Looking to buy a new property? Ask for a strata report
While strata reports can be valuable for prospective buyers, additional research has proven beneficial before buyers make a final decision.
Most of us have experienced making the mistake of buying a ‘lemon’. First car buyers are often the perfect example. We get distracted by sleek wheels and shiny exteriors, so we jump at a bargain. When it comes to buying a property though, there’s so much more at stake.
As a new property buyer in a strata property or scheme, it’s especially crucial to do background research beyond just the selling price. As a lot owner in a strata scheme, you will only become an owner of a section of the property, while the common areas will be shared with other property owners who form part of the owners corporation.
Digging deep into a strata report and doing additional market research, will therefore provide far more insight into your future home, such as, possible risks and defects you may face or potential ongoing costs that are likely to be incurred.
Here’s what you need to do:
1. Request a strata report
A strata report contains all the information you need to know about the property before you make a purchase by providing a valuable overview of important information such as: the history of the building, the financial status, special levies, pending maintenance works, building defects, committee meeting minutes, compliance reports, insurance, by-laws and more.
Tip: the report should contain a capital works forecast and notes on any remedial work. Seeking a second opinion from a lawyer to look over the report and advise further may be worthwhile before signing the papers.
2. View the books and records
Each state has its own legislation. For example, New South Wales follows Section 182 of the Strata Scheme Management Act 2015. Under Section 182, allowance may be given to prospective buyers to review books and records.
A buyer can request access to these records, however it will be necessary to do the due diligence and form a strata report based on the records. If buyers aren’t familiar with industry terminology, there’s the option of hiring a professional strata searcher to do the job.
Tip: When engaging a searcher to conduct and inspect the books and records, make sure you ask about their property background to ensure they have sufficient knowledge and experience.
3. Research additional information
- If the property is newly built, it’s best to research the builder and developer and identify other buildings they have been involved in. This can provide a clear picture of the quality of work.
- Consider appointing a conveyancer or solicitor who specialises in strata purposes. They should know guide the purchaser using their experience and expertise.
- Take a critical look at the building and the levies for amenities. Pools, gyms, big gardens, concierge and tennis courts are wonderful items to have at your convenience, but it’s important to also consider future expenses of maintaining and repairing these amenities 5 to 10 years down the track.
- Be diligent when viewing both the lot and the strata property in its entirety. Take note of any fire safety equipment or lack thereof, the state of amenities such as pool maintenance, overgrown gardens, cracked walls, working elevators.
- Google the property name, address and strata plan. You never know what you can uncover through a simple online search.
Tip: Ask the real estate agent questions about the percentage of owner occupiers, as this can provide an indication if the property is being personally cared for directly by the owners or if the majority are investment properties and tenanted.