There is no doubt that apartment living can be a very attractive housing option for many people. But before purchasing an apartment, it is important to understand how the ownership of an apartment differs from that of a house, and the responsibilities that you may inherit upon buying into an apartment complex.
Ownership
In the majority of cases the ownership of an apartment or unit comes under strata title – which refers to the individual ownership of a single unit within a multi-unit complex. In owning your apartment you also become a joint owner of the common property with the other owners in your apartment complex.
Depending on your strata scheme, areas such as your external walls, floor and roof may be considered common property, and thus do not below to you. This means you may not be able to renovate or alter them.
Levies
Owners of apartments are obligated to pay rates for the upkeep of the common building of which they are a part owner. Apartment complexes may have two separate funds running concurrently to which the owners must contribute. Typically an Administrative Fund is used for day-to-day operational expenses, while a Sinking Fund is in place for long term expenditure. The Owners Corporation of a building will estimate how much is needed for each year to cover all costs, and this figure is then split between all owners, becoming a fee known as a 'levy'.
Before buying into an apartment building it is important to consider the state of the building to ascertain whether or not extensive renovations or repairs may need to be undertaken in the near future. If this is the case, and the funds have not already been raised, you as the owner may be asked to contribute to pay a Special Levy to cover the costs. This information can usually be found in the Minutes of meetings held by the owners of the building, and should be identified if you have a Strata search carried out.
Try not to fall into the trap of selecting a building purely because its levies are low. This could be a risky tactic, particularly if the building will be in need of repairs shortly after your purchase. While your general levies may stay the same, a Special Levy established to cover the costs of the work could be far more than you budgeted for.
Pets
Some apartment buildings allow animals while others don't. If you wish to live with a pet it is important to check this before making your purchase.
In your search for a suitable apartment you will find that many buildings vary, from the way they are maintained to the levies charged. Be sure to have the appropriate studies and reports completed so that you can ensure there are no surprises later on into your ownership.
For any questions regarding apartment ownership, or to see any purchase opportunities available in your area, please do not hesitate to pop into your local Century 21 office.