When purchasing property in Australia, two common ownership types you’ll encounter are Torrens Title and Strata Title. The Torrens Title system grants full ownership of both the land and the property, giving the owner complete control.
On the other hand, Strata Title applies to properties like apartments or townhouses, where owners share ownership of common areas with others in the building. Each title has distinct advantages and responsibilities, depending on your goals and lifestyle.
So, let’s explore the differences between Torrens and Strata titles and which might be the right choice for you.
I. What Is the Main Difference Between Torrens Title and Strata Title?
Torrens Title:
Torrens Title is the most common form of property ownership in Australia. It means that you, as the owner, have complete control over the property and the land it’s on. The Torrens Title system was introduced in the 19th century and is designed to provide a simple and secure way to prove property ownership.
When you buy a Torrens Title property, you are listed as the registered owner on the Certificate of Title. This document proves that you own the property outright and aren’t sharing ownership with anyone else except for the bank if you have a mortgage.
Strata Title:
Strata Title, on the other hand, is typically used for apartments, units, or townhouses where there are shared areas or “common property” like gardens, driveways, and staircases.
When you buy a Strata Title property, you own your individual unit or apartment, but you also share ownership of the common property with other owners in the building. These shared areas are managed by an owners’ corporation (also known as a body corporate), which is responsible for maintaining and managing the property.
The key difference between Torrens Title and Strata Title is the ownership structure. Torrens Title gives you full ownership and responsibility for the land and property, while Strata Title involves shared ownership of common areas and shared responsibilities for their upkeep.
II. What Are the Benefits of Owning a Torrens Title Property?
Owning a Torrens Title property gives you complete control over your home or land. Here are some of the main benefits:
1. Full Ownership and Control:
With Torrens Title, you are the sole owner of both the land and the property. This means you have the freedom to make decisions about your home without needing to consult anyone else. You can renovate, extend, or make changes to your property (within council guidelines) as you see fit.
2. No Shared Responsibilities:
Unlike Strata Title, you don’t have to worry about the maintenance of shared areas. All upkeep, repairs, and maintenance are your responsibility, but you don’t have to coordinate with an owners’ corporation or other property owners. This gives you more independence and flexibility.
3. No Strata Fees or Levies:
Strata Title properties usually come with ongoing fees and levies to cover the maintenance of common property and management costs. With a Torrens Title property, you won’t have these additional costs. You are responsible for the upkeep of your own property, but you don’t have to contribute to the maintenance of any shared areas.
4. Simpler Property Management:
For those who prefer to manage their own home without the involvement of an owners’ corporation, Torrens Title offers a more straightforward ownership structure.
Also Read: Pros and Cons of Property Investment: A Comprehensive Guide
III. How Does Strata Title Ownership Work in Australia?
Strata Title is different from Torrens Title because it involves shared ownership and management. Here’s a closer look at how it works:
1. Ownership of Your Unit:
When you buy a Strata Title property, you own your individual unit or apartment. This means that you are free to live in, rent out, or sell your unit as you wish. However, the exterior of the building and the common areas are shared by all the owners in the complex.
2. Common Property:
In a Strata Title property, common property includes areas like the lobby, stairwells, elevators, gardens, and even the exterior walls and roof. The owners’ corporation is responsible for managing and maintaining these shared spaces. All the owners in the building contribute to the cost of maintaining and repairing common property through strata fees.
3. Owners’ Corporation:
The owners’ corporation, also known as a body corporate, is made up of all the individual property owners in the building. This group manages the common property and makes decisions about maintenance, repairs, and improvements.
The owners’ corporation may also hire a professional strata manager to help with the day-to-day running of the building.
4. Strata Levies:
Each owner in a Strata Title property is required to pay strata levies, which cover the cost of maintaining the common property. These levies can vary depending on the size of the property and the facilities it offers, such as pools, gyms, or elevators.
Also Read: What to Know When Buying a House in Qld
IV. Which Title Is More Suitable for Investors: Torrens or Strata?
If you’re an investor, you might be wondering which title is a better choice for rental income or property growth. Both Torrens Title and Strata Title properties have their pros and cons for investors.
1. Torrens Title for Investors:
A Torrens Title property might appeal to investors who want more control over their investment. You won’t have to worry about strata levies or other shared costs, and you can make decisions about the property without needing approval from an owners’ corporation.
Torrens Title properties are often houses or standalone homes, which can attract families or long-term tenants.
2. Strata Title for Investors:
Strata Title properties, like apartments and townhouses, can be a good investment option in cities and areas with high demand for rental properties. Because strata properties are often more affordable, they can offer a lower entry point for investors.
However, keep in mind that strata levies will cut into your rental income, and you’ll need to work with the owners’ corporation on matters like repairs and maintenance.
Torrens Title properties offer more independence and fewer ongoing costs, while Strata Title properties can be more affordable and have broader appeal in high-density areas.
V. What Legal and Financial Obligations Come with Owning a Strata Title Property?
When you own a Strata Title property, there are some important legal and financial obligations you need to be aware of:
1. Strata Levies:
As mentioned earlier, strata levies are the fees you pay to cover the maintenance and management of the common property. These can vary depending on the property and its facilities. It’s important to factor in these ongoing costs when buying a Strata Title property, as they can affect your overall budget.
2. Special Levies:
In addition to regular strata levies, you may be asked to pay special levies from time to time. These are one-off payments that cover major repairs or unexpected costs, like fixing the roof or replacing an elevator. Special levies can be expensive, so it’s important to be prepared for these potential costs.
3. By-Laws and Rules:
Strata Title properties are governed by by-laws, which are rules that all owners and residents must follow. These rules might cover things like noise levels, parking, and the use of common property. If you break the by-laws, you may be fined or face legal action, so it’s important to understand and follow these rules.
4. Insurance:
The owners’ corporation is responsible for insuring the building and common property, but you’ll still need to arrange insurance for your individual unit and contents. Make sure you have adequate coverage for your own property and possessions.
Property Ownership Simplified: Torrens or Strata?
Choosing between Torrens Title and Strata Title depends on your personal needs, lifestyle, and investment goals. Torrens Title offers full ownership and control, while Strata Title provides affordable options with shared responsibilities. If you’re unsure which option suits you best, seeking professional advice can help.
Need Help with Your Property Purchase? Contact Us
At CJC Law, we specialise in helping clients understand their property rights and obligations. Whether you’re purchasing a Torrens Title home or a Strata Title apartment, we can provide expert advice to ensure a smooth transaction. Contact us today to get the guidance you need for your next property investment!
