Apartments have grown in popularity, making strata an important consideration. Picture: NewsWire/ David Crosling
Buying into a bad strata complex could see you forking out a fortune for costs you weren’t expecting. So, how can you tell if the apartment of your dreams is nestled in a body corporate nightmare?
FIRST IMPRESSIONS COUNT
When it comes to buying a property in a strata complex, presentation is key, REBAA president Melinda Jennison from Streamline Property Buyers said.
“It’s important to visually look around and understand how the property has been maintained,” she said.
If the complex itself, including the common areas, is in a state of disrepair, this should be cause for alarm.
It’s important to make sure all the common areas are well maintained. Picture: Christian Gilles
“Places that need a full repaint externally, that may be an indication there are some major costs coming up,” she said.
Buyers agent Bianca Field from Bought Agency said poor or no maintenance is a dead giveaway that you are buying into a bad strata complex.
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“A poorly maintained facade and common areas, clunky lifts, untidy basement surface, leaks – this indicates a lack of funds being spent to preserve a building and generally an underfunded capital works fund,” she said.
Buyers agent Bianca Field from Bought Agency. Picture: supplied
CHECKING THE STRATA ETHOS
Field said examining the proportion of owner-occupier versus tenanted properties in a complex can speak volumes about the way issues are dealt with.
“In a lot of cases, strata complexes that have a high percentage of tenants, can have landlords who aren’t physically present or privy to everyday issues that may be transpiring and therefore aren’t engaged in rectifying any smaller building issues that can snowball into much larger, more expensive ones,” she said. “Sometimes when you’re inspecting an apartment, a quick peruse of the building noticeboard found in the stairwell or common area can speak volumes on the ethos and give you great insight into the building issues.”
Replacing combustible cladding could become the new owner’s responsibility upon sale. Picture: Rohan Kelly
Jennison said requesting the minutes from strata AGMs held over the past two to three years can also hold great insights into any neighbourly disputes and whether or not legal action has been taken.
Field said a high participation rate from actively involved owners “indicates a dependable strata.”
FINANCIAL MATTERS
AGM minutes can also “highlight issues that have been discussed but not yet budgeted or paid for,” Jennison added.
“We’re always looking for those hidden items that may not need to be disclosed upfront but they can always be found through further investigation of the full body corporate records,” she said.
REBAA president Melinda Jennison.
One example is combustible cladding. If cladding that isn’t compliant with the fire code needs replacing, the owners are liable to cover the cost.
“But if the owners are selling out and if there’s not been a special levy raised within the strata, then that liability becomes the new purchaser’s responsibility,” she said.
When it comes to reading the strata report, understanding the financial statements is crucial, she added. Buyers should look at how much is in the sinking fund and how the figure relates to the number of properties in the complex.
“You want to know there’s a solid buffer in place for future repairs,” she said.
Field said it’s important to understand your percentage of ownership in the common property, also known as the unit entitlement.
Finding out how well the neighbours are getting along is important in high density living.
“This will affect your voting power and financial responsibility going forward,” she said. She said buyers should look at the 10 year capital works plan and any up and coming special levies as well as past levies and the works that have been paid for.
“An underfunded capital and admin fund with no indication of money invested into the complex is a red flag,” she said. “Other items I always check off are: Is there combustible cladding, has the building undertaken compliance for a fire certification, how old is the lift, how old is the roof, have there been any water ingress issues?”
Have structural defects been identified but not accounted for?
STRATA BUYING CHECKLIST
REBAA president Melinda Jennison shares her top questions to ask when buying into a Strata complex.
1. Are the financials healthy – is there an adequate sinking fund to cover any future repairs?
2. Are there disputes between neighbours – have any disputes moved to legal action? Will this come at a cost to the whole committee?
3. Are there hidden costs – do the minutes from past AGMs reveal issues that have been discussed but not accounted for that you may need to pay in the near future?
Do the strata bylaws allow pets? Not all complexes will say ‘yes’ to your furry friend.
4. Are there upcoming works – does the building need repainting, or are there any major structural or safety issues that need to be addressed that will cost you a fortune in strata levies?
5. What are the bylaws – can you have a pet? Are there restrictions on how you style your property?
6. Is the complex well maintained – are the gardens looked after, does the building appear clean and well presented? Or is the fence falling down and is there rubbish piled up in the bin area?
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