Hi there
I am a new property investor. We own our home and have recently bought 2 IPs. I have been actively watching the fantastic info on this site for a while now and thought it was time to ask a question.
We bought a studio apartment with garage in prahran (it is one of 19). It is stratum or company share title. We understood the risk of this type of ownership when we bought it and thought we could add considerable value if there was an opportunity to converted it to strata title. My understanding is that we would need approval from everyone with shares in the service company, get a land surveyor involved, get a solicitor to do the legals and do the necessary paperwork with the titles office. My initial investigation suggest this may be in the order of $10 to $15k which does not seem much if everyone stands to gain 10-20% on the value of their property.
Does anyone have any advice or experience with this?
Newbie
Is it stratum or is it company title? These are two totally different things (at least in NSW). Stratum is a 'higher' form of title permitting further development then strata subdivision, whereas company title existed prior to the creation/acceptance of strata title.
Conversion to strata title will require all owners to agree to the winding up of the company and the regrant/registration of new titles including full survey/strata plan creation. This will involve a development application to council and may leave the unit owners to BCA upgrades to current standards (which may be costly) prior to the registration of the strata plan.
You will need to know if all owners are wanting to change, you will need 100% acceptance from the owners and they will need to be committed to any costs in the conversion (DA/surveys/upgrades etc).
That said, it is probably easier to buy the block yourself.
Scott No Mates
Thanks for your response. I am talking about Company Title. I did not realise it was different in NSW.
The hardest thing appears to be getting everyone on board. However, given real estate agents talk about 10 to 20% increase in property price I cannot see why you would not want to do it unless the costs were prohibitive. Upgrade to BCA may prove costly (it is a 1950s block of units).
Do you have any idea of how much it would cost to do full survey / strata plan and register new titles? My guestimate from initial discussions with people is in the order of $10 to $15k including legals. The other cost would be BCA upgrade as you pointed out, which I will investigate further.
I still think this could work out well. Would you spend a couple of grand to increase your property value by 10 to 20%?
BCA compliance costs would include items like fire doors & jambs to each unit, installation of linked smoke detector system (possibly thermals & or sprinklers with ongoing compliance costs), exit and emergency lighting, fire hose reels, hydrant/hydrant booster etc, fire rating of ceilings & all penetrations, noise separation and the list goes on, possible to spend $30-50k per unit minimum.
You might have to engage a building surveyor to determine what the scope would be, a qs to get a price guide and a raft of other consultants to design any required systems and to get the certification.
Scotty
thanks for the advice. Would a DA (i take it DA is the same as a planning application here in Vic) definately mean upgrade to BCA or would this be dependent on the council?
Regards
Generally, lodging a planning application for the subdivision will only happen once the building has been brought up to comply with the BCA. The BCA upgrade, will in all likelihood, require a separate DA/CC. Councils are generally serving 'upgrade notices' or 'fire safety orders' on many buildings in order to bring fire safety in older buildings up to current requirements. By requesting a subdivision, you are bringing forward that liability to undertake the works.
Speak with one of the council town planners to confirm what they will require.
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