Hello all,
I’ve just learned today that banks in general won’t lend you as much money as they normally would if the property is a company title, as opposed to (say) a strata type.
Can someone explain why this is so, and what exactly is the difference (ie pros vs cons) between company and strata titles?
Thanks,
Anastasiatoo hard to sell company title.
I beleive company title is just like buying shares ina privately owned comany. each of the other shareholders may have a say on who they will accept for the new onwers.
I think about 70% would be the max LVR for these.
Terryw
Discover Home Loans
North Sydney
[email protected]Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Company title is an old style system where a company was formed to own a building. To purchase an apartment one had to buy the corresponding amount of company shares. There were shareholder meetings and these meetings would approve sales etc
So the company can restrict sales and must approve whom you can sell too. I think there are some other limitations in there too.
Strata is the more modern method whereby a owners corporation owns the land and the structure and each owner then owns the airspace within their apartment – or the thickness of the interior paint and inwards as was described to me once. Strata ownership can be freely bought and sold.
Some banks will lend less as they perceive a higher risk. Some banks don’t discriminate on this basis and will lend as per normal. Your broker will help you here.
hope this helps,
Simon Macks
Mortgage Broker
[email protected]
0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
Doesn’t company title mean you don’t actually own an individual unit? I think that’s why the banks (some anyway, going on Simon’s post) have a bit of a problem, as they can’t pinpoint exactly what they are mortgaging [?]
Cheers
MelG’day Mel…
You are absolutely correct.
You own shares and not Real Estate!
Cheers
Bill
Bill O’Mara
Real Estate,Mortgages, Option Writing & Forex. [email protected]Well you own shares in a company that owns real estate. It is also recorded which unit you own but you aren’t on title as such.
Simon Macks
Mortgage Broker
[email protected]
0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
Thanks Simon and Bill
Cheers
MelThanks for the responses.
I’ve heard it is possible to changeover to strata provided you get all the shareholders (or at least the majority) to agree – is there anything legal to prevent this from happening and does it cost much?
If it is possible to do this without great inconvenience/cost, I don’t understand why anyone would keep a property in a company title, because as a selling point, it would seem that it is much better if the place is strata, not company. In particular, the idea of other shareholders telling me who I can and can’t sell my property to is a HUGE turnoff!
AnastasiaI have heard of entrepreneurs buying up company title apartments in Sydney, strata’ing them and reselling at profit.
I think there are some building issues to consider such as fire protection.
Can be done.
Cheers
Simon Macks
Mortgage Broker
[email protected]
0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
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