We might speak the same language, and sure, certain iconic soap operas have introduced us to the Aussie vernacular, but there is still some unique terminology that confounds even the most seasoned expat – especially those looking to venture into the local real estate market.
One phrase that commonly draws a quizzical look is ‘Strata Title’.
What is strata title?
In simple terms, strata title (often just referred to as ‘strata’) is similar to Britain’s ‘commonhold’ ownership. Like that system, it involves:
- owning the outright title to an individual property in a multi-unit complex such as an apartment building, townhouse set or group of units, and
- having shared responsibility (financial, legal and upkeep) of the common areas.
The fabric of the property and its common areas are managed by the building’s strata corporation, which sets the rules of the property (from the use of shared facilities and defining what can be placed on balcony balustrades, up to outright banning of short-term rentals and/or pets). This corporation, led by a committee of strata title owners, also levies annual fees to cover expenses including maintenance, management, future capital works, council rates, common area utilities and, importantly, strata insurance.
Since the day-to-day management of a strata corporation can be complex and time-consuming, committees will almost always engage a specialist management firm to implement the committee’s decisions and carry out the operational aspects of the corporation.
…by any other name
Thanks to its federal system of states, property laws vary across Australia and, not surprisingly, so does terminology. A strata corporation in Sydney, and the rest of New South Wales, is known as an ‘owners’ corporation’ when you head south to Melbourne, a ‘body corporate’ up in Brisbane, and a ‘strata company’ over in Perth.
Confused? Don’t be… they’re all essentially the same, however each state has its own, slightly different strata laws and corporation requirements – especially around insurance, and this is where things can get a bit tricky.
Strata insurance is not owners’ insurance
Firstly, when you buy into a strata property, there are at least two types of insurance that come into play:
- Strata Title and/or Building insurance
- Owners contents and/or Landlord insurance
The difference is that strata insurance covers all the common areas of the property including driveways, stairwells, lifts, lobbies, car parks etc, as well as the fabric of the building, including structural walls, first-fix plumbing and wiring and external windows, plus legal liabilities of the committee and claims for personal injury that occur on common areas or by contractors working for the committee.
However, this insurance stops at the door to your apartment. That means, it doesn’t cover things within your unit such as the contents, fittings, fixtures, internal decor or personal items. This is where contents or landlord insurance comes in.
How do I know what insurance is needed?
Each state has its own requirements for what needs to be covered by strata insurance (for example, strata insurance in NSW must include voluntary workers’ cover).
Luckily, Australia has a well regarded insurance industry, which includes specialist property insurance companies such as Flex Insurance who have offices covering each state.
A policy decision
Choosing the right insurance policy is the responsibility of the strata corporation (although the strata corporation manager will no doubt do all the paperwork). You can suggest changing insurers if you think you can get a better deal. Not only will your hip pocket be happy, but so will your fellow owners, because “…that’s when good neighbours… become good friends”.