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  • #7166
    Anonymous

      How about a Forum where people like me who are looking to buy into strata can post comments or questions not asked so far (or I don't think have been asked)?

      What do people looking at Strata for the first time need to know?

      I recently sold a Torrens Title house (in NSW) and want to buy a two bedroom villa.

      My Conveyancer from the sale of my house has given me some great advice and referred me to a good Strata Search service, and also someone to do Building and Pest inspections. I have been very happy with them.

      I have paid for three Strata Searches so far, and bid unsuccessfully at one auction, after also doing the Building and Pest inspection.

      The first place I was interested in has a $9.6 million dollar claim to repair the building before the Supreme Court.  These were problems from construction. The insurance company only offered $150,000.  The cost of the repairs would be between 63 units.

      The other two places were villas.  One an “original” in a group of six built in the late 1960's with a sinking fund total of $2,000, the other in a group of nine, probably build in the 1980's.  The sinking fund was around $1,200.

      Only one had a 15 year plan but  that was a joke.  For example, “Painting” – $350.  I am not a tradesperson but I have a general idea of costs of painting and repairs.

      The Strata fees for both lost of villas were around $420 per villa.

      It appeared in the two lots of villas, the owners were elderly, and the two I looked at were for sale because the owner was going to aged care.

      While I can understand elderly people on fixed incomes would find it difficult to pay increased Strata fees, it is false economy not to repair their building.

      I realise some landlords are not really interested if the building is falling down as long as they get their rent.

      One unit I looked at but was not interested in was in a block of 12, where they had no sinikng fund but were going to start one.

      What is the law about sinking funds?

      Are Strata rules for Retirement Villages for independent living different, other than people being older?

      Any advice will be thankfully received.

      After reading some of the posts to this forum, I may have to work for a few more years and try to get a small house.

    Viewing 15 replies - 1 through 15 (of 17 total)
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    • #12279
      Jimmy-T
      Keymaster

        No sooner said than done – welcome to the Strata Virgins thread. And don't give up on strata – we never hear from the people who are happy – why would we?  And the rest of us are trying to make it work.  Hang in there!

        JimmyT

        The opinions offered in these Forum posts and replies are not intended to be taken as legal advice. Readers with serious issues should consult experienced strata lawyers.
        #12282
        struggler
        Flatchatter

          It is good to check carefully before buying into strata.  Many people living in strata think that the owners corp pays for everything.  I know of someone who lives in villas in Sans Souci and they had no money in the bank.  The reason – they had many elderly people living there and the owners corp had always paid for everything.  So when a tap dripped, the OC paid for the washer, if the key didn't work in the lock the OC paid for it.  And with the complex aging, they had to pay more.  And the elderly owners cannot afford an increase in levies let alone any special levies.

          Look in the SMH Domain apartments section.  I think it is page 5 that has info on different strata units for sale and lists their levies.  You can get a fair idea of what “average” is for different types of units.  Low levies look good (especially in new complexes) but there is usually not be enough money going into the bank.  And with high levies, generally I have found that they cover more “things” around the complex and more common property (ie pool, movie theatre room, lift etc).

          An old complex with low levies and not much money in the bank equals special levies ahead, and there has to be increases.  You mention that the strata fees for the units you inspected were $420 – am assuming that you meant levies.  I personally would say this was in the low average price range for southern Sydney for two bedroom villa.  Though in an older unit, with more wear, tear and repairs, it probably should be a bit more.  If you take the amount in the sinking fund and divide by the number of units – from your information of the units you inspected there is only a couple of hundred dollars for each unit!  With tradies  costing $100 for call out, would only take a few problems to considerably reduce that balance!

          Our complex has at the moment over $2,000 per unit (complex 10 years old) Our levies are considered low/average.  Our OC does not cover “everything”. 

          Having said all that, am looking for a little house to get out of strata myself!

          #12289
          Jimmy-T
          Keymaster

            I work on a very rough rule of thumb of annual levies being 1% of the value of the unit plus or minus, say, 0.3%, based the number of facilities the OC has to maintain divided by the number of units. For instance, hotel conversions often have lots of lifts and fewer units, compared to, say, purpose-built apartments, meaning the cost of maintenance per owner (or unit entitlement, if you want to get technical) will be higher. Buildings with no lifts or swimming pools, building managers or secure parking will be cheaper to run. But then they won’t have a swimming pool, building manager or secure garages. Just remember that any new building that offers “resort” facilities with all the bells and whistles as well as low levies is probably a con.

            The opinions offered in these Forum posts and replies are not intended to be taken as legal advice. Readers with serious issues should consult experienced strata lawyers.
            #12765
            Chris
            Flatchatter

              Thank you Jimmy and Struggler for your welcome comments. 

