Strata buying in NSW: the 10 things people miss until it’s expensive

Strata properties make up a large share of what gets bought and sold in Sydney. Most buyers do less due diligence on them than they would on a house.

Key takeaways

• The purchase price is only part of what strata ownership costs. Levies, special levies, and building works all add up.
• The strata inspection report and the contract need to be reviewed separately. One does not replace the other.
• Problems are much easier to identify before you exchange than after
• Some issues are deal-breakers. Others are manageable. A lawyer can help you tell the difference

Buying into a strata scheme is not the same as buying a freestanding property. The building, the land, and most of the structure are owned collectively. You own your lot and rights in the common property. The owners corporation makes decisions that affect how the building is run, what it costs to maintain, and what you can and can’t do with your apartment.

Most buyers focus on the apartment itself. They check the size, the light, the finishes. They overlook the scheme around it.

A good strata conveyancing review covers the contract and the strata records. Here are the ten things that most often catch buyers out.

The 10 things buyers miss

1.  The capital works fund balance.  This is the money set aside for major building works: the roof, lifts, external cladding, waterproofing. A healthy fund means the owners corporation has been saving properly. A depleted one means a special levy is likely when something breaks. Check the balance, check what’s been spent recently, and check what’s coming up in the ten-year capital works plan.

2.  Upcoming or unresolved special levies.  A special levy is a one-off charge raised when the capital works fund doesn’t cover a major expense. They can run into tens or even hundreds of thousands of dollars per lot. Check the meeting minutes for any approved special levies that haven’t yet been invoiced. The vendor isn’t always required to disclose a levy that’s been approved but not yet raised.

3.  The strata inspection report.  Most buyers skip this, or rely on a brief summary rather than reading the full report. The inspection covers the financial records, meeting minutes, correspondence, insurance, and the capital works plan. It’s often where the real picture of the building’s health sits. Budget for a proper report, not a summary.

4.  By-laws for renovations.  Want to knock down a wall, retile the bathroom, or install timber floors? In a strata scheme, the answer isn’t just up to you. Most schemes require owners corporation approval for any work that affects common property or the structural elements of the building. Some schemes have specific by-laws that restrict what can be approved at all. Read them before you buy, not after you’ve planned the renovation.

5.  The pet by-law.  NSW strata law changed in 2021. Owners corporations can no longer have blanket no-pet policies, but they can impose reasonable conditions. The scheme’s by-laws will tell you what approval process applies and what conditions might be attached. If you have a dog or plan to get one, check this before you exchange.

6.  Short-term letting restrictions.  If you’re buying as an investment and plan to list the property on Airbnb or similar platforms, check the by-laws. Some schemes have adopted by-laws that restrict short-term letting, and in some circumstances strata committees can prohibit it entirely for properties that aren’t the owner’s principal place of residence.

7.  Active disputes and litigation.  Check the meeting minutes and the correspondence file for any disputes between owners, or between the owners corporation and a third party. A scheme involved in active litigation against a builder or contractor can mean years of uncertainty and unexpected costs. It also affects your ability to sell down the track.

8.  Building defects in newer buildings.  NSW has a six-year warranty period for major building defects and a two-year period for minor ones, running from the date of completion. Newer buildings can look immaculate and still have structural or waterproofing issues that haven’t yet surfaced. Check whether any defect claims have been lodged, and look at the building’s inspection history. The Building Commission NSW maintains records that are worth reviewing for high-rise buildings.

9.  What’s common property and what’s your lot.  The boundary between your lot and common property determines who is responsible for maintenance and repairs. In many older buildings this boundary is less obvious than it looks. Pipes, windows, balconies, and car spaces all have different treatment depending on the strata plan. If something needs repair, you want to know upfront whether the cost sits with you or with the owners corporation.

10.  The quarterly levy amount.  This is your ongoing cost of strata ownership, paid quarterly. It covers building insurance, maintenance of common property, management fees, and contributions to the capital works fund. Levy amounts vary considerably between schemes. A low levy in a building with a depleted capital works fund and deferred maintenance is not a bargain. Compare the levy against what the strata report tells you about the building’s financial position.

What to do with this information

Not every issue is a reason to walk away. Some schemes with lower capital works fund balances have a plan in place and a levy schedule that makes sense. Some older buildings have been exceptionally well-maintained. The strata records tell you which is which.

What matters is that you’re reading those records before you exchange, not after. A contract review covers the contract terms. A strata inspection covers the scheme’s records. Both are worth doing on any strata purchase.

Working with & Legal

Our team reviews strata contracts and advises on strata inspection reports regularly. We’ll tell you what the records are showing, what questions to ask before you exchange, and whether anything warrants negotiating on price or terms. Reach out via the contact form or call the office on (02) 9328 2944 to discuss timing.

Frequently asked questions

Do I need both a strata inspection report and a contract review?

Yes. They cover different things. The contract review looks at the terms of your purchase. The strata inspection covers the financial health of the scheme, the meeting history, any disputes, and the capital works plan. You can’t get a complete picture from one without the other.

What is a special levy, and how much could it be?

A special levy is a one-off charge raised by the owners corporation when the capital works fund doesn’t cover a major expense. The amount depends on the work and the number of lots in the scheme. In larger buildings with significant defects or deferred maintenance, special levies of $10,000 to $50,000 per lot are not unusual. The strata inspection report will show whether any have been approved or are being discussed.

Can the vendor hide a special levy that hasn’t been invoiced yet?

Not exactly hide, but the vendor is only required to disclose levies that are currently outstanding. A special levy that has been approved at a committee or general meeting but not yet invoiced may not be disclosed. This is one reason the meeting minutes matter. A strata inspection report that covers recent minutes will pick this up.

Can I renovate a strata property after I buy it?

Often yes, but approval is usually required. Cosmetic work within your lot is generally straightforward. Anything that affects common property, structural elements, or shared systems (plumbing, electrical) typically requires owners corporation approval and sometimes a by-law. Some schemes have renovation by-laws that set out the approval process. Read those before you buy if renovation is part of your plan.

This article is general information only. It does not constitute legal advice and should not be relied upon as such. For advice specific to your situation, please contact & Legal directly.