Strata Unit Entitlements

Strata Unit Entitlements

Latest Articles:
A common misconception is that the unit entitlement is determined by lot size.

What are strata unit entitlements?

Strata Unit entitlements are a lot owner’s ‘share’ of the strata scheme and are used to establish levy contributions and voting power of each lot owner. 

How are unit entitlements determined?

The initial allocation of unit entitlements is determined by the developer and/or the surveyor at the time the draft strata plan is prepared.

A common misconception is that the unit entitlement is determined by lot size. For example, that a 120 square metre property on the first floor would have a greater unit entitlement than a 100 square metre apartment on the top floor. This not correct, the unit entitlement must be related to the value of the various lots and must be supported by a valuation by a qualified valuer. (From 30/11/16)


Read related: Changing Unit Entitlements


New unit entitlements allocation

Importantly, from 30 November 2016, all NSW strata schemes that are registered will require their unit entitlements to be apportioned on a market value basis. 

Prior to this date there was no requirement for the allocation to be based on a valuation of lots in the strata scheme. This self-assessed determination of unit entitlements left the door open for developers to manipulate unit entitlements to benefit certain lots. For example, setting artificially low unit entitlements for particular lots, like commercial lots, to entice purchasers.

The Strata Schemes Management Act 2015 (Section 236) makes provision and allows NCATto order a reallocation of unit entitlements which were initially allocated unreasonably. 

Th new legislation brings transparency into the process of setting unit entitlements.

Are unit entitlements important?

The strata scheme plan determines the unit entitlement for each lot. It is important for lot owners to know their unit entitlement, as this is what is used to work out the overall interest (part-ownership) in the common property, and to calculate the levies payable, and voting entitlements. Not all lot owners have the same unit entitlement.

What is my unit entitlement?

A Strata plan must show a Schedule of Unit Entitlement and the Schedule of Unit Entitlement is shown on the common property title created from a Strata plan. The Schedule lists all the lots contained in the Strata plan with the unit entitlement of each individual lot. The aggregate unit entitlement, i.e. the sum of all the entitlements, is also shown.

Portions of this article may be subject to copyright.

© State of New South Wales (NSW Fair Trading). For current information go to fairtrading.nsw.gov.au

Share this post

Share on facebook
Share on google
Share on twitter
Share on linkedin
Share on pinterest
Share on print
Share on email

Join our newsletter