Understanding Strata

What is Strata?

What is Strata?

What is Strata?

A common question with regard to property is: what is strata? Strata title is actually an Australian innovation in property law that has been copied around the globe.

Strata title allows individual ownership of part of a property (called a lot' and generally an apartment or townhouse), combined with shared ownership in the remainder (called 'Common Property' e.g. foyers, driveways, gardens) through a legal entity called the owners corporation — or body corporate, strata company or community association, depending on your state or territory of residence and the type of scheme.

The concept only came into being 50 years ago and there are now more than 270,000 such schemes encompassing more than two million individual lots across Australia. In Sydney strata now accounts for more than half of all residential sales and leases because of its popularity with investors. An increasing number of commercial and retail properties are also strata titled. In Western Australia there are even strata-titled vineyards.

Developments that can exist under strata plans can be:

  • residential
  • commercial
  • retail
  • mixed use – i.e. retail and/or commercial and/or residential
  • serviced apartments
  • retirement villages
  • caravan parks
  • resorts.

The history of strata title

Prior to strata title, many flats were sold as either company title, where shares in a company that owns a building entitle a shareholder to the exclusive use of a particular residential unit, or the land on which a building was constructed was sold to make the owners Tenants In Common. This is a type of co-ownership where two or more people own separate interests in a parcel of land. Legal documentation ensured that a purchaser obtained exclusive use of their residential unit.

However, these forms of land title do not confer separate ownership on individual occupants, and banks and building societies weren't then keen on lending money to such purchasers, with the interest rates generally higher than for houses.

With pressure on the New South Wales government to make it easier to borrow money for these types of residential units rising, the NSW Parliament devised the first version of strata title. The Conveyancing (Strata Titles) Act, 1961 came into force on 1 July 1961.

The first strata titled building in the world was Lindsay Gardens (pictured above), a block of 18 units at 189 Liverpool Road, Burwood, Sydney, whose plan was approved by Burwood Council, following its construction, on 28 July 1961.

In 1973 the NSW Strata Titles Act and Regulations meant that the area of individual lots in strata plans had to be shown far more precisely than under the 1961 Act. The first community title legislation was enacted in 1989, again by NSW.

The concept of strata title was gradually adopted by other Australian states.

50 years on and Australia has strata complexes like the Gold Coast’s Q1 (pictured to the left), which contains 526 apartments, plus resort pools, a day spa, meeting and conference facilities and retail and dining areas.

The development of larger and more complex strata developments has brought the management challenges of operational complexity, rising costs, ageing infrastructure, owner engagement, tenant responsibilities, and the need for appropriate support services.

The growth and increasing sophistication of strata mirrors the history of the companies and organisations like Strata Community Australia which have arisen to address its administrative challenges.