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

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

Torrens Title 

Strata Title

Community Title

are the most common, and the ones you really need to understand.

 

1. Torrens Title Torrens Title

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

So when buying a Torrens Title property, it is especially important that the house size and the land size are well matched, taking into account factors such as maintenance costs and rental yield.

In Australia, most standalone houses are held under Torrens Title.

Generally speaking, because this type of property comes with land, it commands a higher price. Correspondingly, though, the holding costs are also greater, making it better suited to owner-occupiers.

A standalone house with land - a typical Torrens Title property

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

After buying a Torrens Title property, you are responsible for the maintenance and management of both the land and the house. You can also apply to the local government to demolish and rebuild, or to 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, all the risk associated with those illegal structures transfers to you as well. If they are discovered by the local government, you will bear the responsibility for 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 purchasing you should fully understand the local government's restrictions and requirements on building construction (such as height limits, material restrictions, area limits, and so on), so that you don't end up worse off.

2. Strata Title Strata Title

Strata Title is another of the most common types of property title. In Australia, apartments and most townhouses are held under Strata Title.

If you buy a Strata Title property, you do not have direct ownership of the land beneath the house, but rather a secondary form of ownership. For an apartment, you buy a space on the land divided horizontally and vertically, and gain permanent ownership of the house within that space. For a townhouse, you have a clearly defined area of land 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, the indoor and outdoor areas, the floor plan and car spaces, without having to worry about the land area.

Because a single piece of land can be divided into anywhere from 2 to hundreds of strata spaces, and gives rise to many shared facilities (such as external walls, corridors and lifts), all of these need to be maintained jointly by all the owners. So Strata Title properties are generally handed over to a professional property management company to manage, with owners simply paying the corresponding body corporate fees each quarter.

Aside from the laws and regulations issued by the government, each owners' group also has its own different rules for strata management. For owners, this means relatively greater restrictions.

Because the building's structure belongs to the owners' group, owners of strata properties cannot freely renovate or alter their own homes. If it is discovered that an owner has made changes to the building's structure without permission, they will face serious consequences (such as fines, being ordered to restore it to its original state, or litigation). Correspondingly, however, the strata management company is responsible for the day-to-day cleaning and maintenance of the building, saving owners a good deal of hassle.

3. Community Title Community Title

Community Title combines some of the features of both Strata Title and Torrens Title. Properties under Community Title are usually located in fairly large communities, made up predominantly of standalone houses.

If you buy a Community Title property, you hold permanent ownership of both the house and the land, but at the same time you also 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 appoints a professional property management company to maintain the common spaces within the community, 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 types of title have their own advantages and disadvantages. Which type of home to choose comes down mainly to the buyer's own circumstances and needs.