Questions to ask when buying a snow apartment
OWNING an apartment in the snow is a dream for many keen skiers and boarders. Waking up in your own apartment to see the snow covered gum trees or returning after an exhausting day on the slopes and falling into your own bed this is the dream.
Romance aside, buying an alpine property is a commercial decision and we have the top three questions you need to ask. 1. What am I buying? Buying an alpine apartment is different from traditional sale and purchase of land because the mountain is (mostly) owned and controlled by the government. It is called ‘crown land’ and is leased to companies and individuals on a long-term leasehold basis.
The most typical form of ownership on the mountain is for a company to hold a lease from the Government (head lease), often referred to as a lessee company, and individuals purchase shares in the company which entitles them to a sublease of an individual apartment. You should note, the term of your sublease will only be for as long as the company’s lease, so always check how long there is left to run on the head lease.
Many newer subleases can now be registered with the Land Titles Office to provide a clear and safe security.
A most important reason to know what you are buying is finance. The type of leasehold arrangement for alpine property has a significant impact on whether banks are prepared to lend. A sublease that can be registered is encouraging for the banks as they can register a mortgage in a transparent and secure manner. 2. What are the outgoings? When purchasing an apartment within a body corporate, you must carefully consider the building’s outgoings including: electricity, upcoming repairs, insurance and management fees and what proportion of those you will be required to pay.
Heated driveways and footpaths can be a luxury, but also expensive to run.
Always request a copy of the annual budget for the building.
This will detail insurances, land tax, maintenance budgets, management fees and other expenses you will be liable to contribute towards.
3. Investment returns - what is the rental arrangement?
As well as a wonderful lifestyle choice, an alpine apartment can be a good source of rental returns.
If the site lease is held by a lessee company, it will have a company constitution which governs the operation and management of the building.
Often, these constitutions will regulate how you may sublet your apartment to holiday and seasonal tenants.
Some properties have compulsory management and letting agreements, some allow combinations and some are simply own your own.
If the building does not have a compulsory letting arrangement, we recommend taking your time to consider which letting arrangement or management suits you best.
If a compulsory management agreement is required, check for overall management fees, and whether these are inclusive of third party agents and suppliers. Any other questions? TressCox Lawyers are able to help and advise with any of your proposed alpine interests and transactions.
REAL ESTATE: Tress Cox lawyers are able to offer expert advice for those wanting to purchase an apartment in the Aussie Alps.