For Chinese Buyers: Understanding the Three Types of Australian Property Ownership

Properties in Australia come with several different title types, of which:

Torrens Title 

Strata Title

Community Title

are the most common and the ones you must understand.

 

1. Torrens Title Torrens Title

Torrens Title is also known as freehold title. If you buy a property with Torrens Title, it means you not only own the house itself outright, but also hold freehold ownership of the land the property sits on.

So when buying a Torrens Title property, taking into account factors such as maintenance costs, rental yield and capital growth potential, the balance between the size of the house and the size of the land becomes especially important.

In Australia, most standalone houses come with Torrens Title.

Generally speaking, because this type of property includes land, it is priced higher and offers better protection of value and capital growth. Accordingly, however, the holding costs are also higher, making it better suited to owner-occupier buyers.

A standalone house with land - a typical Torrens Title property

Torrens Title properties have no restrictions, or very few restrictions, on keeping pets, barbecuing and so on (subject to local council by-laws). What's more, such properties usually offer better private space and are less disturbed by surrounding noise.

After buying a Torrens Title property, you are responsible for maintaining and managing the land and the house yourself. You can also apply to the local government to demolish and rebuild or extend the house.

When buying a Torrens Title property, you should confirm in advance whether the property has any illegal structures. Because once the property is transferred into your name, the risks associated with any illegal structures are transferred entirely to you as well. If discovered by the local government, you would bear the responsibility of paying fines, demolishing the non-compliant structures and so on.

 If you intend to demolish and rebuild or extend the house on the land after buying a Torrens Title property, then before buying you should fully understand the local government's restrictions and requirements on house construction (for example, height restrictions, material restrictions, area restrictions, etc.), so as to avoid a costly mistake.

2. Strata Title Strata Title

Strata Title is another of the most common property title types. In Australia, apartments and most townhouses come with Strata Title.

If you buy a Strata Title property, you do not have direct ownership of the land beneath the house, but rather ownership at the next level down. For an apartment, you are buying a space on the land divided horizontally and vertically, and you obtain freehold ownership of the house within that space. For a townhouse, you have a clearly defined area of land for your use.

A quality apartment - a typical Strata Title property

So who exactly owns the land beneath the house? Put simply, it is owned collectively by all the apartment owners on that piece of land.

So when buying a Strata Title property, you only need to consider factors such as the quality of the house itself, its indoor and outdoor area, floor plan and car space, without needing to consider the land area.

Since a single piece of land can be divided into anywhere from 2 to over a hundred strata spaces, generating many common facilities (such as external walls, corridors, lifts, etc.), all of these need to be maintained jointly by all the owners. Therefore, Strata Title properties are generally managed by a professional property management company, and owners simply pay the corresponding quarterly body corporate fees.

In addition to the laws and regulations issued by the government, each owners' group will also have different rules regarding strata management. For owners, the restrictions are correspondingly greater.

Since the building's structure belongs to the owners' group, owners of strata properties cannot alter or renovate their homes at will. Once it is discovered that an owner has altered the structure of the house without permission, they will face serious consequences (such as fines, restoration to the original state or litigation). Correspondingly, however, the strata management company is responsible for the daily cleaning and maintenance of the building, saving owners a great deal of hassle.

3. Community Title Community Title

Community Title combines some features of Strata Title and Torrens Title. Properties with Community Title are usually located in relatively large communities, made up mainly of standalone houses.

If you buy a Community Title property, you hold freehold ownership of both the house and the land, but at the same time, you jointly own and maintain certain common areas with the other owners in the community, such as roads, parks and recreational facilities.

Generally speaking, the owners' general meeting engages a professional property management company to maintain the common spaces within the community, which is similar to Strata Title. As a result, Community Title owners also need to pay the corresponding community management fees each quarter.

Which type of title makes for a better property?

In fact, all three title types have their own advantages and disadvantages. Which house to choose mainly depends on the buyer's own circumstances and needs.