The Strata Scheme

A publication of the NSW Fair Trading revealed that in New South Wales there has been a steady increase in strata schemes over the years to the tune of 5 or more new schemes being registered everyday. And according to a research conducted by the University of New South Wales. there has been an increase of roughly 3% or 1,957 for residential schemes alone from July 2010 to July 2011 with the Sydney metropolitan area getting the lion share of 65% of these new schemes. For the residential and mix used schemes, the increase totaled  27,941.

What is a strata scheme?

A strata scheme is a real estate development consisting of a building or a complex of buildings for residential, commercial, industrial and mix use. Each unit of a scheme is called a lot which can be a strata townhouse or a strata apartment, and one strata scheme can have from two to more than 700 lots. The lots are exclusively owned by individual owners but common areas such as the gardens, lawns, fences, foyers, driveways, roof, heating system,windows, elevators, and external walls are considered as common property and their ownership is shared by all the individual lot owners.

The strata scheme is covered by a strata title and is no different from the condominium concept in the US, Singapore and in most Canadian provinces. Aside from Australia, countries that adopt the term “strata scheme” are New Zealand, Malaysia and the Canadian province of British Columbia. Other countries have their own term for this concept of real estate ownership.

The strata title was originally formulated in New South Wales in the early 1960s and was later adopted by other Australian states. The scheme was conceived to cope with a new mode of ownership where apartment units are in buildings that are two or more storey or “strata” high. The law that initially covered the concept is The Strata Schemes (Freehold Development) Act of 1973. The law however, has undergone several amendments through the years to make it responsive to the growing sophistication and complexity of this type of real estate development. The newest NSW legislation applying to the scheme is The Strata Schemes Management Act of 1996 (the Act).

How different is it to own a strata apartment from owning a house?

There are certain conditions to living in a strata scheme or owning a strata title that distinguish it from owning a house, among them are:

• Lot or apartment owners own their individual units and at the same time they also share the responsibility and ownership of the common areas.

• Individual lot owners automatically become members of the “owners corporation” that manages the common areas.

• Strata apartment owners are required to pay a fix monthly due or levy for the maintenance and management of the building/s and common areas.

• They also need to contribute to a sinking fund that is meant to pay for major repair costs.

• Strata apartment living has certain limitations or rules with regards issues such as renovations done on individual units, owning pets, specific parking, washing and drying areas, and more.

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