Properties in Australia fall under a variety of titles, one of which is a ‘freehold property.’
What is a freehold property?
If you own a house, it is most likely a freehold property. This means you are the legal owner and have control over its use. You have the freedom to sell it, renovate it, lease it or pass it on to a family member in your will.
There is no end date by which you can no longer own the property. However, for renovations like adding bedrooms, a pool or a deck, you will need to check with your local council for approval.
What is a freehold title?
The title itself represents the legal status of the property in the eyes of the government. If you are not sure what title your property holds, you can check with your state or territory here:
- New South Wales: Land Registry Services
- Victoria: LANDATA
- Queensland: Titles QLD
- South Australia: Land Services SA
- Western Australia: Land Gate WA
- Tasmania: Land Information System Tasmania
- Australian Capital Territory: ACT Land Information System
- Northern Territory: NT Title Search.
Torrens title vs freehold title
In Australia, you may also see the term ‘Torrens Title.’ This is technically the same as a freehold title, and is named after Robert Richard Torrens who was influential in creating the title system for properties.
How does a freehold title work?
When you purchase a property, if it is land or a house and land, it will most likely be listed as a freehold property. As the freehold property title owner you can live in it, sell it, or lease the property.
If you buy the house with a mortgage you are still the title owner, however some banks and lenders will keep the paperwork until the mortgage has been paid off.
You have the power to decide most aspects of the property. However if you want to make changes such as renovations you may need the approval of your local council or government.
This process of getting a permit or approval from the government is not there to stop you from making changes to your own property but to comply with safety regulations. It’s important to seek this approval before starting major renovations.
Freehold titles are common for both residential and commercial properties. Houses and land are usually freehold title properties, while apartments or units are likely listed as Strata title properties.
Other types of property titles in Australia
Limited Torrens title
A limited title refers to a property that is on land that has not been correctly surveyed and its boundaries have not been examined by a land registry service. It is more common in properties that are very old and the data for its boundaries has been lost or not been updated.
This is important for prospective buyers as many lenders require a survey report as part of your mortgage application. A bank may not give you money for a home loan for a limited Torrens title property because they cannot be sure the dimensions of the property or land you wish to buy.
In some cases, you can pay for the property to be surveyed correctly and lodge this plan, though this can add time and money to the home buying process.
In summary, buying a limited title property isn’t impossible, there just may be a few extra hurdles to jump over before you can make the purchase. This process will also depend on the condition of the property itself and the lender you are applying for a loan with.
A Strata title property is common for property types such as an individual apartment or unit. A strata title means you have ownership of the individual apartment, not the building or the land.
You also have shared ownership over communal spaces such as the hallways, elevators, gardens or pools that may be part of your property. These spaces are called ‘common property’ and are managed by a separate entity which may be called ‘body corporate’ ‘owners corporation’ or ‘strata company’.
Strata property title owners will usually pay fees to the body corporate for the upkeep and management fees associated with the shared spaces of the property. If you purchase an apartment in a building with an elevator, pool, and gym, your body corporate or strata fees may be high as these facilities are expensive to maintain. You pay these fees regardless of whether or not you use these facilities.
Unlike a freehold title, as a strata title owner you cannot make changes as you wish to the property. For example, you may not be able to renovate your apartment, as the walls are technically a shared space with your neighbours, meaning you can’t just knock them down to make your bedroom bigger.
As a strata title holder, you still have the right to lease out your property to tenants just like with a freehold title property.