The secret in buying cheaper and affordable units in Sydney

On the property market, properties are sold under different titles – company title or strata title. If you have been wondering about the differences between these two titles, or if you have heard that strata title is better choice for many property owners but you are not sure why, then it is time to resolve the mystery. This article reveals the nature as well as weighs the pros and cons of these two titles to assist with interested buyers in making a more suitable decision.

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Strata title was introduced to Australia in 1961, prior to that, most units are owned under company title.

Strata title provides the framework for dealing with the legal ownership of a part of a building or a structure. Under strata scheme, buyers own individual lots (such as apartments, villas or townhouses) privately. This means that owners collectively own a shared common property, either residential or commercial property, and owners own directly a parcel of the subdivided property.

When you are considering buying a property under strata title, it is highly recommended that you should conduct strata search diligently to obtain certain knowledge about the operating patterns of the owners’ business and the management of strata plan. You are also subject to bylaws, levies and meeting commitments set by the strata management company. It is also important to note the strata levies impose by different strata corporation can range from few thousand dollars per year to as high as $50,000 per year.

The following depicts the advantages and disadvantage of Strata Title

strata title

pro and cons of strata title


Company Title

Under this scheme owners effectively purchase shares of the company that grant them the right to exclusively use and occupy a unit in the building. Buyers should be aware of restrictions and key clauses in the company’s constitution before purchasing a property under company title. The advantages and disadvantages of this scheme are as follows

cheap affordable units in sydney

Units under company title

It is also important to note that normally it is harder to source finance from the bank to purchase property under the company title, as the bank can only take security from the borrower over the shares in the company. In addition, the property under the company title is not governed by the land title act, but rather it is regulated under the Corporation Act 2001. However, it is important to remember that sometime the property under company title is cheaper than strata title by 20% to 30%.

Hence, if the property under the company can be converted to a strata title, then the underlying value of the property will be increased exponentially.

The process of doing it is sometime quite time consuming and difficult. Firstly, you need to review the company constitution, or the article of association and memorandum of association to ensure that you obtain consent from majority.

Secondly, a quantitative surveyor needs to be engaged to measure the land and to subdivide the property fairly and in accordance to the right of the shareholder.

Thirdly any existing mortgagees with existing interests in group of shares in the company should be contacted to obtain their approval of the proposed conversion and approved plan of subdivision. Banks normally will most often consent to the conversion as it will result in them obtaining a better form of security.

transfer company title to strata title

Fourthly once that is done, the separate title needs to be registered with the land title office of the state. Then the title of the new lots must be transferred to the shareholder of the company for nominal consideration of $1.00, and exemption to pay stamp duty must be sought from the title office.

Lastly, the owner corporation must fulfil certain statutory requirement including the requirement under the Owners Corporation Act 2006 to hold inaugural meeting and effect certain insurance over the building to activate the strata title. Once all the steps had been fulfilled then the company can be wound up.

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Lowest interest rate with EndureGo

As you can see from the above, it is important understand the pro and cons of each title system before venturing in purchasing your next dream property. If you need any help, please give John Cheng from EndureGo a call on 0410-829-900.





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