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Recently after months searches, I have found a Sydney CBD studio apartment (around 54 sq m) in Kent Street and intend to buy to live in. The apartment block is now owned by a company and has been used as serviced apartments. Now the owner company wishes to offload part of the apartments in the building and may be selling all eventually. One thing which I find suspicious is that the strata levy per quarter is abnormally low about $580.00 wheareas comparable studio apartments of the same size in the vicinity have much higher levy ranging from $1000 to $1400. The apartment block has facilities such as swimming pool, gym and elevators.
Can any strata professionals or someone with similar past experience and knowledge advise me what caution should I take to ensure there is no trick in the low levy which is quite attractive and a big selling point projected by the real estate agent. Is it advisable to employ a good conveyancing solicitor and highlight this point to him to investigate the reason for the abnromal low levy? Is there any chance that the strata levy may be raised substantially after the owner has disposed off all the serviced apartments?
All comments and opinion will be much appreciated.
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It's advisable to engage a Solicitor or Conveyancer of your choosing, who in the normal course of their inquiries will commission a Strata Search under the provisions of State Legislation; S108 of the Strata Schemes Management Act (1996) in NSW.
The Strata Search will normally look at the financial status of the scheme including all income / expenses for the past 2 years, any special levies proposed (e.g. to cover any shortfall arising from abnormally low levies), past and any proposed works on the Common Property, and the 10 yr Plan covering sinking fund levies for the Scheme.
You can ask for any other items about which you have concerns to be concurrently reported upon, such as the amount / adequacy of the Building Insurance, any Special By-Laws in place or planned, and any disputes with Residents and Contractors etc etc.
A properly conducted Strata Search and some interpretation / explanation from your Legal person will give you all the information that you need to decide upon the purchase; money well spent!
Too right Whale!
John McGrath (you all know him) said in his book, The Ultimate Guide to Real Estate, he's astounded at the number of people, less than 20% he reckons, who don't get proper inspections, checks and reports before handing over their, often mostly borrowed, money for their new place. In stratas, this includes a proper going-over of Owners Corporation's records by an experienced operator such as (am I allowed to mention?) O'Connors Property Reports who did ours years ago.
In what he calls 'real estate roulette', John McGrath says these checks are a 'very cheap insurance policy'.
I'm certain Urban means 'less than 20%' of home buyers actually DO GET PROPER INSPECTIONS before they buy; so 80% don't, the silly sausages!
As he says, when buying in a strata, checking the records is very important and probably neglected even more than the usual inspections.
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