What is Strata and how does it work in Sydney and NSW?

Disclaimer

First, a quick disclaimer. All the info provided here is from standard clauses covered in the Strata Schemes Management Act and Strata Schemes Management Regulation. These are the pieces of legislation that govern strata in NSW. Sometimes, your strata committee can override these standards with more strict processes. Thus, checking your specific strata by-laws is important before doing anything.

What is Strata?

What is Strata?

Strata is a form of property ownership where multiple units or lots are grouped together to form a single building or complex. In other words, you own your unit but share the common areas and facilities with the other unit owners in the building. Strata is a popular form of property ownership in Australia, especially in cities like Sydney.

Strata properties can range from small apartment buildings to large commercial complexes, and they are managed by a strata management company or body corporate.

What does strata mean?

Well, strata comes from the Latin word "stratum", which means "layer". This refers to the different layers of ownership in a strata complex. Each unit owner has a share in the common areas and facilities, and each share is referred to as a stratum.

What are strata fees?

What are strata fees?

Strata fees are regular payments made by unit owners to cover the costs of maintaining and repairing the common areas and facilities. These ongoing strata fees are usually split, and a ratio goes into two accounts:

• The Administration fund, which is what pays the common areas’ bills like utilities, insurances, cleaning and gardening.
• The Sinking fund which covers larger expenses like renovations or repainting for the building.

Then there are Special levies are usually one-off payments for specific expenses, such as major renovations or repairs. These are usually only organised by the body corporate as the need for them arises.

Payment Periods

How often do you pay strata fees?

Strata fees are usually paid quarterly or monthly, and the frequency depends on the specific strata complex, the strata manager or whatever the strata committee has decided.

How much are strata fees?

Strata fees can vary greatly, depending heavily on the size and complexity of the strata complex. On average, you can expect to pay between $500 and $2,000 per quarter in Sydney.

The things that can affect this cost are the location and amenities provided by the complex. This includes things like:

• Elevators
• Gyms
• Swimming pools and spas
• BBQ areas
• Gardens and courtyards, etc.

They are things that require maintenance. Strata managers most likely have a calculated idea of what maintenance for certain amenities may cost over the lifetime and adjust fees accordingly.

You’ll also pay more or less than other owners in your building, depending on how much floor space you own. For instance, The owner of a 3-bedroom unit will usually have higher strata fees than that of a 2-bedder.

What is strata management?

What is Strata Management?

Strata management is the process of managing the common areas and facilities in a strata complex. This includes:

• Maintaining the building and grounds
• Arranging repairs
• Handling financial matters
• Organising and holding strata committee meetings etc.

Strata managers are professionals hired to carry out these tasks on behalf of the unit owners. You can think of them as property managers for the entire complex, though that’s putting it very loosely.

What does strata cover?

What does Strata cover?

Strata covers the maintenance and repair of common areas and facilities, such as:

• The roof
• Walls
• Elevators
• Swimming pools, etc.

However, strata does not cover the cost of repairs or maintenance to individual units, such as changing carpet or installing fly screens. That's the unit owner's responsibility unless in certain circumstances. For example, say you’ve sustained damage from an external source like residual damage from common areas or another unit. This could be something like a leak from a common area where water has entered your unit and caused damage. In this case, strata may cover the repairs.

Strata Approval

What do you need strata approval for?

What do you need strata approval for?

You need strata approval for any alterations or improvements you want to make to your unit. This includes things like renovating a kitchen and even minor ones like changing recessed light fittings or installing and replacing wiring and cabling to name a few.

Changes to common areas are also subject to this. For instance, you can’t just paint the outside of your front door a bright red if it doesn’t match the building. This is to ensure that the changes align with the by-laws of the strata complex and do not affect the safety or appearance of the building. You may even be asked to provide plans for the work, acoustic certificates or even qualifications and details of the tradesmen.

What about Carpet?

Do you need strata approval to change carpet?

This would fall under changes to floor coverings and surfaces in the legislation. It states that you’ll need to notify strata of changes to floor coverings if the change is likely to increase noise into any other lot. So simply changing or replacing the existing carpet with carpet will likely be fine.

Are strata fees tax deductible?

Are strata fees tax deductable?

Yes, for landlords. Strata fees paid into the Admin and Sinking funds are considered tax deductible expenses, as they are incurred while owning and maintaining rental property. Special levies, however, aren’t deductible. You must keep a record of this, though. It's always best to consult a tax professional to confirm your circumstances.

Can strata refuse pets NSW?

Can Strata refuse pets NSW?

Here's the big one. Yes, strata can refuse pets, but not in the way they used to. In 2021 major changes were made due to the pandemic lockdowns as pets are considered companions.

Strata by-laws can include restrictions on pet ownership, such as a ban on certain breeds restricted by the Companion Animals Act or that are declared dangerous or menacing. Strata by-laws must comply with state legislation, which in NSW allows for reasonable restrictions on pet ownership in strata.

What strata can do, however, is ban a current pet regardless of breed if it causes “unreasonable interference”. Examples of this are:

• If it makes constant noise
• Damages property
• Risks health
• Attacks and threatens other residents

Garages

Is a garage common property in Strata?

This depends on the specific strata complex. Some garages are considered common property, managed and maintained by strata. Others are privately owned and maintained by the unit owner. It's important to check the strata by-laws or consult with a strata professional to determine the status of the garage in your complex.

Fly Screens

Are fly screens covered by strata?

No, fly screens are considered part of the individual unit and are not covered by strata. The cost of installing and maintaining fly screens is the unit owner's responsibility.

Water Rates

Do strata fees include water rates?

This depends on the specific strata complex. Some strata fees include water rates as part of the common expenses, while others do not. It's important to check the strata by-laws to determine what is included in your strata fees.

If you’re a landlord, it’s important to note that if you don’t have separate water usage charges from a separately metered unit, you won’t be able to pass any water usage costs on to your tenants.

Strata Meetings

Who can attend a strata committee meeting?

Who can attend Strata meetings?

The strata committee manages the property, and these meetings are generally open to all lot owners. However, strata committees can set rules regarding who can attend meetings.

Tenants at Meetings

Can tenants attend strata meetings?

The answer is yes in some cases. Some strata committees may allow tenants to attend, while others may not. If they do, tenants can attend strata meetings to learn about important property decisions and raise any concerns. However, they do not have voting rights. Only the owners of strata units hold this power.

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What is a quorum for a strata meeting?

A quorum is the minimum number of people required to be present at a meeting to make decisions. The quorum is determined by the strata bylaws and can vary depending on the size of the property and the number of owners.

Typically, a quorum is set at 50% of the total number of lots plus one, but this may vary.