Apartment buyers are failing to do proper property inspection checks
According to recent reports first home buyers, property investors and empty nesters are competing for apartments and in this fast moving property market it pays to be savvy and aware of what you’re buying. While most would undertake property inspections on houses some are skipping the same on apartments as they believe the owners have taken care of all the issues.
ABS statistics for July 2013 shows that those approved for owner occupied finance for housing increased by 1.6 percent. Similarly those seeking finance for investment property increased by 0.8 percent.
According to PICA Group CEO Greg Haywood, many apartment buyers – both owner occupiers and investors – are first time apartment buyers and most have very little idea of what homework they need to do before committing to buying a property.
“As you would inspect a house and get various pest and engineering reports, you should also undertake inspections of an apartment,” Mr Haywood said.
“Many first time apartment buyers are not aware they should undertake a strata inspection before purchasing an apartment. They seem to assume that because there are others living there everything must be ok but when buying a strata apartment it is highly advisable to also get a Strata Inspection Report one before the exchange of contracts. Doing so after the fact is too late, as any problems that may show up would not allow purchasers to cancel the contract.”
Solicitors and conveyancers acting for the apartment buyer will usually recommend a Strata Inspection Report as part of best practice for conveyancing.
Mr Haywood said a Strata Inspection Report involved checking:
- The books and records of the owners corporation to get a full picture of the state of the building
- Notices served on the owners corporation including any court or tribunal orders
- Minutes of general and executive committee meetings
- Accounting records including income and expenditure records
- The approved budget and levy instalments
- The certificate of title and registered copy of the strata plan
- Up-to-date insurance policies
- Managing agent records (if there is a strata manager)
- Other supplier agreements
Mr Haywood advised apartment buyers to obtain an authority to inspect the records from the owner or their agent before the inspection can be carried out.
“Buying into a strata scheme gives you more than just an apartment. Apartment owners are also responsible for the upkeep of common areas such as the lobby and garages, gardens, fences and extras such as a pool or gym.
“The records will show how well these areas are being maintained and if there are any issues that might attract an extra or special levy. If a buyer is paying $350,000 for a unit they don’t also want to be paying an additional $20,000 or $200,000 for major building works,” Mr Haywood advised.
“Buyers should rely on the information that is documented but also consider talking to owners or tenants who may clue you into number 10 being used by backpackers who like to party all night. But beware as some details about the building can just be rumour and innuendo. It is best to make the decision to buy or not to buy based on the information in the Strata Inspection Report and of course the Building Inspection Report.”
For further media information please contact:
Kris Suraj Padukone
Marketing & Communications Manager