              You may have noticed from other posts that I am now a card carrying Strata owner so you have given me important suggestions to add to the Agenda items for my first AGM.

              #13817
              Chloe1
              Flatchatter

                Hi

                I have recently bought an apartment that is so new that the first meeting is not scheduled to be held until mid October so at this stage there is not even a committee formed. My question is Would I be able to install security screen with the permission of the builder? who has told me that it would be Ok. I do not wish to go ahead with the expense of this only to find that I am not legally allowed to do so. I also do not wish to upset the other residents by doing so. I need these screens installed as a requirement of leasing to DHA

                Thank for any help

                #13888

                JimmyT said:

                I work on a very rough rule of thumb of annual levies being 1% of the value of the unit plus or minus, say, 0.3%, based the number of facilities the OC has to maintain divided by the number of units. For instance, hotel conversions often have lots of lifts and fewer units, compared to, say, purpose-built apartments, meaning the cost of maintenance per owner (or unit entitlement, if you want to get technical) will be higher. Buildings with no lifts or swimming pools, building managers or secure parking will be cheaper to run. But then they won't have a swimming pool, building manager or secure garages. Just remember that any new building that offers “resort” facilities with all the bells and whistles as well as low levies is probably a con.

                #13889

                JimmyT said:

                I work on a very rough rule of thumb of annual levies being 1% of the value of the unit plus or minus, say, 0.3%, based the number of facilities the OC has to maintain divided by the number of units. For instance, hotel conversions often have lots of lifts and fewer units, compared to, say, purpose-built apartments, meaning the cost of maintenance per owner (or unit entitlement, if you want to get technical) will be higher. Buildings with no lifts or swimming pools, building managers or secure parking will be cheaper to run. But then they won’t have a swimming pool, building manager or secure garages. Just remember that any new building that offers “resort” facilities with all the bells and whistles as well as low levies is probably a con.

                I am looking to purchase a unit for $745,000. It is still under construction, due for completion early December. The strata fees are going to be $1300 per quarter and council, water, land taxes combined are $2000 per annum. Total of $7,200 which seems to fit with your 'rough rule of thumb' calculation. Have I understood you correctly?

                The complex consists of two 3 bedroom and five 2 bedroom units. The 3 bedroom units will be levied at $1500 per quarter.

                Aside from this obvious difference, are strata levies generally calculated on square meterage to allow for differences between unit size? I ask this because there are some differences in measurements between the 2 bedroom units but the strata fees are the same regardless.

                #13890
                Jimmy-T
                Keymaster

                  Firstly, at $5,200 p.a. your levies fall at the lower end of my 0.7 to 1.3 percent range – which is good, for what it’s worth.

                  I say that because you and the other owners will soon be collectively setting the levies to finance what it actually costs to run the building, plus anything you need to put away for a rainy day (aka, the sinking fund).  Those costs include electricity for common areas, insurance, lifts, maintenance and any bells or whistles you might have like swimming pools and security or concierges.  But for a small complex like yours these may not even be an issue.

                  To answer your question about strata levies are calculated on Unit Entitlements which is a figure that represents your share of the common property. Unit entitlements are based on complicated (to the point of mystical) estimates of value which take into account position in the building, height above ground, aspect, size and other stuff.  But for all practical purposes they are (or should be) related to the value of the apartments.

                  So, if the developer is charging a lot more for a similar sized apartment but says the levies are the same, then there is something seriously out of kilter.  There have been cases where developers have set the UIs of their penthouse aprtments lower than those of single bedroom units on the lower floors, so as to attract big spenders who want a luxury pad but don’t want to pay high levies.  But these cases almost always end up at the CTTT where they not only have to put things right but can be ordered to refund the overcharged owners.

                  Unless the discrepancy is huge, I’d let it slide. The cost of fixing it – which means getting surveyors and lawyers involved – may well be more than it's worth.

                  The opinions offered in these Forum posts and replies are not intended to be taken as legal advice. Readers with serious issues should consult experienced strata lawyers.
                  #13891

                  Thank you for your response Jimmy. It's good to have some input from an informed and neutral source. I am advised by the agent that the levy will cover building & carpark insurance, cleaning of common areas, rubbish bins being put out & collected, common area electricity, water useage for building (not rates) the lift maintenance, Strata manager,and the sinking fund. I believe there is also an admin fund so I need to find out if it covers this also. Anything else I need to consider do you think?

                  #13892
                  Jimmy-T
                  Keymaster

                    Just remember that all these contracts have to be approved at the first AGM of the Owners Corporation – that's you and other owners – so now is the time to see if there's been any feather-bedding, before they are all rubber stamped. 

                    For instance, in the past some lift installers have sold lifts into buildings at a cut price to developers in exchange for inflated long-term maintenance contracts which get blithely approved at the initial AGM (because nobody wants to get stuck in a lift).

