In recent years, there has been a shift in our real estate market on the number of Strata Units sold compared to the number of detached properties. More Strata properties are sold than Detached, indicating Strata housing is becoming increasingly popular in BC, especially in urban areas. But what exactly is strata living all about? This blog post will give you the full rundown on strata properties, strata fees, pros and cons, and tips for buying into a strata development.
What is a Strata Property?
Strata housing refers to properties where individual owners have title to their units while sharing ownership and maintenance responsibilities for common areas. This includes condos, townhouses, duplexes, and other multi-unit dwellings. One place that can be confusing is what they call a bareland strata. Bareland Strata can look like a regular residential subdivision, but for some reason, the development needed to take place as a strata and not detached. Our home in the McMillan area a few years ago was like this. It was a great location, but the land was triangular, so it would have been challenging to develop a full-sized road on the property and get enough usable lots to make the development economically viable. The solution was to create a bareland strata. One of the challenges of bare land strata is people are not always aware they are still governed by the Strata Property Act and subject to the rules and regulations listed within. This can create some confusion, and it is better to sort it out before making a firm offer.
What is a Strata Corporation
Strata corporations manage the shared assets and enforce bylaws for strata communities. This includes collecting strata fees from owners. One way to think of the Strata Corporation is to consider it a company. Each property owner within the strata owns their own unit but also would own shares in the overarching Strata Corporation (Company), which owns the common property. Other forms of home ownership resemble strata like Co-ops, with the main difference being in a co-op, you do not own your own unit. You own shares in the whole development. Of course, there are other nuances of both types of home ownership, and I would be happy to answer any questions you might have about them.
What are Strata Fees?
Strata fees go towards maintenance and upkeep of shared property and assets like lobbies, elevators, grounds, and amenities. Strata insurance covers the common areas. Since each strata is different, each strata will have different fees. In my building, we have a community water system, so we do not pay for our hot water directly. Some Strata's have more amenities than others, which can cause additional fees to cover these. It is essential to understand what is covered by the strata fee and how well those fees are managed. Also, note that as of November 1, 2023, 10% of the strata corporations' total budget must be contributed to the contingency reserve fund. A healthy contingency reserve fund is an attractive attribute of a strata you may consider purchasing.
Strata Living Pros & Con's
As noted above, Strata's have increased in popularity recently, and likely one of the biggest reasons is the cost of ownership. Usually, a strata unit will cost less than a detached unit because you don't have as much land. Other pros of strata living are shared amenities like pools and gyms, lower maintenance responsibilities, and a built-in community. Cons are having less control over your property and having to follow strata bylaws.
Other things to be aware of
It isn't uncommon for some of us to invest in a strata property as a vacation spot. Be aware of BC's empty homes tax that charges a 1% tax on vacant properties each year to discourage real estate speculation and free up rental supply. This applies to both strata and non-strata homes.
Acquiring a strata property involves one of the more complicated purchases you might make in your lifetime. Therefore, you must ensure you are getting good advice. One of the tools I like to use for my clients is a Strata documents review service. They are familiar with what to look for, and sometimes, reading hundreds of pages of documents and depreciation reports can make your eyes blurry with fatigue. Reviewing these documents is equally as important as inspecting the physical property.
When buying a strata property, review documents and meeting minutes to watch for issues like special assessments or systemic maintenance problems.
Strata living offers excellent perks like amenities and community but also requires compromise. Understanding strata fees, bylaws, and responsibilities upfront allows you to make an informed buying decision. With proper research, strata ownership can be a great option, especially for first-time home buyers.
If you are contemplating strata home ownership or need someone to help sell your property, call me and let's talk. We are here to serve you and your best interests.