If you’re in the market to buy property in Western Australia, you may have come across the terms "freehold," "strata title," and now the new "community title." Understanding the differences between these types of property ownership is crucial, as each comes with its own rights, obligations, and implications for the settlement process.
Let’s break down what each of these property types means and how they might impact your purchase in Perth and throughout Western Australia.
What is Freehold?
Freehold, also known as Green Title in WA, is the most common form of property ownership in Australia. When you buy a freehold property, you own the land and any structures on it, such as a house, outright. This gives you complete control over the property, subject to local council regulations and planning laws.
Key Features of Freehold Property:
Exclusive Ownership: You have full ownership of the land and the building. This means you have the right to modify or develop the property as you wish (subject to council approvals).
No Shared Areas: With freehold, you don’t share any part of your property with others. This is typical for standalone houses on their own plots of land.
Fewer Restrictions: Freehold owners generally have fewer restrictions compared to other ownership types, as they don't have to comply with strata bylaws or regulations.
Implications for the Settlement Process:
The settlement process for freehold properties is typically straightforward, as there are no shared areas or common property that require additional legal agreements.
Your settlement agent will handle the transfer of title, ensure that any mortgage is discharged, and oversee the payment of relevant fees and duties.
What is Strata Title?
Strata title refers to a type of property ownership where you own a portion of a larger development, such as an apartment, unit, or townhouse, and share ownership of common areas like gardens, lobbies, or driveways with other owners. In WA, strata properties are governed by the Strata Titles Act, which sets out the rights and responsibilities of owners and how the common property is managed.
Key Features of Strata Title Property:
Individual Lot Ownership: You own your specific unit or apartment (known as a "lot"), which is registered on a separate title.
Shared Common Areas: You share ownership of the common property with other owners in the complex. This includes facilities like swimming pools, elevators, and gardens.
Strata Levies: All owners contribute to the upkeep of the common property through strata levies, which are used to maintain shared areas and pay for any major repairs or improvements.
Bylaws and Restrictions: Owners must comply with bylaws set by the strata company (the body responsible for managing the complex). These rules may cover everything from noise levels to whether you can have pets.
Implications for the Settlement Process:
Strata Disclosure Requirements: When purchasing a strata title property, certain disclosure documents must be provided, including details of strata levies, bylaws, and any pending maintenance or disputes within the strata scheme. Your settlement agent will help you review these documents to ensure there are no unexpected costs or restrictions.
Insurance and Maintenance Considerations: Unlike freehold properties, where you are solely responsible for property insurance, strata properties have insurance arranged by the strata company, which covers the building and common areas. As an owner, you may need additional contents insurance for your individual lot.
Review of Strata Records: It's advisable to review the minutes of the latest strata meetings and the financial status of the strata company. This will give you an understanding of how the strata is managed and whether there are any upcoming levies for major repairs.
What is Community Title?
The Community Titles Scheme is a relatively new form of property ownership in Western Australia, designed for larger and more complex developments that include a mix of residential, commercial, and recreational uses. It sits somewhere between strata title and freehold, allowing properties within a larger community to be divided into "community schemes."
Key Features of Community Title Property:
Layered Schemes: Community titles can be set up in tiers—there can be multiple schemes within a larger community development. For instance, a community might include residential units, shops, and shared facilities, each of which can be managed independently while still being part of the overall community scheme.
Community Associations: Similar to a strata company, community schemes have a community association responsible for managing shared facilities within the community, such as parks, pools, and roads.
Greater Flexibility: Community titles offer more flexibility than traditional strata, making them ideal for large mixed-use developments. Each part of the development can be managed independently, providing owners with more specialised facilities and services.
Implications for the Settlement Process:
Community Management Statement (CMS): Buyers must review the Community Management Statement, which outlines the rights and obligations of owners, including the use of shared facilities and financial contributions.
Community Levies: Owners contribute to the upkeep of shared community areas through community levies, similar to strata levies. Depending on the scale of the development, these levies can vary significantly.
Complex Ownership Structure: Unlike strata, where there is one set of bylaws for the whole scheme, community title schemes may have multiple sets of bylaws depending on the specific part of the development.
Comparing Strata, Freehold, and Community Title
Feature | Freehold | Strata Title | Community Title |
Ownership | Own the land and buildings outright | Own a specific lot, share common areas | Own a specific lot, share larger community property |
Control | Full control over property development | Limited by strata bylaws | Limited by community bylaws, often layered |
Maintenance | Owner is fully responsible | Shared responsibility, managed by strata company | Shared responsibility, managed by community association |
Fees | No recurring fees, aside from local rates | Strata levies for common area upkeep | Community levies for shared community facilities |
Settlement Complexity | Generally simpler, fewer disclosures | Requires review of strata documents and compliance with bylaws | Requires review of Community Management Statement, more complex structure |
Choosing the Right Property Type for Your Needs
Privacy and Control: If privacy and having full control over your property are important to you, a freehold property may be the best choice. You'll have the freedom to make changes as you wish, without needing approval from a strata or community association.
Low-Maintenance Lifestyle: For those who prefer a low-maintenance lifestyle, strata properties or community title properties can be ideal. The shared responsibility for common areas means less personal involvement in property maintenance, which is particularly appealing for busy professionals or those seeking a lock-and-leave lifestyle.
Community Living: Strata and community title properties often foster a sense of community, with shared facilities like pools, gyms, and gardens. If you enjoy communal living and amenities, these types of properties may be a great fit.
Mixed-Use Flexibility: If you’re interested in being part of a mixed-use development with both residential and commercial elements, a community title property offers greater flexibility and specialised management of shared facilities.
Working with a Settlement Agent: Ensuring a Smooth Process
Whether you decide on a freehold, strata, or community title property, working with an experienced settlement agent is crucial for ensuring a smooth property transaction.
For strata and community title properties, your settlement agent will:
Review the Strata Plan or Community Management Statement to confirm what areas are common property and which are part of your individual lot.
Help you understand the bylaws and ensure they align with your lifestyle preferences.
Provide clarity on any upcoming special levies or major maintenance plans that could affect your budget.
For freehold properties, your settlement agent will focus on the title search to ensure there are no easements, encumbrances, or other legal issues that could impact your ownership rights.
Understanding the differences between freehold, strata title, and the new community title is key for any property buyer in Western Australia. Each type of ownership has its own set of benefits and considerations, and the right choice depends on your lifestyle needs, financial circumstances, and comfort with shared responsibilities.
At Adaptive Settlements, we’re here to help you navigate the intricacies of all types of property ownership in WA. Whether you're looking for full ownership of a house, a modern apartment with shared amenities, or a property in a mixed-use community, we ensure the settlement process is seamless and stress-free.
If you’re considering purchasing property in WA and want guidance on freehold, strata, or community title ownership, reach out to our team today!
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