Strata or Torrens title? The question comes up the moment someone looks at a unit, a townhouse or a duplex. The title decides what you own, what you share with your neighbours, and what you pay for. Two properties that look alike can be very different investments because of it.
Torrens title
With Torrens title you own the land and everything on it. A freestanding house on its own block is usually Torrens title. There are no body corporate fees and no shared rules beyond the council’s. You decide when to paint, repair or rebuild.
Strata title
With strata title you own your lot, usually the inside of your unit or townhouse, and share the common property with the other owners: the land, the driveway, the roof, the garden. A body corporate, called an owners corporation in some states, looks after the common property and charges each owner levies. Decisions about the building are made together, under rules that differ from state to state.
What it means for an investor
Most of a property’s long-run gain tends to come from the land, and on strata title your share of it is small and shared. The levies come out of the rent every quarter. A building’s future depends on decisions you do not make alone, such as major repairs paid for by a special levy. A one-bedroom unit with no car space in an outer suburb is not the same investment as a similar unit close to the city.
Duplexes and dual occupancy
A duplex can be held either way. Two homes on one Torrens title block are one property with two rents. Split into two titles, each half can be held, refinanced or sold on its own. Whether a block can be split, and how, depends on the council and the state, and it is worth knowing before you build. I cover building new in New builds, duplexes and the mini developer.
Two investors pay the same price: one for a townhouse in a small strata complex, the other for an older house on its own block. Ten years on, the complex needs new roofs and the owners vote a special levy. The townhouse owner pays a share of a bill she did not choose. The house owner decides for himself when, and whether, to fix his roof.
Which suits which investor
Strata suits some investors well: a lower entry price, shared upkeep, a location they could not afford as a house. Torrens suits others: more land, more control, no levies. What suits no one is not knowing which one they are buying.
- Is the title Torrens or strata, and what exactly is your lot?
- What are the levies, and what do they cover?
- Is money set aside for major repairs, or is a special levy coming?
- How much of the price is land, and is it shared?
A title is a few lines on a document, and it decides a great deal about what you hold for the next twenty years.
Before you commit, read the title, the levies and the body corporate records against your own numbers. To do it with someone beside you, book a first conversation. It costs nothing.
Nicholas Lockhart
Title and strata rules differ by state; a solicitor and the body corporate records can confirm the detail for a particular property.