Chinese Buyers Should Know the Difference: Three Types of Australian Property Title

Property in Australia comes in a number of different title types, 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 own not only the house itself in perpetuity, but also the land the property sits on in perpetuity.

So when buying a Torrens Title property, taking factors such as maintenance costs and rental yield into account, matching the size of the house to the size of the land becomes particularly important.

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

Generally speaking, properties with this type of title come with land and so carry a higher price. Correspondingly, the holding costs of such properties are also greater, making them better suited to owner-occupiers.

Detached house with land – a typical Torrens Title property

Torrens Title properties have no restrictions, or very few (limited by local council by-laws), on keeping pets, barbecuing and the like. 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 the repair and management of both the land and the house yourself. You can also apply to the local government to demolish and rebuild the house, or to extend it.

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 risk associated with illegal structures also transfers entirely to you. If the local government discovers them, you will be liable for penalties, 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 you buy you should fully understand the local government's restrictions and requirements for house construction (such as height limits, material restrictions, area limits, etc.), so as to avoid a costly mistake.

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 lower level of ownership. For an apartment, you buy a space on the land divided both horizontally and vertically, and obtain perpetual title to the house within that space. For a townhouse, you own 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 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, the floor plan and car spaces, without having to consider the size of the land.

Because a single parcel of land can be divided into anywhere from 2 to over a hundred strata spaces, and generates many common facilities (such as external walls, corridors, lifts, etc.), all of which need to be maintained jointly by all the owners, Strata Title properties are generally handed over to a professional property management company to look after, with owners simply paying the corresponding body corporate fees each quarter.

Besides the laws and regulations enacted by the government, each owners' group will also have its own rules for strata management. For owners, the restrictions are correspondingly greater.

Because the building structure belongs to the owners' group, the owner of a strata property cannot freely alter or renovate their own home. Once it is discovered that an owner has changed 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 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 features of Strata Title and Torrens Title. Properties held under Community Title are usually located in larger communities, and these are mainly made up of standalone houses.

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

Generally, the general meeting of owners appoints 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 is better?

In fact, each of these three title types has its own advantages and disadvantages. Which house to choose mainly depends on the buyer's own circumstances and needs.