What are ‘strata improvement loans’?
Borrowing is an alternative option, with some funders offering loans specifically tailored for owners corporations to address strata improvements. Such loans reduce the financial dependence on existing lot owners and their levy contributions, spreading the cost of any capital works over a longer and potentially more manageable timeframe. Improvement works can commence immediately and in some cases there may be reduced disruption for lot owners / tenants by funding and supporting the coordination of a variety of improvements at the same time. Strata improvement loans also maintain the lot owners’ flexibility to freely choose their service providers. Conversely, owners corporations are required to pass a resolution to borrow funding, which means that a majority or potentially all lot owners must be comfortable with the concept of borrowing. Strata improvement loans generally have a term of five years, and there will often also be an increase in strata levies during the term of the loan to meet principal and interest repayments.