Hello All
I have a few stand alone IP properties but have come across a deal I don’t have any experience in. Just wondering what is involved in picking up 3 average looking Units on one title and strata titling them and either hold/selling all or a few of them. Is this hard to do and what are the costs involved, pitfalls etc etc.
Any help and advice would be greatly appreciated.
Cheers
DM
Strata Titling must follow a series of individual unit compliance.
Every council will have different recommendations for strata compliance.
When taking on a block of flats you'll find some of the current recommendations is that every unit has proper annotation and allocation of a carspace to the relevant unit, that the units have separate individual metering, that the fire department requires a minimum level of time of access to and from the unit.
There may be more than these .. or less than this .. depending on your councils requirements.
Costs involved? You have to supply all costs to meet recommendations and only then will the council certify strata approval on the units. It can get expensive. My latest job cost just under 40k to meet strata requirements. Multiple units adds up to multiple costs. But over 12 units that averages out quite affordable.
Benefits? You can actually treat each individual property as a separate asset. In other words .. before they were strata'd if you wanted to borrow 100k .. you'd do so on the whole block. After strata .. you can just borrow on the individual title. So if things went screwy, you'd only be minus one unit.
If close to retirement and you wanted to utilise the property as a mini superannuation fund, you can sell a single property a year .. and not have too much of a CGT burden in the near term. CGT is only calculated on the GAINS over and above the initial price paid. The longer you hold it .. the more CGT you'll be paying on sale. Read up on your CGT as part of your ongoing investigation. I'm 20 years away from retirement so i only know it vaguely.
Pitfalls? Some properties will not meet the criteria for strata subdivision. Or if they do .. it will be horrendously expensive. Those are your two main pitfalls. Check with your council before even submitting an offer on the property. Better wary than expensively sorry.
An additional … as owner of the whole block once strata'd (even without individual strata) you are the sole representative of the community collective (body corporation) on the property. That doesnt mean be extra stingy on doing things. It just means that instead of individual contributions .. you are the sole contributor. Its a great way of saving money on owning and maintaining a property. Also without a separate grouping for management .. there is only one vote that counts.
Yours.
Once you've determined what you need to do to achieve the planning controls for strata titling, you will need to submit a development application as well as carrying out any required building work to meet current building code requirements. Then get subdivision plans prepared etc.
hi xdrew,
do you have any rough guidelines in terms of things that must be met – eg fire doors, 1 car space per title? Or are these completely dependent upon the council?
where would you suggest going to research this/which part of council?
lachy
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