Explore common Australian land titles, their loan impacts, and expert advice for informed property purchases.
When choosing the right land for your future home, understanding the type of land title is crucial. The land title can significantly influence the land purchase process and how much lenders are willing to finance—or if they’ll finance the purchase at all. Certain land titles, like Crown land, can complicate a loan application or even make it non-viable. Here’s an overview of common land titles in Australia and how they may affect your property purchase and loan options.
1. Freehold Title
Most Common Land Title for Houses:
A Freehold title, also known as Torrens Title, is the most prevalent form of land ownership in Australia. It provides the owner with complete and indefinite ownership of both the land and any structures on it. Lenders typically prefer freehold titles because they’re considered stable and secure.
Benefits:
Full control over your property and fewer hurdles for loan approvals.
2. Strata Title
Popular for Apartments and Units:
Strata titles apply to properties such as apartments, townhouses, and units, where owners have an ownership share in common areas, such as pools, recreation facilities, lobbies, car parks, and gardens. As a strata title owner, you own your unit or lot but share ownership and maintenance responsibilities for communal facilities.
Implications for Loans:
Lenders take into account strata fees and regulations when assessing your borrowing capacity, which may impact your loan amount.
3. Community Title
Shared Ownership of Common Facilities:
Community titles cover properties in larger estates where homeowners share community facilities, such as parks, roads, or recreational amenities. These titles are increasingly common in master-planned communities.
Considerations:
Ongoing fees and governance of shared areas can affect property values and loan conditions.
4. Crown Land
Government-Owned Land:
Crown land is owned by the Commonwealth or State government and leased to individuals or businesses. Residential development on Crown land comes with restrictions, and the leasehold arrangement may complicate property financing.
Lender Challenges:
Many lenders hesitate to approve loans for Crown land due to limited ownership rights and higher risks.
5. Company Title
An Older Form of Property Ownership:
Company titles are less common but still exist in some older apartment buildings. Instead of owning the property directly, you own shares in a company that controls the building. This title type can be difficult to finance, as lenders often impose strict conditions.
Limitations:
Limited financing options and complicated ownership structures make company titles less appealing to buyers and lenders.
6. Leasehold Title
Limited Period Ownership:
Leasehold titles provide the right to use the land for a specific period. Once the lease expires, ownership reverts to the original landowner. These are more common in some areas (e.g. Canberra) or certain developments.
Loan Considerations
Leasehold properties are often viewed as higher risk, resulting in stricter lending criteria or reduced loan amounts from lenders.
If you’re eager to dive deeper into the entire course, feel free to explore all the lessons on our blog here.
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Consult with Professionals
Given the complexities and variations in land titles, it’s wise to consult with a solicitor or conveyancer before proceeding. These professionals have comprehensive knowledge of land titling and access to detailed land title searches. If you need help connecting to a conveyancer, reach out to us and we will be able to refer you to a trusted conveyancer.
Call us at (02) 8313-8400 or request a call back
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