If you’ve never lived in a strata community before, you may be wondering how strata works. Strata living might seem a little complicated at first, but the system is actually designed to make life easier. However, we understand that when you start using terms such as by-laws, committees and levies, it can feel a bit daunting.
Here is a guide to strata community living to help you understand how it works.
What is a strata scheme?
In very basic terms, a strata scheme is a living situation where you own an apartment or lot but join in shared ownership of common areas and facilities. A strata scheme essentially means that you buy a specific part of a building or development. In an apartment building, you would buy one apartment to live in and share responsibility for common areas such as stairwells, the foyer, gardens and more.
Strata schemes work on a commercial basis for businesses too, but in terms of residential strata, the most common properties include:
- Apartment buildings
Every scheme works slightly differently and is governed by a clear set of by-laws, which we’ll get into later. The emphasis for many strata owners is the community aspect. If you’re the type of person who likes to keep to themselves, that’s totally fine. Nobody will force you to attend weekly barbecues, however, you’ll need to adjust to the fact that decisions are usually made by a committee elected to represent all owners. So, to get the most out of your time in a strata community, a little interaction with other owners may be required.
In addition, you’re often living quite close to other people, and the by-laws regarding behaviour can be quite prescriptive. Consider how this fits with your lifestyle – if you like throwing loud parties every weekend, you may need to adjust your behaviours.
The Owners Corporation
The Owners Corporation is the legal entity that owns the whole building or collection of units/villas etc. It is sometimes known as the body corporate, but Owners Corporation is the widely accepted term.
The Owners Corporation includes everybody who owns a lot within the strata scheme. All lot owners are members of the Owners Corporation. As a result, you become equally responsible for all common property, which can include carparks, gardens, elevators, stairwells and all other shared facilities, such as pools, gyms or any other common amenities provided to residents.
When you buy into a strata scheme, you also agree to comply with its by-laws. These by-laws are set by the Owners Corporation, and can only be changed through voting at a General Meeting. By-laws are in place to promote a safe, secure environment for all lot owners to enjoy.
By-laws don’t just govern what you do inside your own lot but also the common areas of the property. So, for example, whether or not pets are allowed in certain parts of the property. How extensive the by-laws are depends on the people managing the scheme, so they will vary from scheme to scheme.
Common inclusions are noise restrictions, waste disposal, parking, property renovations, shared facility use, and even things that impact the look and feel of the property, such as hanging washing on balconies.
Strata by-laws are enforceable, so by joining the strata scheme, you also agree to abide by the by-laws. There are usually penalties for breaches, so it’s important you understand all of your responsibilities.
How much does strata living cost?
Strata living costs vary depending on the type of property, location and quality of the lots. Typically, residents buy and own their lot, however, the upfront cost is usually lower than it would be to purchase a detached home or independent unit.
From there, owners are required to pay certain fees on an ongoing basis, known as strata levies. Your fees will depend on the unit entitlement of your property. For example, in the same complex, typically, a 1-bedroom apartment will attract lesser fees than a 3-bedroom apartment.
The quality of the property overall will also affect strata levies. For example, an apartment building with ultra-modern facilities such as pools and gyms will cost more than a building that only offers the basics. Overall, you may be required to pay three different types of fees.
Administrative fund levies
These are the standard levies that go towards the upkeep of the property. They cover things like gardening, maintenance, shared-use area energy costs, cleaning and other administrative expenses.
Capital works funds
Most strata schemes include separate capital works levies or ‘sinking fund’ levies. This money goes towards more costly repairs and maintenance in a strata scheme, those that cost more than just regular maintenance.
If there is a need for unexpected repairs, such as replacing a roof due to storm damage, there may not always be enough money in the capital works fund. In this case, special levies may be raised. This isn’t particularly common, however, you should be aware of these before committing to strata living because they can come as a shock to some owners.
Every year, your strata manager will call an Annual General Meeting. Much like any organisation, this is a time to review by-laws, elect committee members and vote on any issues affecting the scheme. Each lot owner has voting rights, and this is usually done by ‘unit entitlement’. This means your vote is worth more if you own a larger percentage of the scheme.
For general resolutions, only a majority vote is needed, and there is no unit entitlement – just one vote per owner. For a special resolution (such as raising special levies), no more than 25% of lot owners can vote against it. For sustainability infrastructure votes, no more than 50% can vote against it.
The strata committee is appointed at the AGM, generally on a voluntary and unpaid basis, to represent the interests of all lot owners. They are responsible for enforcing decisions made at the AGM and ensuring by-laws are followed. In most cases, the strata committee isn’t responsible for the daily running and administration of the scheme, but this can form part of its duties if an independent strata manager isn’t employed.
Who manages a strata scheme?
Some strata schemes are self-managed, meaning the committee handles most of the day-to-day running of the scheme. This includes organising repairs, taking care of administrative tasks, handling levies, keeping financial records and much more.
Alternatively, many schemes choose to hire an independent strata manager, such as the team at More Than Strata. The duties of a strata manager are the same as listed above, as well as calling and running an AGM
If you’d like a team of professionals to ease the burden of managing your strata scheme, we’d love to talk to you. Contact us today to find out how we can help.