Whether your interested in buying property for residential or for investment purposes, there are some significant differences between buying apartments and houses you need to consider before taking the plunge.
Buying property of any kind can be daunting but when it comes to apartments and houses there are three significant differences:
1. The Title
Generally the title for an apartment is a long leasehold with the lease being the primary title deed to your property. This is unlike the freehold title you would have as the main title for a house. A lease is required for an apartment because it allows the apartment owners and management company to enter into mutual covenants. Mutual covenants are promises from the apartment owners to the management company to ensure the code of conduct is respected.
When considering the purchase of an apartment it your solicitor should provide you with a copy of the lease which will have schedule of rules regarding animals, noise, clothes on balconies etc. It is important to note that there may also be house rules set out by the management company and these should also be evaluated when making decision to purchase.
2. Common Areas
Unlike a house an apartment complex will contain common areas, where the apartment is in a new development the developer retains the freehold title to the common areas until all units are sold, at which point the developer is obliged under the Multi Unit Development (MUD) Act 2011 to transfer any common areas over to the management company.
Issues may arise in older developments where common areas have not been transferred and the developer is therefore in breach of the Multi Unit Development Act 2011. It is important you discuss this with your solicitor and consider the consequences if such a dispute arises.
3. Service Charges
After buying an apartment you will be subject to service charges to your management company to cover general maintenance, utility bills for any common areas and insurance. There is also a provision of the Multi Unit Development act that specifies a sinking fund must be set up by the management company to cover any major repairs which may need to be carried out to the building over its lifetime. Issues can arise where no sinking fund has been set up in violation of the MUD Act.
If you are thinking of purchasing an apartment why not come in and talk to us about a quotation and ensure a smooth, hassle free purchase.