Today, company title properties are few and far between, but they do still occasionally come up for sale. If you are on the lookout for a new apartment and you come across a company title building that you like, there are some pros and cons to be considered.
On the plus side, they tend to be cheaper, due to lower insurance, administrative costs and a much lower buyer demand than regular properties.
It’s also easier to deal with a company when resolving disputes. This could be put down to the fact that a single entity like a company is likely to have a more unified agenda than a mishmash of individual owners that make up an owners’ corporation and have their own priorities.
If repair works need to be undertaken to one apartment, for example, the company is likely to see the bigger picture- how it will benefit the whole building; while it can be harder to convince strata owners to each fork out money for works that will not directly benefit their individual properties.
Another factor that can be great for residents is that company title properties are hard to rent out due to different legal and administrative requirements, so they are usually filled with owner-occupiers, who take greater care of the building in general than short term tenants and are more inclined to get along with each other.
Of course, this same factor would make them less attractive to property investors and several of the other positives can also double up as negatives depending on circumstance.
The fact that they are cheaper to buy means that when it comes time for you to sell, you may have to settle for a lesser result than the owners of strata apartments are achieving. You might also face a lengthy period on the market if you are unable to find a willing buyer.
You may not agree with decisions made by the owning company, but have less say than in a strata building.
Banks are also less likely to lend for company title purchases as they can cause more hassle in the case of a mortgage default; that is, a smaller buyer pool and administrative details will make it harder for the bank to on-sell the property and recoup its value.
Tim McIntyre is the senior real estate reporter for the Daily Telegraph and News.com.au.
Over the past decade, he has attained widespread knowledge of Australia’s many unique property markets and is an authority on all things buying, selling and investing.
His commentary appears every Saturday in the Daily Telegraph Real Estate lift out, as well as online at news.com.au.