Unlocking the Secrets: Your Essential Guide to Understanding Strata Reports

TL;DR

• A strata report shows how a building is run, maintained and funded.

• The most important sections relate to finances, maintenance history and upcoming works.

• Low levies aren't always a good sign if sinking funds are underfunded.

• Red flags often appear in meeting minutes, not just balance sheets.

• Understanding a strata report can help you avoid unexpected costs and long-term risk.

Introduction: Why Strata Reports Matter More Than Buyers Realise

For many buyers, strata reports feel intimidating — long, technical and easy to skim rather than study.

Yet when buying an apartment, villa or townhouse in NSW, the strata report is one of the most essential documents you'll review.

It doesn't just tell you what the property looks like today — it shows how the building has been managed over time and what costs or issues may lie ahead.

In Illawarra markets such as Wollongong, Corrimal, Woonona and Shellharbour, strata properties vary widely in quality.

Two near-identical apartments can carry very different long-term risks depending on how the owners' corporation operates.

Knowing how to read a strata report properly helps you buy with clarity — not surprises.

The Financials — What the Numbers Are Really Telling You

Most buyers start (and stop) with the levies. That's a mistake.

Administrative fund vs sinking fund

Strata finances are usually split into two main buckets:

• Administrative fund: covers day-to-day expenses such as cleaning, insurance, gardening and minor repairs.

• Sinking fund (capital works fund): funds major long-term items such as roofing, concrete repairs, lifts, windows, and waterproofing.

A healthy strata scheme should show:

• regular contributions to both funds

• a growing sinking fund balance over time

• planned spending aligned with the building age

Low levies can seem attractive, but they often indicate underfunding rather than efficiency.

What buyers should watch for

• Very low sinking fund balances in older buildings

• Irregular levy increases without explanation

• Heavy special levies raised recently or discussed

Financial strain in a strata scheme doesn't disappear — it usually shows up later as sudden costs for owners.

Maintenance History — Past Behaviour Predicts Future Costs

Strata reports provide insight into how proactive (or reactive) a building has been.

Why maintenance history matters

Buildings that are maintained proactively tend to:

• cost less over time

• avoid emergency repairs

• retain stronger resale appeal

Those who delay maintenance often face:

• higher long-term costs

• insurance complications

• oOngoingdisputes between owners

Look for:

• regular inspections

• documented repairs

• long-term maintenance plans

Repeated references to the same issue — leaks, concrete spalling, drainage — can signal deeper problems.

Illawarra-specific considerations

In coastal and escarpment-adjacent buildings, pay close attention to:

• waterproofing

• corrosion or rust treatment

• stormwater and drainage

• balcony and concrete condition

Salt air and weather exposure accelerate wear if maintenance is inconsistent.

Meeting Minutes — Where the Real Story Lives

If you read only one section carefully, make it the meeting minutes.

What minutes reveal

Meeting minutes show:

• disputes between owners

• unresolved maintenance issues

• funding disagreements

• insurance claims

• upcoming major works

These details rarely appear in the financial summary alone.

Pay attention to:

• issues discussed repeatedly but not resolved

• motions that fail due to a lack of funds

• tension between owners and the strata manager

Patterns matter more than one-off comments.

Red flags buyers often miss

• talk of "monitoring" problems without action

• reliance on short-term fixes

• disagreement over levy increases

• references to legal advice or tribunal matters

These don't automatically mean "don't buy" — but they do mean investigate further.

Local Insight: Common Strata Misconceptions

A frequent misconception is that newer buildings are always lower risk. In reality, newer strata schemes can face:

• warranty disputes

• construction defects

• underestimated long-term costs

Conversely, well-run older buildings with strong sinking funds can be more predictable and stable.

Another oversight is assuming strata managers "handle everything." In truth, decision-making rests with owners, and owner engagement levels make a significant difference.

Understanding how decisions are made is just as crucial as the decisions themselves

Your Checklist: Reading a Strata Report with Confidence

Before committing, ask yourself:

• Are sinking fund balances appropriate for the bbuilding'sage?

• Are levies increasing gradually or suddenly?

• Is maintenance proactive or reactive?

• Are there unresolved disputes or repeated issues?

• Do meeting minutes show alignment or tension among owners?

If multiple answers raise concern, it's worth pausing and reviewing further.

Conclusion: Strata Reports Are About Risk, Not Just Cost

A strata report isn't about finding a perfect building — it's about understanding risk.

When read correctly, it helps you:

• avoid unexpected expenses

• assess long-term livability

• make informed comparisons between properties

Buyers who take the time to understand strata reports tend to make calmer, more confident decisions — and experience fewer surprises after settlement.

Your Next Step

If you're considering a strata property and want help interpreting a strata report before making an offer, we're happy to assist.

📧 Contact The Shoreline Agency at joel@theshorelineagency.com.au for buyer-focused guidance tailored to Illawarra properties.

This article is general information only and does not constitute legal or financial advice. Buyers should seek independent advice relevant to their circumstances.