What is Strata?
A common question with regard to property is: what is strata? Strata title is actually an Australian innovation in property law that has been copied around the globe.
Strata title allows individual ownership of part of a property (called a “lot” and generally an apartment or townhouse), combined with shared ownership in the remainder (called “Common Property” e.g. foyers, driveways, gardens) through a legal entity called the owners’ corporation.
The concept only came into being in 1961 and there are now around 350,000 such schemes encompassing nearly three million individual lots across Australia. In Sydney strata now accounts for more than half of all residential sales and leases because of its popularity with investors. An increasing number of commercial and retail properties are also strata titled.
Developments that can exist under strata plans can be:
- mixed-use – i.e. retail and/or commercial and/or residential
- serviced apartments
- retirement villages
- caravan parks
The history of strata title
Prior to strata title, many flats were sold as either company title, where shares in a company that owns a building entitle a shareholder to the exclusive use of a particular residential unit, or the land on which a building was constructed was sold to make the owners Tenants In Common (a type of co-ownership where two or more people own separate interests in a parcel of land). Legal documentation ensured that a purchaser obtained exclusive use of their residential unit.
However, these forms of land title do not confer separate ownership on individual occupants, and banks and building societies weren’t then keen on lending money to such purchasers, with the interest rates generally higher than for houses.
With pressure on the New South Wales government to make it easier to borrow money for these types of residential units rising, the NSW Parliament devised the first version of strata title. The Conveyancing (Strata Titles) Act, 1961 came into force on 1 July 1961.
The first strata-titled building in the world was Lindsay Gardens, a block of 18 units at 189 Liverpool Road, Burwood, Sydney, whose plan was approved by Burwood Council, following its construction, on 28 July 1961.
In 1973 the NSW Strata Titles Act and Regulations meant that the area of individual lots in strata plans had to be shown far more precisely than under the 1961 Act. The first community title legislation was enacted in 1989, again by NSW.
The concept of strata title was gradually adopted by other Australian states.
The development of larger and more complex strata developments has brought the management challenges of operational complexity, rising costs, aging infrastructure, owner engagement, tenant responsibilities, and the need for appropriate support services.
The growth and increasing sophistication of strata mirrors the history of the companies and organisations like Strata Community Association which have arisen to address its administrative challenges.
Strata managers are professionals who are responsible for the administration of strata, company and community schemes.
It is their task to ensure buildings and common areas within a strata-titled or community titled scheme are properly maintained for the benefit of all lot owners. They follow specific instructions issued by the owners’ committee.
Strata managers are specialists in their field, possessing the knowledge and skill to administer the owners corporation in accordance with the complex requirements of the relevant legislation. They also work to achieve consensus in decision making by the lot owners and to otherwise assist the lot owners by assuming onerous responsibilities.
Their functions are not those of real estate agents or resident managers.
Strata managers are involved in coordinating the affairs of lot owners including conducting meetings, collecting and banking levies, arranging property maintenance, advising on asset management, placing insurance and keeping financial accounts.
Their duties include:
- set dates for committee meetings, the annual general meeting, and other general meetings
- prepare and distribute notices, agendas and minutes
- attend to correspondence
- organise and coordinate repairs and maintenance of common property, including a preventative maintenance program
- maintaining the strata roll
- arrange payment of all invoices
- prepare and distribute financial statements and budgets
- prepare and distribute levy notices
- attend to orders, submissions and appeals
- ensure the strata scheme complies with all the Work Health & Safety (WHS) regulations
- provide advice in handling ‘difficult’ or complex strata issues.
Engaging a strata manager that is a member of the Strata Community Association (NSW) is an important step to ensure the professional and compliant administration of a strata scheme as all SCA (NSW) members are covered by a legislated Professional Standards Scheme.
Strata legislation is complex and designed to protect the interests of its lot owners. A strata manager who knows the legislation well can prevent inadvertent errors which can be made by self-managing owners.
Members of SCA (NSW) practising as strata managers are required to keep abreast of all changes in the relevant legislation through a program of continuing professional development and also maintain professional indemnity insurance. Not least, they are required to adhere to the Association’s Code Of Ethics. Learn more.