                    Ask for a copy of all proposed contracts, get together with a few other owners if need be to share the costs, and get a strata lawyer to go through them before the AGM.  Anything that doesn't add up, reject.

                    The opinions offered in these Forum posts and replies are not intended to be taken as legal advice. Readers with serious issues should consult experienced strata lawyers.
                    #13906
                    Sir Humphrey
                    Strataguru

                      JimmyT said:

                      I work on a very rough rule of thumb of annual levies being 1% of the value of the unit plus or minus, say, 0.3%, based the number of facilities the OC has to maintain divided by the number of units…”

                      I have to remember that one. As treasurer of our owners corp. I have some influence in setting levies and suggesting spending priorities. Our levies are about 0.2% of the value of a unit but I think we are very responsibly managed. We have plenty in our sinking fund.  We have a few owners who dispute that which is a pain but we took professional advice and performed our own reality checks on that. We are just lucky that we actually have few major expenses to worry about. We are 'class B' units, townhouses, so most maintenance is down to individual owners. Most of the road through the property is a public road so we don't have nearly as much road resurfacing to anticipate as most places would have. All our services, electricity, water, sewer and such are in easements that belong to the service provider not us and each unit is connected individually. Consequently we do not have utilities that service multiple units to worry about. We do have large grounds but much is drought tolerant native grasses and remnant bush which does not need a lot of maintenance. We have some paths, lights, a tennis court and playground but they are not too expensive to look after split across about 100 units. The more I read about other strata issues the luckier I realise we are!

                      I mention this just to say there are exceptions to the most reasonable general rules!

                       

                      #13909
                      Jimmy-T
                      Keymaster

                        Good point.  My “rule of thumb” is based on apartments which tend to have more high maintenance common property. If anybody wants to give us an idea of what percentage of purchase price your townhouse is, we'll try to see what figure we can arrive at.

                        The opinions offered in these Forum posts and replies are not intended to be taken as legal advice. Readers with serious issues should consult experienced strata lawyers.
                        #13911
                        DaveB
                        Flatchatter

                          Peter C is most likely from the ACT, where the legislation allows for Class B units.    Unlike in NSW the Class B units structures themselves are, in theory at least, maintained by the owners, so the levies would be much less.   Having lived in that situation in a group of 50, as the units aged it was very hard to get some recalcitrant owners to spend money on their properties, so some of the units presented a rather shabby appearance alongside their neighbours.   It was possible to repair such properties at the expense of the owners corporation, and then enforce recovery, but why should other owners have to do this from their scarce communal funds? As the current owner of two units (townhouse and villa) in NSW I am much happier with the legislation here which allows an even standard to be applied thru the complex, and for economies of scale to be achieved when doing such things as a general repaint.  On present value of property my levies would represent about 0.5% per annum.  

                          #13912
                          Jimmy-T
                          Keymaster

                            Well spotted.  Peter C is indeed from the ACT and thanks for opening the Townhouse levies bidding at 0.5% of property value.  Do I hear any further bids?

                            The opinions offered in these Forum posts and replies are not intended to be taken as legal advice. Readers with serious issues should consult experienced strata lawyers.
                            #13916
                            Sir Humphrey
                            Strataguru

                              DaveB said:

                              Peter C is most likely from the ACT, where the legislation allows for Class B units.    Unlike in NSW the Class B units structures themselves are, in theory at least, maintained by the owners, so the levies would be much less.   Having lived in that situation in a group of 50, as the units aged it was very hard to get some recalcitrant owners to spend money on their properties, so some of the units presented a rather shabby appearance alongside their neighbours.   It was possible to repair such properties at the expense of the owners corporation, and then enforce recovery, but why should other owners have to do this from their scarce communal funds? As the current owner of two units (townhouse and villa) in NSW I am much happier with the legislation here which allows an even standard to be applied thru the complex, and for economies of scale to be achieved when doing such things as a general repaint.  On present value of property my levies would represent about 0.5% per annum.  

                              Yes. I am from the ACT. I didn't realise NSW did not have the class A/B distinction we have. Here unit owners are responsible to maintain their class B units and the OC only maintains the common property although the OC insures the entire property. Unit owners generally only take out contents insurance. 

                              Just as you suggest as perennial issue is that some units are poorly maintained compared to neighbours. Some of ours are a bit shabby and could do with some tidying up of weeds and cobwebs and a coat of paint. However, a worse issue to my particular aesthetic sensibilities is that some units owners repaint in not quite the standard colour or think that something quite different would be an improvement and then will not budge. We have an interesting and integrated architectural style that is not enhanced by having individual units draw the eye more than the overall shapes of groups of units. 

                            Viewing 15 replies - 1 through 15 (of 17 total)
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