What is a ‘Company Title’ Unit?
Chances are if you have come across a Company Title property, most commonly a unit or apartment, you feel like you've found a bargain. This is because traditionally in Sydney, a Company Title unit will be priced about 10% lower than Strata Title units and apartments.
A Company Title unit is:
Where the whole property (e.g. All the units) are registered with the NSW Land Titles Office in the name of a Company e.g. ABC Pty Ltd owns 100 High Street. ABC Pty Ltd then has 1000 shares which represent 10 apartments.
Each unit then owns shares in that property allowing them exclusive use to a specific apartment in return e.g. Shares 1-99 allow the owner exclusive use to unit 1, shares 100-199 allow the owner exclusive use to unit 2 etc.
The NSW Land titles office only holds the records of the building and does not include individual share owner rights.
This is different to a strata title unit where each individual unit owner is recorded with the NSW Land Titles Office.
Why is a Company Title unit cheaper then?
Most banks will only allow a purchaser to borrow up to 70% of the property value (LVR ratio) on a Company Title property, compared to borrowing up to 95% on strata properties. This is because the property is deemed more risk by the bank, and harder for the bank to repossess and sell in the event you default because the bank is taking on shares rather than the specific title with the NSW Land Titles office.
With a smaller pool of potential buyers, and hence less demand, the price is generally about 10% cheaper than a comparable strata title unit.
What else should I know?
You are still required to pay levies, similar to strata and these work in the same way as strata levies
Most 'companies' actually have to approve the buyer of the lot and this is not guaranteed. It is generally advisable to make an offer on the Company Title Unit subject to approval by the Company
Legislation recently changed to make it illegal for strata title companies to have a blanket ban on pet approvals, however, this does not apply for Companies and so ensure you are across the company by laws and whether or not this may impact you and/or your potential rental market
There are solicitors and conveyancers who specialise in Company Title and it would be highly advisable to use one of these to ensure your transaction covers all legal requirements
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