Strata units, apartments and townhouses

Strata property makes up a huge share of Australian homes and investments, from inner-city apartments to suburban townhouse complexes and small blocks of units. All of it can back a private business loan. What changes is how much a lender will advance and how many questions the valuer asks.

What lenders look at

With a house, the valuer focuses on the land and the dwelling. With a strata lot, the building and the scheme matter just as much as the unit itself.

Factor	Why it matters
Internal size	Very small units have fewer buyers and are harder to resell
Building age and condition	Defects or major works can drag down value
Number of lots in the scheme	Large towers can see price swings from oversupply
Body corporate finances	Low sinking funds can signal future special levies
Recent sales in the building	Direct evidence of value supports a stronger offer
Rental or owner-occupier mix	Very high investor share can make values volatile

A two or three-bedroom unit in a well-kept, mid-sized building with steady sales is about as easy as strata security gets. A tiny studio in a tower with cladding issues is at the other end.

Units that narrow the lender pool

These don’t rule out a loan, but fewer lenders will consider them, and the amount offered may be lower:

• studios and units with small internal areas
• serviced apartments and units in hotel or letting pools
• student accommodation
• units in buildings with known defects, combustible cladding or major rectification works
• units in remote or tourist towns with few sales
• company title units, which aren’t strata at all and are rarely accepted

If your unit fits one of these, a lender may still help, especially if you can add a second property as extra security.

Body corporate records that help

A valuer and the lender’s solicitor may ask for:

• the most recent levy notice and confirmation that levies are paid
• minutes from the latest annual general meeting
• a body corporate or strata search showing sinking fund balances and any special levies
• details of any building defect claims or planned major works
• the building’s insurance certificate

Gathering these early helps. Your body corporate manager can usually provide them within a day or two for a small fee.

Townhouses: strata or freehold?

Townhouses come in two forms. Some are strata lots in a community title scheme, with shared common property and a body corporate. Others are on their own freehold title, like a small house. Freehold townhouses are generally treated like houses. Strata townhouses are assessed like units, though usually more favourably than apartments because of their size and land component.

A title search shows which you have, so you don’t need to guess.

A worked example

A Kangaroo Point graphic design studio needed $140,000 to cover a gap between project deposits and a large software and hardware upgrade. The owner held a two-bedroom apartment in a 40-lot building at Hamilton, worth about $780,000 with $420,000 owing.

The valuer reviewed recent sales in the building, the body corporate’s sinking fund and the latest AGM minutes, which showed no special levies. A private lender approved a second mortgage at a combined LVR just under its limit for that building type, and settled in six business days. The term was ten months, repaid from client payments on two major contracts.

Commercial strata too

Strata offices, retail shops and industrial units are common business loan security. Many owners operate from strata premises they own. The same body corporate checks apply, alongside the commercial factors covered on our commercial and industrial page.

When the building has problems

If your building has a defect claim, a cladding remediation programme or a large special levy on the way, say so upfront. Lenders find out through searches anyway, and an early explanation, with documents showing the scope and the cost, can keep a deal alive that would otherwise be declined at the last minute. Some lenders will simply lower the amount rather than refuse, and others will accept the unit alongside a second property.

Ask about your unit

Tell us the address, size, what’s owed and what you need. We’ll say how a private lender is likely to view it before you spend anything. There’s no credit check when you first enquire, and your file stays with our team.

Accurate details on size and building issues get you a reliable first answer. Get started, or compare with how lenders view investment property and then check your eligibility.