by state.

Governance and management of strata

The governance and management of strata properties vary across Australian states, with each jurisdiction enacting its own legislation to govern strata ownership. States such as New South Wales, Victoria, Queensland, Western Australia, and South Australia have established bodies to regulate strata schemes and ensure compliance with relevant laws. These bodies oversee matters such as elections of committee members, financial management, dispute resolution, and enforcement of by-laws.

You can view all criteria related to the states in our pages here.

As these laws vary based on state, so too does their naming conventions and applicable laws. 

Owners must adhere to strata regulations governing issues such as renovations, pet ownership, noise disturbances and dispute resolution mechanisms. Legal frameworks also govern the establishment of by-laws, enforcement of rules, and resolution of conflicts between owners, tenants and the body corporate.

Financial aspects of strata

Financial management forms a crucial aspect of strata ownership, with owners collectively contributing funds to cover operational expenses, maintenance, insurance and contingency reserves. 

Strata levies, also known as body corporate fees, are typically paid quarterly or annually and fund ongoing maintenance, insurance premiums, utilities and administrative costs. Additionally, strata corporations may establish sinking funds or capital works plans to finance major repairs, renovations or upgrades to the property over time.

Challenges and best practices in managing different strata types

Managing diverse strata properties presents unique challenges and requires effective strategies to promote efficient property management and a peaceful environment. 

Challenges may include: 

  • conflicting interests among owners
  • maintenance issues
  • financial constraints
  • compliance with evolving regulations. 

Adopting best practices such as proactive maintenance planning, transparent communication and community engagement can mitigate challenges whilst enhancing the overall livability and value of strata properties. In addition, rather than self-manage, some buildings will choose to have a dedicated strata manager, to spend time managing the property alongside the strata committee. The duties of a strata manager will encompass many facets such as  as choosing building suppliers to selecting the best strata insurance or body corporate insurance policy for your building’s needs.

Strata ownership made easy

Strata ownership offers a flexible and communal approach to property ownership in Australia, accommodating diverse residential and commercial needs. 

Understanding the nuances of strata governance, financial management, legal obligations, and best practices is essential for owners, investors, and stakeholders to navigate the complexities of strata ownership successfully. By fostering collaboration, transparency, and adherence to regulations, strata communities can thrive and sustainably manage their properties for the benefit of all stakeholders.

To find out more about strata insurance and the policy that suits your buildings needs best, check out our page here.