Buying an Owners Corporation Property in Victoria: What Every Buyer Should Know

Introduction

If you are buying an apartment, townhouse, or property within a newer residential development, there is a strong chance the property will form part of an owners corporation property in Victoria.

Many Australians still refer to this structure as a “body corporate”, however in Victoria the correct term is usually owners corporation.

As Melbourne property prices continue to rise, buying an owners corporation property in Victoria has become increasingly common, particularly among first home buyers and investors seeking a more affordable entry into the market.

At What If We Finance, we regularly help buyers finance apartments, townhouses, and strata-style properties across Victoria. For many buyers, these properties provide access to suburbs and locations that may otherwise be financially out of reach.

However, purchasing within an owners corporation also comes with additional costs, rules, responsibilities, and financial considerations that buyers should understand before signing a contract.

Understanding How Owners Corporations Work

An owners corporation is responsible for managing and maintaining the shared areas within a property development.

Depending on the development, this may include:

• Shared driveways
• Building insurance
• Gardens and landscaping
• Hallways and foyers
• Lifts and elevators
• Pools and gyms
• Security systems
• External building maintenance

When you purchase a property within the development, you automatically become a member of the owners corporation and contribute towards these shared expenses through ongoing owners corporation fees.

This is one of the key differences between buying an owners corporation property in Victoria and purchasing a standalone house.

Why Owners Corporation Properties Are Becoming More Common

Melbourne’s property market has changed significantly over the past decade.

For many first home buyers, purchasing a standalone home in certain suburbs is no longer realistic without a substantially larger deposit and higher income.

This is one reason apartments and townhouses have become increasingly popular across Victoria. They often provide:

• Lower entry prices
• Access to desirable locations
• Reduced maintenance responsibilities
• Greater affordability
• Improved lifestyle convenience

Spiro Kolokithas, Managing Director of What If We Finance, says:

“Owners corporation properties are now a normal part of the Melbourne market. For many buyers, especially first home buyers, they’re one of the more realistic ways to enter the property market sooner rather than later.”

Owners Corporation Fees Can Affect Borrowing Capacity

One area many buyers overlook when buying an owners corporation property in Victoria is how ongoing fees may affect borrowing capacity.

When lenders assess a home loan application, they consider your ongoing financial commitments and living expenses. Higher owners corporation fees can reduce the amount some borrowers may be eligible to borrow because lenders factor these costs into servicing calculations.

This becomes particularly important for:

• First home buyers
• Buyers close to their borrowing limit
• CBD apartment purchases
• Buildings with premium facilities
• Large developments with lifts, pools, and concierge services

Spiro Kolokithas explains:

“Some buyers are surprised to learn that higher owners corporation fees can reduce borrowing capacity. This is why your lending strategy and lender selection matter, especially for first home buyers purchasing apartments.”

An experienced mortgage broker can help assess how owners corporation fees in Victoria may affect your overall affordability before you commit to a purchase.

Why Pre-Approval Still Matters

If you are considering buying a townhouse in Victoria or purchasing an apartment with shared facilities, obtaining a properly assessed pre-approval remains extremely important.

A pre-approval can help you:

• Understand realistic borrowing capacity
• Budget for owners corporation fees
• Identify lender restrictions early
• Avoid wasting time on unsuitable properties
• Move quickly when making offers

Not all lenders assess strata or apartment-style properties in the same way. Some lenders may apply stricter lending policies to smaller apartments, high-density developments, or certain postcodes.

This is where mortgage broker guidance can make a major difference during the property search process.

Shared Living Also Means Shared Financial Responsibility

Owners corporation living also involves shared financial responsibility and, in some situations, shared financial risk.

If major repairs, structural issues, or defects arise within the building, owners may collectively contribute towards the cost through special levies.

Some apartment developments with lifts, gyms, pools, concierge services, and extensive shared facilities can carry significantly higher ongoing costs than smaller townhouse developments.

Owners corporation fees in Victoria may increase over time due to:

• Building ageing
• Rising insurance costs
• Lift maintenance
• Pool servicing
• Structural defects
• Cladding rectification
• Major maintenance projects

Spiro Kolokithas says:

“A lot of buyers only focus on the purchase price and loan repayment, but ongoing owners corporation costs can materially impact your overall affordability. Some larger CBD buildings with lifts, pools, and concierge services can carry very significant annual fees.”

