When it comes to return on investment everyone has their own rules for maximising tax advantages/profit whether renting or selling their unit.
That said – most strata owners are not familiar with how to unlock the income which may be available through the property shared by all owners – that is – the scheme’s “common property”.
In this article we touch on the type of property transactions owners may investigate to collectively garner an income from their common property.
Common Property Lease
Depending on the location and the type of scheme land, a portion of the body corporate’s common property may attract the interest of telco or billboard scouts looking to enter into a lease with the body corporate in order to occupy a portion of the common property.
Traditionally a phone call might be made to us or we may receive a letter from a telco scout seeking to enter into basic negotiations with the Committee to explore whether the proposal is of interest and any potential snags to approval by the owners at a general meeting.
For some owners – the process dies at this early stage where the Committee know of one or more owners who will vote “no” on principle and regardless of the potential for income.
For other owners – the Committee may undertake preliminary discussions without making any promises and consider such questions as:
- How long might a proposed lease run for?
- Would legal advice for the body corporate be covered by the telco (if often is to a point);
- Would agreeing to this lease rule out other options for the body corporate;
- What might the infrastructure look like and how might it operate?
Common Property Sale
Again, dependant upon location and type of scheme land, the Committee may consider options to sell a portion of the common property to an owner in the scheme or a third party.
The types of scheme land which might feature in a common property sale are not limited to an unused car park.
For example – a developer may want to buy the roof of the scheme onto which to build further units, or a neighbour may want to buy land which contains a retaining wall which benefits his or her house block and allows for further development or an owner may want to expand their lot into a portion of common property air space. There are many possibilities open to the owners.
Given common property is owned by all owners collectively – a sale requires a resolution without dissent. Which means if even one owner will vote “no” it may not be a simple process for the Committee to press on with the sale.
Depending on the form which the sale takes – legal fees, surveying fees and stamp duty may be payable by the ultimate buyer. Additionally it is not uncommon for the body corporate to negotiate other times like a building wash-down or retaining wall rejuvenation.
Next month we will be covering Part 2 of this instalment.
Questions? Comments? Interested in exploring options for your scheme? Here’s where you can ask further: https://www.hlss.co/contact/