Top 5 things to consider before buying an apartment
For first-home buyers, couples who are downsizing, or individuals looking for an investment property, a promising and financially viable option you may want to consider is an apartment. But before you dive head first into signing for the first apartment that piques your interest, there are a few things you need to consider that could drastically impact your finances…and your lifestyle.
While apartment living can be a cheaper alternative to entering the property market (and in many cases, a more affordable option to renting), you should give some thought to the ‘unspoken costs’ of property ownership, such as strata fees.
Strata fees are regular levy payments covering the maintenance of common areas in buildings where there are multiple owners – such as townhouses, units and apartments. The levies depend on the size of your apartment and its entitlements – meaning that an owner with a family-sized apartment will pay more than the owner of a studio apartment in the same building.
You’ll likely pay much higher levies when attractive facilities such as pools, playgrounds and gyms exist in a complex. Where shared facilities such as these are available, an apartment owner can expect to pay between $550 and $2500 per quarter in strata fees to cover ongoing maintenance. If you’re looking for lower strata fees you may need to forgo that resort style pool and high rise building with fancy elevators.
It’s important to undertake multiple tours of the apartment you are interested in prior to making an offer – any missed structural issues or problems not addressed by the building’s management can leave you substantially out of pocket.
Buyers should inspect their target property with great interest. Get those magnifying glasses out and get to it! Red flags such as mouldy walls and cracks in the building’s foundation or façade should be noted and questions asked of the sales agent, seller, strata inspector or strata management company. Serious structural flaws such as subsiding, and arch and lintel failure, can affect the cost of strata maintenance levies on a big scale.
According to Home Guide, the cost of repairing structural issues can range anywhere from $250 to $15,000 per unit, apartment or townhouse, depending on the size and severity of the overall building’s failure.
Hairline cracks in the foundation can cost you as little as $250 per crack, whereas a foundation leak will set the owner’s corporation back $2500 to $5000 per owner. Meanwhile, if the foundation repair requires hydraulic piers, you can expect to contribute to a strata levy of $10,000 to $15,000 per owner.
Body Corporate / Owners Corporation
While we’re talking owner’s corporation, if you’re looking to buy into a Strata scheme, you’ll want to understand what an owner’s corporation is and what they do.
Many Strata titles are managed by an owner’s corporation (or body corporate), which are responsible for the up-keep of common areas such as car parks, stairs and gardens. They are also responsible for the maintenance of structural elements such as guttering, window safety checks and termite inspections.
Body corporates are designed to ensure the safety of all residents of the complex. However, it is important that you familiarise yourself with the way the body corporate or your target property works before signing on the dotted line. You really want to ensure the plans of the BC align with yours and everything suggests a harmonious working relationship is on the cards. For example, if you’re seeking sustainable living, you’re best to avoid a body corporate that isn’t eco-friendly.
It’s also savvy to find out whether the owners corporation is in debt. You’re looking for a fiscally solid body corp. The last thing you need is to be out of pocket for a corporation’s bad financial decisions or lack-lustre building management.
While reality TV has provided us with aspirations to buy their own strata title, there are some T&Cs you need to uncover before laying down your deposit. It’s not all DIY Block-style dreams.
The apartment owner has to seek permission before any renovations are made. Even the addition of an air conditioner requires approval from the owners corporation before plans to install can be made. If an owner does not get permission for their renos, they could be liable for hefty fines down the track. An example of this would be renovating a heritage-listed apartment. A huge no-no!
There are a variety of renovations required to maintain an apartment to a liveable standard, so it is best to find out whether your plans will be breaking any by-laws, or affecting the integrity of the building’s structure, ahead of time.
As apartment buildings have a higher risk of crime due to human traffic entering and exiting the building, it is important to consider the security features on offer in your prospective new apartment.
During your walk-through inspection, be sure to take a close look at access to the building, as well as the presence of any fire alarms and extinguishers. Keep an eagle eye out for safety systems such as intercoms and security cameras too – crime prevention is key to avoiding big insurance premiums.
Remember, everything has a monetary value – from Strata levies to security systems, you’re better off investing time into researching your new investment or living space now, so you can breathe easy (and live comfortably) well into the future.