If you are considering becoming a commercial property landlord or expanding your portfolio, you will need to know about commercial body corporates.
This blog will cover what a body corporate is, whether owning a unit in a body corporate is right for you, what interactions will look like with body corporates as a landlord, and why you should enlist Azure to manage your property.
What is a commercial body corporate?
A commercial body corporate occurs in a multi-unit development, where the ownership over the premises is comprised of many different unit owners. This common form of ownership could include properties such as commercial offices and mixed-use premises, which can include residential components, carparks, retail, and industrial units.
Owning a property in a commercial body corporate, you automatically become a member of your property’s body corporate, in which you and the owners of the other units share the responsibilities of the daily running and maintenance of the building’s common area.
A commercial body corporate is also governed by the Unit Titles Act, which regularly goes through changes. There are upcoming changes to the Unit Titles Act expected in 2022, which are expected to formalise committee processes and a mandatory code of conduct for Body Corporate Managers, to name a few items.
What are the differences in comparison to not being in a body corporate?
Being a part of a body corporate isn’t a set-and-forget process. So, it is important to understand the role you, as the landlord, will play within a body corporate collective.
There are many financial obligations and duties involved in being a property owner in a commercial complex. For example, The Unit Titles Act requires establishing a Long-Term Maintenance Plan (LTMP) that covers ten years.
An LTMP will cover maintenance requirements and potential costs. The LTMP has to be adopted by the Body Corporate to decide how the funds are managed and establish ongoing guidance to assist in annual maintenance decisions.
You will also have to pay a levy, which can be expensive depending on the property, and ensure the property is in a good state of repair, insured, and fire security systems are in place and constantly maintained.
What are the benefits of becoming part of a body corporate?
The levy you pay gets used for items such as the building’s insurance, long-term maintenance, and a body corporate administration fee.
Working as a collective with other landlords means you will receive additional support on important decisions. Budgets and the spending of funds are made and approved by all the property owners.
Plus, your body corporate will develop rules which govern the relationships of unit owners and third parties, such as regulations involving pets, use of property, gardens, and tenants’ behaviour.
What do interactions with a body corporate look like for a landlord?
As a property owner in a body corporate, you must attend an annual general meeting – to represent your unit and financial obligations. A Body Corporate Chairperson must also be elected by the collective.
A body corporate can also call an extraordinary general meeting at any time to discuss any matter relating to the unit title development, such as urgent repairs. In this case, a vote will be held to make decisions.
Special resolutions are required for decisions that could have significant consequences for the unit owners – e.g., selling part of the common property. For this to pass, a 75 per cent vote is required.
Ordinary resolutions are decisions made by a body corporate at general meetings, such as changes to the operational rules. For this to pass, a majority vote is required.
If there are disputes between property owners around unit title development, then the Tenancy Tribunal will decide on the outcome.
Why should you choose Azure to manage your commercial property?
If sitting in long, stressful meetings trying to fight for the best for your property isn’t how you like to spend your free time, then you may benefit from a property management company such as Azure.
With over 20 years of experience managing properties in New Zealand and Australia, you can trust us to manage every aspect of your property – from attending all meetings on behalf of the landlord to fulfilling all legal obligations and providing a monthly snapshot of how your building and tenants perform.
With Azure, you can sit back, relax, and watch an almost entirely passive income flow into your bank account.