Are there body corporates that can help you take care of your investment property?
Your previous experience with corporate properties will likely answer this question.
An apartment or townhouse is typically purchased by joining a body corporate that manages the entire property. The purpose of the body corporate – also known as the owner’s corporation – is to ensure the property is well maintained, now and in the future.
For example, the body corporate takes care of maintenance and lighting of common areas. It also ensures that adequate insurance is in effect.
“There are less maintenance issues to be worried about when you own a unit, as often all externals of the property and building are taken care of and organised by the body corporate,” explains Nicole Marsh, a licenced buyer’s agent with www.eureka-property.com.au,
“On the negative side, however, there are the ongoing body corporate fees to build into the equation.”
Small buildings can pay as little as $15 per semaine for body corporate fees. Larger properties with luxurious amenities such as spas, pools, and gyms may have to pay up to $200 per per week.
They are reviewed annually, but Marsh warns, “Body corporate fees can be excessive, and can increase from year to year.”
As an apartment owner, the best way to minimise body corporate increases – and to be involved in any financial decisions that impact your property – is to join the committee. The members of the committee decide the amount of quarterly fees and work with the strata manager to manage maintenance and repairs. They also vote on issues such as pet ownership.
“Often, there can be hundreds of owners in a complex, and there can sometimes be infighting or differences of opinions with the individual owners that make up the body corporate as a result –and this can lead to headaches for many owners,” Marsh says.
“As an example, we recently purchased a property for a client that was part of a body corporate. This buyer desperately wanted to be allowed to keep a small dog, however the body corporate by-laws did not permit pets. It was a duplex which meant there was only one person in the body corp. The owner was happy to let the buyer keep a pet. We are now going through the process of having the body corporate by-laws changed to formally reflect that pets are now allowed, to ensure the other owner can’t change their mind down the track.”
Marsh bought a duplex from a client who was only a few years old. It was being sold by its original owner.
“The body corporate was in place and set up, however there were no financial contributions being made by the owners to the ongoing maintenance or insurance of the property. There was a ‘handshake agreement’ made between the two owners that they would pay half of the building’s insurance each and that was all,” she says.
“This was an alarming issue for us when we came to purchase the property for our client – what happens if one party doesn’t pay their portion of the insurance? The property would be uninsured until such time as the premium was paid, if at all!”
Marsh suggests that any buyers interested in a unit or townhouse should do their due diligence prior to signing anything, to be sure you don’t get caught out.
“Don’t be afraid to have your solicitor do additional searches into the body corporate records, to ensure you are fully informed regarding proposed works, future increases in fees, past maintenance issues etc,” she adds.