_Owning strata-titled property

Owners Corporation

Most medium- and high-density buildings around Australia are strata titled, with an owners’ corporation established for the building. An owners’ corporation is also known as body corporate or strata companies depending on the state where the property is located.

The owners’ corporation is the legal entity that allows for the individual ownership of the apartment or townhouse—whilst sharing common areas and facilities with all occupants of the building.

A group of elected people manage the operations and decision-making of the common area of the property. In most states, the owners’ corporation comprises of an executive committee (generally individual owners of the apartments) who make decisions on the behalf of their owners.  

The rights and responsibilities of the owners’ corporation and its members is different in each state but generally comprise:

- Maintain and repair the common property of the strata scheme;

- Manage finances of the strata scheme;

- Maintain required insurances including public liability and building insurance where applicable;

- Keep records of all details of notices given under the relevant state strata management legislation;

- A strata register must be established and maintained, detailing the owner’s name or agent’s name and address for each lot within the strata scheme;

- Administration of any by-laws for the strata scheme;

- Provide a grievance register.

Administrative Costs

A levy is paid to the owners’ corporation to maintain these common areas, on a quarterly basis unless otherwise stated. 

This levy covers the council rates and insurance of the whole building and costs associated with concierge, lifts, foyers, swimming pools, spa, sauna, steam rooms, gymnasiums, collaborative areas such as yoga rooms and library, landscaping, lighting, staircases, fences, visitor car parks, pest control and building security.

Sinking Fund

A sinking fund is established by the owners’ corporation for future costs that are planned under capital works, or for emergency expenses to the strata building. A sinking fund is also known as a maintenance plan, capital works fund or reserve fund.

Major capital works could include painting the external walls, replacing roof, guttering, fencing and pavement and internally, upgrade lifts and common area carpets, art and furniture. This is in addition to any unplanned emergency expenses that surface.

For the past decade, sinking funds have become a legal requirement for strata schemes across Australia. By law, a 10-year sinking fund plan must be in place for the life of the scheme and the owners’ corporation are responsible to demonstrate the plan to cover the cost of  repairing and maintaining common parts of the property. This avoids large, one-off levies when emergency costs do arise.

When calculating the costs for a sinking fund, many factors are taken into consideration including the age of the building, number of lifts, number of dwellings, height of the building, on-site amenities and the maintenance history of the property.