Purchasing commercial properties can be a valuable investment but there are numerous important decisions which need to be made to determine how profitable that investment will be. One of the most significant is what kind of investment property you may be purchasing – Torrens (freehold) or Strata title? This article will examine both of these properties and some of the considerations you should take into account when deciding which property investment is best for you.

Torrens Title (freehold) investment properties

A Torrens title property grants the purchaser sole ownership and control of the home and the land on which it is built.

This provides the owner with the power to renovate the property as they choose, without the need for approval from a body corporate (or Owners Corporation). This is the more traditional form of property ownership and involves registering your Certificate of Title with the NSW land title system.

Things to consider:

• Freehold investment properties are often more expensive than Strata titles. This is compounded by the maintenance costs associated with the property for which the owner is liable.
• Outgoing costs are usually greater than that of Strata title investment properties.
• Freehold investment properties are potentially the better choice for investors who would like control and have greater financial resources available.

Strata title investment properties

A Strata title property is typically a unit, apartment or townhouse which forms part of a common piece of land, with different owners living in their separate properties within the one complex or block.

Investing in Strata titles only provides the landowner with control over their section of an individual building. Unlike in a freehold investment, the body corporate regulates the use of the land and external structures. This means that all changes or renovations which may impact the building holistically or a common area such as driveways, walkways or gardens, require the body corporate’s approval.

Things to consider:

• Purchasers should note the Strata complex’s associated by-laws before deciding to invest. These are the rules and regulations regarding the property complex, and it is important they are compatible for your plans for the property or lifestyle if you intend to live in it for any period.
• Owners of Strata title are required to pay for maintenance of the common areas, through the ongoing quarterly fees and strata levy, as well as for their own future repairs and maintenance.
• Outgoing costs are usually less than those for freehold properties, and are relevant to the individual lot rather than the whole building.

A solicitor at Etheringtons Solicitors can assist with ascertaining the financial health of the Owners Corporation for the Strata complex by obtaining a report that shows the levies paid by the individual owners and the money available in the funds to maintain the common property.

How Etheringtons Solicitors can help

A solicitor at Etheringtons Solicitors can provide clarification of the relevant law in relation to your individual circumstances. Etheringtons Solicitors can assist with your property purchase. If you need further advice or assistance with property or strata law matters, please contact one of our experienced solicitors on (02) 9963 9800 or via our contact form.