If you are planning to buy a home to live in, or as an investment property to build a healthy stream of income and capital growth for the future, it is worthwhile getting to know some of the more common types of property title in NSW as they can affect ongoing costs of ownership.
The Old System Property Title
As the first state to be colonised, NSW has a unique system of property titles, some of which remain from the very first day of the colony. The Old System Title remains from early settlement, and at the time there was not a system in place like we have today that could document and tally information about the sale; prices paid, who the vendor was, and who the property was sold to. This system covers all property bought before the Real Property Act came into force in 1863.
The most common type of ownership title a property buyer may see is the Torrens Title, also known as freehold. If there is no outstanding mortgage on the property, real estate with this kind of title will be retained by the person listed on the title deeds. The title deeds are a kind of document which proves the ownership of a property. Torrens Title has been in existence since the creation of the Real Property Act.
Leasehold is another very common type of title property buyers may see today. Any new land releases the government makes for housing development are very likely to be made under Leasehold provisions. Instead of property being owned outright by the property owner they will instead have the right to use the land for a prescribed period of time. Most commonly Leasehold property is initially released on a 99-year lease, the balance of which can be sold and exchanged.
The government can decide to change the way in which land is used, and under the Leasehold system when the term has expired they can take the land back or renew the lease for either a similar or different length of time. In residential areas, especially, it is more likely to see the NSW government extend or renew Leasehold terms.
Today, it is also common to see Strata Title properties on the market. In most cases, this title will be used by developers building apartment blocks and units. Typically, when you buy a unit in one of these buildings you own your part of the building, plus have common ownership of shared areas of the building with other unit owners in the same building. A Strata management company controls the maintenance and upkeep of these shared areas and unit owners pay them strata levies to help pay for these ongoing expenses.
Property investors looking to develop a cash-flow positive portfolio will be concerned with how much the ongoing expenses associated with the strata levies. Like other costs, Strata fees rarely stay at the same level they were in the beginning. Regular adjustments to take into consideration increased costs of maintenance are common and can be a game-changer for property investors. Offsetting this, investors need to consider that a unit’s purchase price may be far lower, and they are often very attractive places to live with high rental demand.
Community Title is another type of title becoming common to see. It works a little like Strata titled properties and is widely seen in secure community developments, for example. Property owners are jointly responsible for maintenance and upkeep; however, it is more common to see a residents committee or manager take care of these responsibilities rather than a Strata company. Often ongoing fees are less than Strata titled properties but a set of rules governing things like noise, the ability to keep pets, car parking, and changes to the property’s external appearance may not be for everyone. Property investors will be careful to make sure ongoing fees don’t negatively affect their cash-flow, while also making sure this type of property investment is still attractive for the local rental market.
Speak to the Experts
If you are interested in buying a home or looking to invest in real estate to secure your future, speak to the property experts at Vision first. Ring on 1800 004 663 or contact us for quality, expert advice on your next property move!
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