Strata And Company Title: 3 FAQs For Property Buyers
If you're planning to buy a single unit or multiple units in an apartment complex, you should know a thing or two about strata title and company title. The answers to the three questions discussed below provide a brief introduction.
What Is Strata/Company Title?
These are the two forms of property ownership available to investors like you. Under strata title, the apartment block is owned/managed by a body corporate. Once you pay for the preferred unit(s), you'll be issued with a title deed that gives you legal ownership of the unit(s).
An apartment that's under company title is owned by a private company. You'll be required to buy a pre-determined number of shares in the company. This gives you the exclusive right to use and occupy a unit/units within the complex. You then become a shareholder of the company, but you won't get a title deed for the property.
What Are Some Advantages Of Strata Title Over Company Title?
Strata title properties are easier to find than those held under company title. In 1961, strata title replaced company title as the mainstream form of ownership for individual units in apartment complexes. Since then, many property owners have shifted to this form of ownership. However, some apartments are still held under company title.
It might be easier to get a mortgage for property held under strata title. Properties held under company title are often not very appealing to potential buyers because they don't come with individual title deeds as proof of ownership. If the unit was to be repossessed for failure to repay your mortgage, the financing institution would have a difficult time getting someone else to buy it in their bid to recover the mortgage. Thus, lending institutions are often less enthusiastic about financing property held under company title.
What Are Some Advantages Of Company Title Over Strata Title?
If you're able to find a unit held under company title, you'll probably pay less for it than you would have paid for its strata title equivalent. This is because the cost of insurance and other administrative costs are often lower for company title property.
Private companies often have more stringent rules and regulations for their tenants than body corporates do. Therefore, tenants tend to prefer strata title properties. If you buy property under company title, your neighbours are more likely to be owner-occupiers instead of tenants. Thus, you won't have to worry about certain problems commonly associated with short-term tenancy in apartment complexes (e.g. constant noise from loud music).
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