Have you ever wondered why you need a strata inspection before buying a house in Australia?
As the property market in Australia booms, it is essential to know certain things before looking up houses for sale in Sydney or other locations.
Let’s explore all you need to know about strata reports and whether you need one.
To get a better idea of the layers that form an enterprise, check out our article on company strata.
What is a strata report?
A strata report is a complete summary of a property owner’s corporation records. It is used to declare ownership of properties like apartments, units and townhouses.
For example, if you purchase an apartment unit in a building, your strata report indicates your ownership of your unit and legal right to use other shared spaces in the building, like the pool or gym.
Why do you need a Strata Inspection Report?
Strata-titled units or townhouses make you share ownership of the property you buy, including the liabilities.
Not just the damages, but you also become part-owner of the common areas surrounding the property, as mentioned above.
The above reasoning makes the Strata Inspection Report significant to mitigate unforeseen future expenses.
Additionally, you are covered from these avoidably future losses when due diligence is done.
Unravel the complexity of stratum titles by exploring our detailed breakdown on Stratum Title Meaning.
How much is a strata inspection report in Australia?
In Australia, the cost varies from property to property depending on what Strata scheme you are interested in.
Primarily, the price age of the building determines the cost, the number of communal buildings involved, maintenance cost/policies, etc.
Meanwhile, many have been advised not to engage in self-search but rather utilise the services of a Strata Searcher.
However, this is not free, as Strata Levies have no fixed standard but vary from Scheme to scheme depending on how many communal facilities it has and other factors.
In Australia, average Strata Fees can be from 0.3% to 1.2% of the property’s value.
Meaning charges can be between 0.8%–1.2% with facilities or 0.3%–0.7% without facilities.
What areas do strata inspection reports cover?
It covers all the aspects involved in running and maintaining a block of properties and all the common areas. These include; present property ownership, voting rights, and structural or building defects.
They include planned or previous significant works, quarterly levies and proposed special levies.
It also includes sinking fund forecasts, strata scheme insurance, pet policies, compliance documentation, disputes or breaches of by-laws, and Minutes from Annual General Meetings and Executive Committee Meetings.
Information to look out for in your strata inspection report
1. Financial Stability
How financially stable is the Owners Corporation to carter for the building needs? Do they gather enough reserve for immediate and long-term maintenance projects?
Are the annual or quarterly levies enough to run the day-to-day expenses of the Strata-scheme? This is not necessarily about the profits but is the funds raised enough to carter for these maintenance needs.
The Administrative Fund and Capital Work Fund should be enough to run the daily maintenance cost and a long-term one as forecasted by Quantity Surveyors.
We know every investor wants to make a profit, but the monies coming in should not be usurped for personal gains against the building maintenance policies.
2. Structural Defects
You need to know if there are maintenance issues with the building, like water penetration in the walls of the building, flooding, pest inspections in Sydney, electrical, plumbing, dilapidated façades, etc.
This information is needed by researching the Strata Inspection Report or speaking with existing building owners or previous occupants.
This will help to know the structural state of the building. Is it worth your investment?
3. Any Questionable Strata Management concern?
Is the Management or company strata up-to-date with the required information and paperwork about the buildings?
How diligent are they in keeping the Financial Records and other policies regarding the Strata-scheme?
For example, if you are renovating a home exterior in Sydney, further research on the developer’s or builders’ websites will show if they are properly licensed to handle such. Or is there any track record of disciplinary measures for poor work?
You don’t need to hurry and get the property without knowing how swift the strata property manager is in resolving financial and other issues regarding the property.
4. Compliance with Policies
Since a bundle of the legal framework runs the Scheme, it is essential to know if these policies are respected.
A look at their records, reports and minutes will give tale-tell signs of any concern. Do they keep up with their Fire Safety or Greenhouse policies?
5. Disputes
Knowing how the Corporation of House Owners relates is pertinent. Is it harmonious? Do residents coexist peaceably?
These are the tips you get from the reports and minutes of the Strata Inspection Report.
There are bound to be conflicts where two or three individuals exist. The concern is not about these conflicts but how matters get resolved when they arise.
Do the residents, even the Corporate owners, respect set policies? Nobody wants to live where there is no mutual respect and harmonious dealings.
