If you're buying an apartment in NSW, you're almost certainly buying into a strata scheme. But what does that actually mean? What do you own, what do you share, and what are you signing up for?
This is Part 1 of our Beginner's Guide to Strata — a six-part series that walks you through everything you need to know about strata living in NSW, from the basics right through to handling disputes and getting the most out of your investment.
What Is Strata Title?
Strata title is a form of property ownership designed for multi-unit buildings. Instead of owning a plot of land with a house on it, you own an individual lot — your apartment, unit, or townhouse — plus a share of the common property that everyone in the building uses.
The concept was invented in New South Wales in 1961, making it one of the oldest strata systems in the world. Before strata title existed, there was no practical way to individually own an apartment — the entire building had to be owned by one entity.
Today, strata is the most common form of property ownership for apartments in Australia. There are over 88,000 strata schemes in NSW alone, covering more than 800,000 individual lots. If you live in or are buying an apartment, a townhouse in a complex, or even some types of commercial property, chances are it's strata.
The legal framework is set out in the Strata Schemes Management Act 2015 (NSW) and the Strata Schemes Development Act 2015 (NSW). Other states have equivalent legislation — in Queensland and Tasmania it's called "body corporate," and in Victoria, "owners corporation" — but the core concept is the same everywhere.
Your Lot vs Common Property
This is the most important distinction in strata ownership, and it trips up a surprising number of people.
Your lot is the part you own exclusively. Generally, this is the space inside your apartment walls — from the inner surface of the walls inward, including internal walls, fixtures, and fittings you've installed. The exact boundaries are defined in your strata plan.
Common property is everything else — the structure of the building (external walls, roof, foundations), hallways, stairwells, lifts, gardens, pools, car parks (unless they're on title), pipes and wiring within walls, and any shared facilities. Common property is collectively owned by all lot owners in the scheme.
Why does this matter? Because who pays for repairs depends on where the problem is:
- Damage inside your lot — your responsibility and your cost. If your dishwasher leaks and damages your kitchen floor, that's on you.
- Damage to common property — the owners corporation's responsibility, funded by everyone's levies. If the building's waterproofing fails and water leaks into multiple units, the owners corporation pays for the common property repair (though individual lot damage may fall on each owner or their insurer).
- Boundary cases — the most common source of strata disputes. Is that leaking pipe inside the wall part of your lot or common property? The answer depends on the strata plan, and it's not always obvious.
Some buildings also have common property subject to exclusive use by-laws. This is where a specific area of common property — like a courtyard, rooftop terrace, or parking space — is allocated for one owner's exclusive use. You get to use it, but the owners corporation may still be responsible for structural maintenance.
Unit Entitlements: Your Share of the Building
Every lot in a strata scheme is assigned a unit entitlement — a number that represents your proportional share of the building. These are set when the strata plan is registered (usually by the developer) and are recorded on the plan itself.
Unit entitlements determine three important things:
- How much you pay in levies. If your unit entitlement is 15 out of a total of 100, you pay 15% of the building's running costs.
- Your voting power. Most resolutions at general meetings are decided on a one-lot-one-vote basis, but some (like special resolutions) may reference unit entitlements.
- Your share on wind-up. If the strata scheme is ever terminated, unit entitlements determine how the proceeds are divided.
Unit entitlements are typically based on the relative value of each lot at the time the plan was registered. A larger penthouse will have a higher unit entitlement than a studio on a lower floor. You can find your unit entitlement on your strata plan or in the Section 184 certificate.
Changing unit entitlements after registration requires either unanimous consent or a court order — it almost never happens in practice.
Types of Strata Schemes
Not all strata schemes are the same. You'll encounter several types:
Residential strata is by far the most common — apartment buildings, townhouse complexes, and villa developments where people live. This is what most people think of when they hear "strata."
Commercial strata covers office buildings, retail centres, and industrial complexes. The principles are the same, but the by-laws and management tend to be more business-focused.
Mixed-use strata combines residential and commercial lots in the same building — shops on the ground floor, apartments above. These can be more complex because the needs of commercial and residential owners often conflict (think noise, trading hours, or signage).
Community schemes (community title) are a layered version of strata, used for large developments with multiple buildings, shared roads, or common recreational facilities. A community scheme might contain several strata schemes within it, each with its own owners corporation, plus an overarching community association. You'll see this in large master-planned estates.
Company title is technically not strata — it's an older form of apartment ownership where you buy shares in a company that owns the building. It's being phased out but still exists in some older Sydney buildings. Company title has significant restrictions (many lenders won't finance it, and the company can restrict who you sell to), so it's worth knowing the difference.
The Owners Corporation
When you buy into a strata scheme, you automatically become a member of the owners corporation (sometimes still called the "body corporate"). This is the legal entity that manages the common property and makes decisions about the building.
The owners corporation has legal obligations: it must maintain the common property, take out insurance, keep financial records, hold annual general meetings, and enforce the by-laws. It can sue and be sued. It has a bank account and levies owners to fund its obligations.
In practice, most owners corporations appoint a strata managing agent (strata manager) to handle the day-to-day administration — issuing levy notices, organising maintenance, keeping records, and running meetings. The strata manager acts on behalf of the owners corporation but doesn't make decisions unilaterally — significant matters still require owner votes.
We'll cover the strata committee, meetings, and decision-making in detail in Part 3 of this series.
What Strata Means for You as a Buyer
Buying a strata property is fundamentally different from buying a house. When you buy a house, you're assessing the property on its own merits. When you buy a strata lot, you're also buying into a community and its collective financial decisions.
A well-managed strata building with healthy finances and proactive maintenance will protect your investment. A poorly managed one — with underfunded reserves, deferred maintenance, and ongoing disputes — can cost you tens of thousands in special levies and make your property difficult to sell.
That's why due diligence matters so much for apartments. You're not just checking the apartment itself — you need to understand the building's finances, its maintenance history, its governance, and any looming issues. The strata report is the single most important document in this process.
The good news: strata isn't complicated once you know the basics. And that's exactly what this series is for.
Next in the Series
In Part 2: Understanding Your Strata Levies, we break down exactly where your quarterly levies go, how they're calculated, and what to look for so you're not caught off guard by a special levy.