Buying An Apartment - 10 Questions
Apartment living offers some great advantages, it’s a housing trend that’s here to stay, and while yes, it’s not for everyone more Australians are increasingly drawn to apartment living by choice.
True, recently there’s been some concerns about a handful of buildings, and emotional time for those involved. However, the apartment market does offer a wide range of options and is a diverse market with lots of opportunity, and so understanding both the financial and emotional commitment involved I wanted to suggest 10 questions that I think every potential apartment buyer should consider.
Then next week I’ll look at 10 questions I really recommend every apartment buyer should fully explore once they find an apartment to buy. These points will be related to the body corporate and how a building is or will be managed in the future.
What we need to remember with both sets of questions is that apartment living is much more about living in a community where residents will have shared interests and often shared facilities.
Here’s what I suggest for anyone looking to buy an apartment and while the questions might be slightly different depending if you’re thinking off-the-plan or an established apartment, all the points are relevant and important.
1. Ownership Structure
Some key points here are to establish current or future levies, if pets are allowed and the details of the strata manager. The main difference is that when you buy an apartment, there are areas of common ownership in the complex. This is controlled by the buildings body corporate under the guide of recently updated legislation. There are common sense rules that to a degree, restrict what you can do with your apartment.
The main additional cost is strata levies for all apartments, for the upkeep of the apartment complex and for future major works. Strata levies are used to maintain common areas, such as gardens, and pay relevant insurances, such as building and public liability. Its recommended to always check the current cost of these levies before buying an existing apartment and ask for an estimate when looking at an off-the-plan purchase.
Parking is almost always a big question for any apartment buyer as not all apartments will have allocated parking and in some council areas on-street parking is largely restricted. If you need parking, make sure it’s on the apartment title and check the size and access to the allocated space.
If not, can you rent a long-term space in the building or nearby, that may be an option, and if visitor parking is important check the rules for how visitor space is managed in the building. A recent development is the availability of car-share facilities in some buildings, these can even be dedicated car-share that are only available to residents.
Noise from adjoining apartments or nearby apartments will always be a high priority for any buyer. Noise can also be annoying if the building design for example has open or facing balconies or courtyards that might amplify noise.
Nobody likes excessive noise however, some apartments will be in popular areas where the density of development can create added noise, so if this important it pays to check, and with new buildings its possible to request projected noise-rating details, so ask.
It’s a fact that every household will produce rubbish and it’s also true that rubbish can turn into an unwanted problem. Waste and recycling systems in apartment buildings vary considerably depending on the size and age of the building. In newer buildings, it tends to be easy to drop off rubbish and items for recycling via floor by floor waste-shuts some are automated to separate and grade rubbish.
However, older buildings are likely to have garbage chutes only, with recycling bins located less conveniently in a basement car park, or similar. Understanding the options is important as rubbish is managed at the communal level and that includes the disposal of large items.
5. Structure & Quality
This is a big and increasingly important factor for any apartment buyer and involves many different aspects for new and established buildings.
I suggest it’s important to consider both the builder’s and the developer’s reputations, and with so much information online that’s now a much easier task, also consider the overall quality and appearance of the building and how many apartments there are.
However, other key points here include the quality or age of fixtures and fittings and for older established apartments how renovations, in particular large-scale renovations are managed and keep in mind the buildings existing services, for example is there sufficient electricity for new air conditioning
6. Vacancy Rates
If you’re buying an apartment as an investment then vacancy rates are key however, why should this be of concern for an owner-occupier?
I suggest that vacancy rates are interesting whether you are buying as an owner-occupier or investor. If buying as an owner-occupier a building’s or an area’s vacancy rates may affect potential capital gain as they are a useful pointer to market demand. For an investor if there are high vacancy rates then the ability to achieve a reliable rate of return might be tough. In either case, it’s easy to get vacancy rate information and worth the effort.
7. Rentals or Owners
From my own personal experience and from the constant feedback I get, this is among the most common questions asked about a building or a new project. In particular owner-occupiers appear concerned that a building does not have to many investment or rental units and now there are questions about Airbnb that are not so easy to answer.
My view is that it’s a question that also has to consider the quality of the building’s strata manager and individual property managers. Higher density living is placing more pressure on these two groups.
For an existing building checking out the established facilities is as easy as doing a detailed inspection and also looking around the immediate area. When considering facilities there’s awareness of the building’s general amenity and that cover areas like transport and access to services, and with so much new infrastructure underway that can change even in well-established areas. For new projects the variety and level of facilities can vary from very basic service to much more up-scale facilities that will appeal to different buyers depending upon their personal ‘wish-list’.
No matter where you live the amount of space you need will be a very big if not the biggest consideration, and with apartments it’s almost impossible to build an addition!
The reality is that family sizes are changing, and the mix of apartments are having to respond. Some households are getting smaller and in some areas 1-bedroom apartments have been popular.
In urban areas across the world, more people are living alone and that is why 1-bedroom apartments have been very popular. However, there’s now a number of trends changing this and that includes more families and buyers downsizing into 3-bedroom apartments.
10. Future Developments
For an apartment buyer future development is important, as additional development close to already established medium and high-density living can impact quality of life. Buyers should check or ask questions about future development close to their possible new home.
Will a new or existing apartment be impacted by the loss of amenity, like the loss of a view or access to open space. Less obvious impacts could also come from new work that for example, involves road closures. Always get an understanding of what the effects of any developments could be but, remember they can and often are positive.
If in Doubt Ask or Ask Anyway
When buying an apartment, it’s common sense to appreciate that no list can easily cover every aspect of such an important purchase, and personal circumstances will always be very different.
However, to make an informed choice when deciding to buy an apartment, like any property, it is essential to ask the right questions and ask as many questions as you like so that you feel happy and comfortable with your purchase.
For an established apartment you can ‘drive the selling agent crazy if you like’, after all its your money and choice. For new projects look at the developers and the builders track record in detail, check their respective capacity to deliver, including the on-time completion of projects, and look at past projects and make sure you fully understand the terms and conditions of the sales contract.
In any real estate market, there is always many factors to consider and that’s regardless of the whether buying an established or new apartments or house. You should always focus on the location of the property and buy a property where you can answer at least these 10 suggested questions. However, lifestyle is also important and buying an apartment close to cafes, restaurants, open space and transport might well come with your ideal buy as well as ticking the important issues I’ve touched upon.