Owners Corporation & Strata Guide Australia
An owners corporation (OC) — called strata in NSW, QLD and most other states — manages shared property in apartment buildings and some townhouse complexes. If you're buying a property with an OC, you become a member and share responsibility for building maintenance, insurance, and common areas. Understanding the financial health of the OC before you buy is as important as inspecting the unit itself.
What owners corporation / strata covers
The OC or strata body corporate is responsible for everything outside your individual lot. This includes common areas such as the lobby, lifts, pool, gym, car parks, and gardens. It also covers building insurance for the structure and common areas — importantly, not contents insurance for your belongings or the interior of your unit.
Maintenance of shared infrastructure falls to the OC: external walls, the roof, plumbing in common areas, and shared electrical systems. Compliance obligations — fire safety certifications, lift annual inspections, pool safety checks — are also the OC's responsibility.
The OC does not cover the interior of your individual lot. Anything within your front door — carpet, appliances, internal plumbing — is your responsibility.
Fees and levies explained
OC levies are split into two funds. The administrative fund covers day-to-day costs: building insurance, cleaning of common areas, garden maintenance, and general management. The sinking fund (called the capital works fund in NSW) is a long-term savings account for major future repairs — roof replacement, lift upgrades, repainting, waterproofing works.
Both are charged quarterly. A small, simple complex with no facilities might levy $300–$500/quarter total. A large building with a pool, gym, concierge, and complex systems could levy $1,200–$2,000+/quarter. The headline levy figure alone tells you almost nothing — what matters is whether it is adequate given the building's age, condition, and capital works plan.
| Fund | Purpose | Typical items |
|---|---|---|
| Administrative fund | Day-to-day operations | Insurance, cleaning, garden, management fees |
| Sinking fund | Capital works reserve | Roof, lifts, painting, waterproofing, driveway |
Why a low strata fee is not always good news
This is the most important — and most misunderstood — aspect of buying into a strata or OC building. A low quarterly levy feels like a financial win. It may actually be a serious warning sign.
Consider two buildings in the same suburb, both 20 years old with 20 lots:
- Quarterly levy: $400/quarter
- Sinking fund balance: $20,000
- 10-year plan requirement: $100,000
- Fund adequacy: 20% of required
- Quarterly levy: $900/quarter
- Sinking fund balance: $95,000
- 10-year plan requirement: $100,000
- Fund adequacy: 95% of required
Building A looks cheaper on paper. But now the building needs an urgent roof repair — $200,000 total cost.
Repair cost: $200,000
Sinking fund available: $20,000
Shortfall to be raised by special levy: $180,000
Per-lot special levy (20 lots): $9,000 per lot
A buyer who paid $650,000 for a unit in Building A faces an immediate $9,000 bill they did not budget for — potentially within months of settlement. Special levies can range from $5,000 to $15,000+ per lot for major works. They cannot be refused.
The $900/quarter OC had built up $95,000 in reserves. The same $200,000 repair costs $105,000 via special levy — just $5,250 per lot, or is manageable within the reserve with a modest supplementary levy. Higher ongoing cost, far lower financial shock risk.
Conclusion: Always request strata/OC financial statements and ask specifically about the sinking fund balance versus the 10-year capital works plan. A well-funded reserve is worth paying higher levies for.
What to check in OC / strata documents
Before you commit to an offer on any strata or OC property, your conveyancer should obtain and review the following:
- →Sinking fund balance and 10-year capital works plan: Is the fund at or near the plan's target balance? A fund at less than 50% of its required balance is a warning sign.
- →Pending or approved special levies: Has the OC already voted to raise a special levy? Has any major work been approved but not yet funded?
- →Last 2–3 AGM minutes: Disputes between lot owners, repeated complaints about maintenance, major works being discussed but deferred — all visible in the minutes.
- →Litigation: Is the OC involved in any current legal proceedings? Common in buildings with construction defect claims.
- →By-laws: Any restrictions that would affect your intended use — pets, short-term rental, renovation works.
Special levies
A special levy is raised when the sinking fund cannot cover a major repair. All lot owners must pay their share — there is no option to defer or decline. The levy is typically payable within 30–90 days of being issued, and non-payment can result in debt recovery action and a caveat on your title.
Special levies typically range from $2,000 for minor works to $30,000+ per lot for major structural repairs, lift replacements, or fire compliance upgrades. Their timing is unpredictable — a defect may emerge shortly after you settle.
The best defence is to read the last two AGM minutes carefully. If major works are being discussed, a special levy is likely coming. Request quotes or cost estimates if any works are mentioned in minutes.
By-laws and restrictions
By-laws are the internal rules of the OC that govern how you can use your lot and the common property. They vary significantly between buildings. Common restrictions include:
| Restriction | What to check |
|---|---|
| Pets | Some OCs prohibit all pets; others allow with approval. Check whether approval is discretionary or automatic. |
| Short-term rental | Airbnb may be restricted by OC by-law or state law. Check both. |
| Renovation works | Works affecting common property or structure typically require OC approval before beginning. |
| Parking | Car spaces may be separately titled or on a licence — confirm what you're actually buying. |
| Balcony use | Restrictions on furniture, plants, or storage on balconies are common. |
By-laws can be amended by a general meeting with sufficient lot owner votes — but this takes time and majority support. Do not buy assuming a by-law you dislike will be changed.
House vs apartment OC costs
Standalone houses generally have no OC and no ongoing levy costs. Some townhouse complexes have small OCs covering a shared driveway or garden area — fees are typically low ($200–$500/quarter) and capital works plans are simpler.
Apartments typically have the most complex OC structures, the highest levies, and the greatest risk of special levies — particularly in older buildings (10+ years) where capital works are becoming necessary. This does not mean apartments are a bad buy, but the OC financial health must be part of the due diligence alongside the physical inspection.