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Strata Titles Explained – What are They?

Here’s all you need to know about strata titles, what they mean and how they work.

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, updated on August 7th, 2023       

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When looking at buying an apartment or townhouse, you may have come across the term ‘strata title’ and wondered what it meant.  Read more about what strata titles are and explore their benefits and disadvantages with Savvy.  We can also help you compare lenders to find the lowest interest rate and best home loan deals available.

What exactly are strata titles?

The word ‘strata’ means layers, or a series of layers, so strata titles describe a type of property ownership and loans which covers multi-level apartment buildings and also land sub-divisions having multiple residences which share common areas.

Strata titles apply to units, apartments and townhouses where, in addition to individual living units, there’s also shared property such as foyers, lifts, swimming pools and communal gardens.  They are a common form of property title which also exists in retirement villages, serviced apartments, retail blocks and commercial properties.

They give the owner of the strata-titled unit the right to exclusive use of their property, but also common ownership and responsibility towards the shared property which other unit owners own a percentage of.

To maintain, service and repair the common property, each strata building has an owner’s corporation (previously known as a body corporate) which makes decisions about the upkeep and maintenance of common property.  This corporation is made up of individual unit owners and acts on behalf of all the joint owners of the strata-titled property. The corporation charges each unit owner a fee which should cover the cost of repairs and maintenance to common property.

The owner’s corporation also makes rules (which each unit owner has to follow) about what is acceptable behaviour and decides on issues such as pet ownership, smoking, parking regulations, noise complaints and disputes between unit owners.  The corporation also manages the insurance for the building and arranges and employs tradespeople and workers to carry out necessary maintenance to the property, such as gardeners and pool cleaners.

What are the advantages of strata title ownership?

  • Strata properties are generally cheaper to buy with a home loan than freehold properties, which make them very popular with first homebuyers and lower-income borrowers
  • Modern strata title properties often include facilities such as swimming pools, gyms, BBQs, outdoor entertaining areas and communal gardens that individual property owners could not afford by themselves
  • Living in a strata title building brings the opportunity to become involved in a community with a common interest and can bring companionship and friendship to people who may not have close friends or family nearby
  • Activities such as pool cleaning and garden maintenance are provided year-round, so individual unit owners don’t have to worry about them whilst they’re away, sick or on holiday

What are the disadvantages of strata title ownership?

  • Strata fees or levies are charged to cover the cost of maintaining communal property. These can be quite expensive if a major unexpected expense arises which is not covered by the building’s insurance, which will come in addition to regular home loan fees
  • In addition to strata fees, each unit owner also has to pay council rates, which can be quite expensive for a shared building
  • You rely on the owner’s corporation to handle maintenance and repair issues, so a strata building with an ineffective corporation can fall into disrepair, with individual owners unable to get necessary repair work done on time
  • There could be restrictions to your daily life that wouldn’t be imposed if you owned a freehold title to a detached house – such as regulations about owning a pet, where you and your visitors can park, when you’re allowed to cook a BBQ and how you decorate the outside of your unit or apartment

Strata title building language explained

Here are some of the common phrases used in relation to strata title buildings and what they mean:

  • Strata plan – the shared building’s drawn building plan which denotes individual and communal ownership areas
  • Strata lot – the individual apartment, unit or office which forms part of a strata building
  • Strata scheme – describes the entire shared building, individual lots and owners’ corporation that make up a strata development
  • Strata owners' corporation – a legal entity comprised of lot owners which takes on the responsibility for maintenance, governance, insurance and repair of a strata building
  • Strata fees or levies – fees which are charged to lot owners by a strata owners’ corporation to help pay for the maintenance, repair, insurance and development of the strata property
  • Schedule of unit entitlements – this is a legal document which describes the proportion of the entire strata scheme held by each lot owner. For example, penthouse suites in a high-rise building may have a higher entitlement than a strata title unit on a lower floor, meaning the penthouse owner has to pay higher strata fees in proportion to the increased value of their unit compared to others
  • Strata by-laws – rules and regulations which are agreed by the strata owners’ corporation governing the behaviour and regulation of the strata building. For example, a strata by-law may stipulate no swimming in the pool after midnight or pets only being allowed in ground-floor units
  • Strata sinking fund – this is a sum of money which is owned by the owners’ corporation and is kept in reserve to pay for unexpected repair or maintenance costs for the building which may arise in unusual or emergency situations

More of your frequently asked questions about strata titles

What's the difference between Torrens title and strata title?

A Torrens title (which covers most properties where you are the sole owner) means you have total control over your property and how it’s used.  A strata title means that maintenance and repair to the common areas of the property are handled by the owners’ corporation and covered by strata fees.

Are strata titles a safe property investment?

Yes – strata titles have been in existence since the Conveyancing (Strata Titles) Act came into force on 1st July 1961 and are a well-recognised and respected form of property ownership.

What happens if I don't pay my strata fees?

This will depend on the individual by-laws of the strata owners’ corporation.  In general terms, if you don’t pay your strata fees, you’ll be charged interest on the amount owing.  If you continue to not pay, legal action will follow, including disconnection from shared resources.  This could result in your water or electricity being disconnected, your rubbish not being collected and your right to enjoy communal facilities (such as using the swimming pool) being withdrawn until payment is made.

What can I do if I don't agree with a strata corporation decision?

The strata owners’ corporation is comprised of lot owners and its activities are regulated by Australian law.  Each corporation should have its own dispute-resolution clause detailing what to do if a dispute arises, so get a copy of your corporation’s by-laws and follow the dispute resolution process as agreed to by other unit owners.

Is the mortgage application process different when buying a strata title?

The process for applying for a home loan is very similar, whether you’re buying a Torrens title property or a strata title.  However, if you’re buying a strata-titled unit, apartment or townhouse, you will need to have a strata search carried out by your conveyancer.  This strata search will obtain financial records and meeting minutes for the strata scheme and will give you and your legal representative a good understanding of how well-run the strata owner’s corporation is.  You may also find that lenders require a larger deposit (up to or above 30%) when buying a strata-titled property.

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Disclaimer and important things you should know

Quantum Savvy Pty Ltd (ABN 78 660 493 194) trades as Savvy and operates as an Authorised Credit Representative 541339 of Australian Credit Licence 414426 (AFAS Group Pty Ltd, ABN 12 134 138 686). We are one of Australia’s leading financial comparison sites and have been helping Australians make savvy decisions when it comes to their money for over a decade.

We’re partnered with lenders, insurers and other financial institutions who compensate us for business initiated through our website. We earn a commission each time a customer chooses or buys a product advertised on our site, which you can find out more about here, as well as in our credit guide for asset finance. It’s also crucial to read the terms and conditions, Product Disclosure Statement (PDS) or credit guide of our partners before signing up for your chosen product. However, the compensation we receive doesn’t impact the content written and published on our website, as our writing team exercises full editorial independence.

For more information about us and how we conduct our business, you can read our privacy policy and terms of use.

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