There are 3 different titles you may want to buy into –
but which one works best for you?
So, you’re looking to buy a new property as an owner-occupier or as an investor. Yay, you! Taking a step into the property market is really exciting for any first-time or experienced homebuyer, but as with anything in real estate, it’s important to know the ins and outs of the properties you’re interested in before signing on the dotted line.
Let’s take things back to basics by understanding the difference between the three property titles in real estate, so that you know which type of property works best for your needs as an owner-occupier or long-term investor.
What is a property title?
A property title is a collection of rights and regulations associated with a property. It outlines legalities including who owns the property, its existing easements, and other such details about the land.
When a property is sold, the title is updated to reflect the new owner. There are however some restrictions on these titles that cannot be changed – at least without a lengthy court battle, so it’s important to know where you stand before buying into a title.
There are three property titles you’ll need to understand, and they are Torrens Title, Strata Title and Community Title. Let’s take a closer look.
The most common title in Australia is the Torrens Title – also Australia’s highest form of property title which names the buyer as the sole owner of the property (or joint owner if you’re purchasing the property with another person).
Buying under the Torrens Title means you are the owner across all and any circumstances, which means you have complete control over how you maintain or refurbish your house (provided the changes meet council regulation).
While this gives the owner a grand sense of freedom, you should keep in mind that all costs associated with repairs are your sole responsibility.
Strata Titles are often associated with shared accommodation such as apartment blocks, units, retirement villages and villa complexes that share certain areas including driveways, pools, green spaces, laundry facilities, gyms and so on.
Buying into a strata title is very different to that of a Torrens Title, in that each individual owner has less capacity to make changes without first seeking approval from the owner’s corporation.
The owner’s corporation is the company that owns the land itself and manages all the individual units connected to the property. The company and all of its members (often fellow owners within the complex) need to agree on any major decisions related to the land – for example landscaping outdoor recreation areas, roof repairs, installation of new air conditioning units and so forth.
Keep in mind that when buying into a Strata title:
- No individual owner in the complex has a greater claim to any of the shared areas;
- No individual owns the land the complex is built upon;
- Everyone has ownership of their individual abode – however, there are restrictions on what can and can’t be done to the property;
- By-laws apply to the property (for example, ‘no pets’).
What costs are associated with a Strata Title?
Besides the typical mortgage and rates, Strata titles come with quarterly strata fees often known as body corporation fees; this financial outlay contributes to the overall maintenance and repair of shared spaces. But be warned, depending on the size of your individual unit in comparison to your neighbours, you may be expected to pay more than the other owners in the complex.
Strata fees also increase over time, so bear this in mind when budgeting prior to purchase.
A Community Title is a subdivision of multiple homeowners holding Torrens Title properties that enable them to share a certain area. It can be held by as few as two houses as long as they share a common area such as a driveway, detached garage or backyard.
Community Titleholders own their entire property – house and land, within set boundaries. A common example of a community title would be a small bungalow in a retirement village or other gated estate.
What fees are associated with a Community Title?
If you’re the owner of a community title, you’ll be expected to pay quarterly or annual fees on top of your mortgage and rates to pay for the repair and maintenance of any shared spaces.
You should also know that you’ll be paying community levies for the rest of your life – even once you’ve finished paying off your mortgage, so if a community title is of interest to you, make sure you work this into your long-term budget before buying.
So, what do you think? Still, eyeing off that Strata property in the next suburb over? Thinking of downsizing to a community title in your nearby retirement hub? Or does the idea of having complete independence with a Torrens title appeal to you more?
Whatever your property buying needs, my fab team here at Kitty and Miles are ready to talk you through any real estate jargon that’s bogging you down, and guide you with ease into your next property buying venture!