Most of us would have heard of company title, which is a term used where a company owns the land and the buildings on that land parcel. The land itself may be under either the Old Systems or Torrens title, and most of these blocks of units were developed and built before the Strata Title system was introduced in NSW in 1973. It was a way of allowing multiple occupancy and a form of "ownership" of the one building. The main features of company title include: *The company owns the land and buildings *Individual shareholders in the company have the right to occupy a particular part of the building *Control of the building is vested in the company's board of directors *The company's articles of association regulate the company including the management of the building and rights of shareholders Obviously, such features can present drawbacks as the shares are personal property and not "real" property (as in real estate). This can present problems with lenders as well, as some don't view the shares as enough security for a loan. With the shares not being readily transferable, with a sale often needing an approval from the board of directors as to who is purchasing those shares, this can also present problems. Often there are also strict controls on the property itself, including the need for board approval to lease to particular tenants. Though there are more strata title units out there than company title, there will come a time when, if looking for an investment unit, you come across one of these company title blocks. Though I've looked at some in the past, I've tended to steer away, but would be curious to know if any investors here have taken the plunge, and, if so, what issues have they encountered (if any)- particularly in terms of making renovation changes and onselling. Anyone?
Hi Jaque, Interesting question. I have not purchased company title myself, but am under the impression that because company title involves the purchase of shares rather than property, it is regulated under the Financial Services Reform Act. This has resulted in some (or many?) property valuers not wanting to value company title properties, which means that lenders are less willing to lend against them. Which makes company title properties very difficult to say the least! MichL
Company Title/Group Title Hi Jacque & MichL Although I've not yet bought property on group title, I have researched and bid on a couple. The research to date from my land surveyor has been handy (and I'm actually using similar info to do my current development). My understanding is this: Lenders consider a group of units on group title a commercial enterprise as you can't carve off and sell individual units yet, until split. Therefore, likely to get max LVR of 60%. My broker told me this. It's possible to split the title, providing criteria is met, for example, fire walls in place to pitch of roof, not ceiling, survey of land and building done, ratio of common land and private land met (something like 5% common land is a requirement). The land surveyor surveys the land etc, creates a body corporate/community title scheme and submits to (DNR in QLD). Suggestion though if renovating: Do this first as there is no body corporate to get approval from. Hope all find this of some use.
Thought I might resurrect this thread from the depths of InvestEd. Anyone had experience with company titles?
Company title from the inside I bought a company title unit in NSW 10 years ago and have found it good. It does depend on what the company laws are (each company has slightly different stipulations I believe). You have to be resident for the initial 12 months so it won't work if you're only planning to buy for investment. But afterwards you can rent it out. From memory only the Westpac and St George will lend (perhaps this has changed since I bought). However, it's not as expensive if you want a foot in the door of the property market. As it's 75% owner-occupied it's been great as the place is so clean and tidy - people are happy to work on keeping it well-maintained. Also, it's quiet and I know my neighbours. There was a problem with one person (of 40) and this did cost a lot in legal costs to the general fund but it's the first time in 50 years this has happened. Strata title laws don't work for company title units. There is an interview to be 'accepted' but no-one gets refused. It's more a 'meet & greet' session. I can't quite figure out why it has such a bad reputation - maybe because it's not about a quick buck. For me, I love living here because I know everyone and it has a low tenancy but high owner occupancy rate. Guess it depends on what your priorities are.
