11 November, 2024
What are the most common owners corporation problems?
From parking to partying we look at some of the most common problems faced by any owners corporation.
Off-the-Plan Purchases: What to Consider Regarding the Future Owners Corporation
Buying an off-the-plan property can be an exciting opportunity for homebuyers and investors alike, offering the chance to secure a modern property before it’s even built. However, beyond the shiny brochures and architect renderings, it’s important to understand what happens after the building is completed and you become part of an Owners Corporation. This article provides a guide to the key aspects you should consider when purchasing an off-the-plan property, focusing on how the future Owners Corporation will impact your living experience and investment.
1. What is an Owners Corporation?
An Owners Corporation, sometimes referred to as a body corporate, is responsible for managing and maintaining common property within a building or development, such as lobbies, hallways, gardens, parking areas, and recreational facilities. It ensures the smooth operation of the shared spaces and amenities that you and other property owners will enjoy.
2. Why Does the OC Matter for Off-the-Plan Purchases?
When you buy an off-the-plan property, you’re not just purchasing your apartment or townhouse—you’re also becoming part of an Owners Corporation. The OC will have a direct impact on your property’s ongoing costs, maintenance, and even its resale value. Understanding how the OC is structured, how it will operate, and what it will cost is crucial to making a smart investment.
Here are some key questions and considerations when evaluating the future Owners Corporation for an off-the-plan property:
3. Questions to Ask Before You Buy
a. What Will the Owners Corporation Levy Be?
The OC levy is the fee each owner pays for the maintenance and management of common areas and shared services. Developers set the initial levies, but they are only an estimate. These levies can increase once owners take over management or if unexpected maintenance is needed.
What to Ask:
How has the developer calculated the initial OC levies?
What are the estimates based on, and have similar developments by the same developer had comparable costs?
How often are levies reviewed, and by how much are they expected to increase?
b. Who Will Manage the Owners Corporation Initially?
At the start, the developer often appoints a manager to run the Owners Corporation until control is handed over to the owners. It’s essential to know who will be managing the OC and how they’ve structured the initial agreement.
What to Ask:
Who will manage the OC during the first few years, and how long is the contract?
Will owners have a say in selecting a new OC manager once control is handed over?
Are there any exit clauses or penalties for changing managers?
c. What Are the Maintenance Plans for Common Areas?
The quality and maintenance of shared areas such as the gym, pool, or rooftop terrace will have a direct impact on the building’s condition and your enjoyment of the property. It’s important to know if there are long-term maintenance plans and how those costs are budgeted.
What to Ask:
Has the developer provided a sinking fund plan for future major repairs or upgrades?
Are there any warranties on the fixtures and fittings in common areas?
What is the plan for ongoing maintenance of amenities, and how are costs allocated?
d. What Are the Rules and Regulations?
Developers set up the OC rules and regulations (sometimes referred to as the strata by-laws) to govern the use of common property. These rules can include restrictions on noise levels, short-term rentals (like Airbnb), pet ownership, and renovations. While rules can be changed by a vote after the OC is handed over to owners, it’s helpful to know the framework you’ll be buying into.
What to Ask:
What are the initial OC rules, and do they cover issues like pets, parking, and renovations?
Are there any restrictions on short-term rentals or other leasing arrangements?
Can owners change these rules once the OC is established?
4. What to Look For in the Owners Corporation Structure
a. How is Common Property Defined?
The definition of common property can vary between developments. For example, some developments may include balconies, courtyards, or car spaces as part of common property, which can affect your rights and responsibilities.
What to Review:
Review the plan of subdivision to see exactly what areas are classified as common property.
Check if any parts of the building that you would expect to be private are shared, and how that impacts your privacy or responsibilities.
b. How Many Lots Are in the Development?
The size of the development will affect how the Owners Corporation functions. Smaller OCs may have more flexibility but may also have higher levies due to fewer owners sharing costs. Larger OCs might have lower individual levies but can be more complex to manage.
What to Review:
How many lots (or units) are part of the development, and how will the levies be shared?
Are there different OCs for different sections of the development, or will one OC oversee the entire building?
c. What Shared Amenities Are Included?
High-end developments often come with a range of shared amenities like gyms, pools, or concierge services. While these features can add value, they also come with higher ongoing maintenance costs.
What to Review:
What amenities are included in the development, and are they necessary for your lifestyle?
Will the ongoing maintenance of these facilities result in higher levies or additional costs?
5. Future-Proofing Your Investment
While you may not have control over the OC structure when buying off-the-plan, you can future-proof your investment by ensuring that you’re entering into a well-managed and transparent OC. Look for developers with a good track record, thoroughly review the OC documents provided, and consider seeking independent legal advice to ensure you fully understand your rights and obligations.
Purchasing an off-the-plan property offers exciting possibilities, but it’s crucial to dig into the details of the future Owners Corporation. From levies and management to rules and maintenance, understanding how the OC will function helps you make a well-informed decision that protects your investment and enhances your living experience. By asking the right questions and doing your due diligence, you can enter your new home with confidence and clarity.
At Amity Strata Management, we understand the complexities of Owners Corporations and are here to help guide prospective buyers through the process. Our expertise ensures that owners are informed about their rights and responsibilities, helping them navigate the transition from off-the-plan purchases to active participation in their Owners Corporation. With a focus on transparency and strong relationships, we’re committed to supporting owners every step of the way.
Date Published
23 October, 2024
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