Hidden Costs Buyers Should Consider

One of the most important parts of any owners corporation property guide is understanding the hidden or ongoing costs associated with apartment and townhouse living.

Beyond the purchase price and mortgage repayments, buyers should budget for:

• Owners corporation fees
• Special levies
• Insurance costs
• Maintenance contributions
• Building defect rectification costs
• Moving fees in some apartment buildings
• Higher utility or facility costs

In some developments, owners corporation insurance may also affect annual fees depending on the building size, facilities, claims history, and construction type. These additional costs are important considerations when completing your apartment buying checklist in Victoria.

Understanding Settlement Adjustments and Additional Costs

Another area many buyers overlook is settlement adjustments during the apartment settlement process. At settlement, certain expenses are adjusted between the buyer and seller to ensure each party pays their share up to the settlement date.

This commonly includes:

• Owners corporation fees
• Council rates
• Water rates
• Land tax in some situations
• Rental adjustments for investment properties

For example, if the seller has already prepaid owners corporation fees for a future period, the buyer may need to reimburse the seller for the portion that applies after settlement. This is known as a pro rata adjustment.

Spiro Kolokithas explains:

“A lot of buyers focus purely on the deposit and stamp duty but forget there can also be settlement adjustments including owners corporation fees, council rates, and water charges. Understanding the full costs upfront is extremely important.”

Why Reviewing the Section 32 Is Critical

Before purchasing any owners corporation property in Victoria, buyers should ensure their conveyancer or solicitor carefully reviews the Section 32 vendor statement and owners corporation records.

The Section 32 and owners corporation certificate can reveal important information about the property and building, including:

• Current owners corporation fees
• Special levies
• Financial statements
• Owners corporation insurance
• Building defects
• Planned major works
• Legal disputes
• Maintenance history
• Rules and restrictions

For example, the records may reveal upcoming cladding rectification works, disputes between owners, or significant maintenance projects that could result in future special levies.

Spiro Kolokithas says:

“You need to clearly understand what’s included, what the ongoing costs are, and whether there are any hidden risks within the building. A proper review of the Section 32 and owners corporation records is extremely important before committing to a purchase.”

Owners Corporation Property vs Standalone Home

When comparing an owners corporation property in Victoria with a standalone home, there are several important differences buyers should understand.

Owners Corporation Property

• Shared maintenance responsibilities
• Ongoing owners corporation fees
• Shared facilities and common property
• Potential special levies
• Common property rules in Victoria
• Building insurance often managed collectively

Standalone Home

• Greater control over the property
• No shared owners corporation fees
• Independent maintenance responsibilities
• Separate building insurance
• Fewer shared restrictions
• No body corporate rules in Victoria to comply with

The right option often depends on your budget, lifestyle preferences, location goals, and long-term plans.

What Lenders Look at When Financing Apartments

When assessing finance for apartments and townhouse properties, lenders often consider factors beyond the buyer’s income and deposit.

This can include:

• Apartment size
• Building density
• Location
• Postcode restrictions
• Construction type
• Owners corporation fees
• Building condition
• Cladding risks
• Marketability of the property

Some lenders may apply stricter policies to very small apartments or certain high-density developments.

Working with a mortgage broker early can help identify lender policies that may affect your borrowing options before making an offer.

Common Mistakes Buyers Make

When buying an owners corporation property in Victoria, some of the most common mistakes buyers make include:

• Focusing only on the purchase price
• Ignoring owners corporation fees
• Failing to review the Section 32 properly
• Not understanding special levies
• Overlooking common property rules in Victoria
• Assuming all lenders assess apartments equally
• Forgetting settlement adjustments
• Not budgeting for ongoing maintenance costs

Understanding these risks early can help buyers make more informed property decisions and avoid costly surprises later.

Final Thoughts

Buying an owners corporation property in Victoria can be an excellent way to enter the property market, particularly for first home buyers and investors seeking more affordable property options.

However, buyers should fully understand the financial responsibilities, ongoing costs, owners corporation rules, and lending considerations before committing to a purchase.

At What If We Finance, we help buyers compare loan options from more than 50 lenders while providing guidance around pre-approvals, borrowing capacity, apartment lending policies, and finance structures across Victoria.

Whether you are buying your first apartment, purchasing a townhouse, or considering an investment property, understanding owners corporation costs and risks is an important part of making an informed property decision.

Frequently Asked Questions