Carrying out a due diligence on an apartment before you purchase, especially if you are choosing to use it for investment purposes is a wise expense to ensure that you are aware of any building concerns prior to making the final acquisition.
A strata inspection report will detail the history and the current state of the building including any information relating to both the residential and commercial aspects of the scheme. This report will outline the effectiveness of the management of the building.
What exactly should a strata report contain?
The financial status of the body corporate and building
As an apartment owner, there are requirements to contribute toward strata levies which are allocated to maintain the building and common areas of the property. These levies will usually be allocated to items such as cleaning and gardening, any maintenance items and minor repairs that may need to be done.
Should there be larger repairs and expenses, you may be asked to pay a special levy to contribute toward capital works if there are insufficient funds in savings to cover the costs.
A healthy bank balance for a Body Corporate will mean that there is wiggle room should any capital works need to be carried out. It is also important to check that there is a Capital Works Fund included in the balance sheet and that this has a plan and funds for future work.
Future building work and defects
Check the report and ask questions around any defect work both historically and planned future events so that you are aware of the implications on future costs relating to capital work and on your future living conditions or those of tenants renting your investment.
Should the tenant lose facilities during major renovations or defect work, this may also impact your income as you may be required to compensate the tenant or release them from lease obligations depending on the work to be done.
Check off the by-laws
A strata complex will have by-laws, which are a set of rules that are provided to all owners and tenants in relation to expectations of the building and common areas. The rules may include items like air conditioner use, washing on balconies, pets, noise, use of common areas, parking, visitors, smoking, renovations and short-term letting.
Before you purchase, check these laws as they could impact your living expectations should one or more of the laws require a change to your lifestyle or needs.
Disputes may have occurred between owner-occupiers or tenants and some may be ongoing. Minutes from committee meetings will outline any disputes and resolutions as well as upcoming tribunal matters should they progress.
A good strata manager should be able to manage most disputes with the Body Corporate, any Property Managers and Tenants and be proactive around repairs and communication to resolve disputes before they escalate.
When you are purchasing, ask our sales team or the property management team on feedback on strata and they can provide you with further information on the key questions to ask.