Quick answer
Strata property — residential units, townhouses, strata offices, shops and industrial units — can secure a business loan, including a caveat loan. The lender takes security over your individual lot, not the common property, and looks at the lot's value, the building, the scheme's finances and levies, and how easily similar lots sell. Very small units, some high-density towers and schemes with major defects or special levies are harder.
Key points
- Security is over your lot; the common property is managed by the owners corporation or body corporate.
- Lenders look at the lot, the building and the health of the scheme.
- Unpaid levies, major defects and big special levies can affect value and appetite.
- Strata industrial and office units are common, well-understood commercial security.
- Have the lot/plan number, levy notices and any recent scheme records ready.
Look at the property that sits behind Australian small businesses and you’ll find a lot of strata: the investment unit bought a decade ago, the townhouse the family lives in, the strata office the accounting practice owns, the industrial unit where the joinery runs. All of it can be used to secure business finance. It just comes with a few extra layers that a lender will look at, and knowing them in advance saves time.
What exactly are you offering as security?
Your lot. In a strata or community scheme, each owner holds title to an individual lot, and the scheme’s common property — foyers, driveways, gardens, lifts, external walls in many cases — is managed collectively. Consumer Affairs Victoria describes an owners corporation (formerly called a body corporate) as the body that “manages the common property of a residential, commercial, retail, industrial or mixed-use property development.” Common property is whatever the plan of subdivision says it is, and may include gardens, passages, walls, stairwells, driveways, lifts, foyers and fences.
So when a lender lodges a caveat or registers a mortgage, it’s over your lot’s title. The owners corporation or body corporate isn’t a party to your loan, and generally doesn’t need to agree.
What do lenders look at on a strata lot?
| Area | What the lender asks | Why |
|---|---|---|
| The lot | Size, layout, parking, condition, outlook | Drives the lot’s value |
| The building | Age, construction, height, maintenance | Affects future costs and saleability |
| The scheme’s finances | Levies, sinking or maintenance fund, special levies | Big unfunded costs reduce value |
| Defects | Known building defects, cladding, waterproofing | Can sharply reduce appetite |
| Use and by-laws | Permitted uses, short-stay rules, commercial restrictions | Affects who can buy or lease the lot |
| The market | How quickly similar lots sell locally | Determines how conservative the valuation is |
Which strata properties are easiest?
Usually straightforward:
- townhouses and villas in small, well-kept schemes;
- two- and three-bedroom units in established suburbs;
- strata offices and medical suites in good locations; and
- industrial and warehouse units in established estates.
Usually harder:
- very small studios and one-bedders in high-density towers;
- serviced apartments and student accommodation;
- buildings with known major defects or large special levies coming;
- schemes with restrictive by-laws affecting use; and
- units in oversupplied markets where similar lots sell slowly.
“Harder” doesn’t mean “no”. It means the lender will value more conservatively, ask more questions and may support a smaller loan. Our page on how much you can borrow explains how value flows through to your borrowing capacity.
Got a strata lot with equity? The Feasibility Checker will give you a quick read on your position, or ask a specialist to look at the unit.
Why do levies and special levies matter?
Owners corporations raise fees from lot owners to meet the scheme’s obligations. Two things matter to a lender:
- Arrears. Unpaid levies are a debt linked to your lot. Lenders want them current, or paid out from the loan.
- Upcoming big costs. A scheme facing major repairs — facade, roof, lifts, waterproofing — may raise a special levy. A valuer will factor a known large cost into what the lot is worth.
Owners corporations must provide owners corporation certificates when requested, which is one way to get a current picture of fees and finances. If you have a recent certificate, or recent minutes and budgets, have them ready.
How does a title search look for a strata lot?
Much like any other title, with extra references. The title identifies your lot on the strata or community plan. It will list your ownership, any mortgages and caveats over your lot, and in many cases references to the scheme itself. Titles Queensland, for example, describes a current title search as showing owners and interests including mortgages, easements, covenants, leases and caveats. Our guide on how to read a title search walks through the parts.
Is commercial strata different?
A little. For strata offices, shops and industrial units, lenders add commercial questions:
- Is it leased? On what terms, to whom, for how long? A strong lease supports value.
- What can it be used for? Zoning and by-laws matter more when there are fewer possible buyers.
- Access and practicality. For industrial strata, roller-door height, truck access and parking.
- Estate quality. Well-run estates with active owners corporations hold value better.
See commercial property for how lenders value income-producing property.
An illustrative example
Illustrative only.
The owner of a Newcastle electrical contracting business needs $110,000 to cover materials for a school refurbishment job before the first progress payment. She owns a two-bedroom unit in a 12-lot, well-maintained strata building, worth about $620,000, with $260,000 owing. Levies are up to date, and the latest annual meeting minutes show no major works planned. A $118,000 caveat loan including costs brings the combined LVR to about 61%. The valuer has what they need on the first visit, and the loan funds within 24 hours.
Change the facts — a studio in a 300-lot tower with a large special levy about to be raised — and the same loan would take longer, and might be smaller.
What should you gather before you apply?
- The lot and plan number (on your rates or levy notice).
- A recent levy notice showing payments are current.
- Any owners corporation certificate, recent minutes or budget you have.
- Details of any known defects or special levies.
- For commercial strata, the lease and outgoings.
- The usual: payout figures, ID for every owner and evidence of your exit. See our documents checklist.
Owner-occupied or tenanted: does it matter?
Both are acceptable, but they’re handled a little differently:
- Owner-occupied units are straightforward to access for valuation, and the lender will look mainly at the lot and the scheme.
- Tenanted units need access arranged through the property manager, with proper notice to the tenant. The lease won’t usually change the value of a residential unit much, but it will matter for commercial strata.
- Short-stay or holiday-let units can be harder if the scheme’s by-laws restrict that use, or if the unit is part of a managed letting pool.
If you own several strata lots — common for owners who’ve built a small portfolio of units — pooling equity across them can bring the combined LVR down, as each lot’s title carries the lender’s caveat. The arithmetic is on how much you can borrow.
What about company title and other older forms?
Some older apartment buildings, particularly in parts of Sydney, are held under company title rather than strata title: owners hold shares in a company that owns the building, with the right to occupy a unit. These are much harder to use as loan security because there’s no individual land title for a caveat to sit on. If your unit is company title, tell us early.
Strata lot with equity? Let’s see what it can do
Strata property is ordinary security for us. The more we know about the lot and the scheme upfront, the faster it moves.
Enquiring takes around 60 seconds, and there’s no credit check involved. Your details go to one team — not a rotating list of lenders — and a specialist calls to talk it through. Please tell us the property type and anything you know about levies or building works; a complete picture now avoids a slower answer later.
Frequently asked questions
Can I get a caveat loan on a strata unit?
Yes. The caveat is lodged on your lot's title. Lenders commonly accept strata units, though very small units, serviced apartments and some high-density buildings are harder.
Does the owners corporation or body corporate need to agree?
Generally not — you're giving security over your own lot, not the common property. The owners corporation manages common property and raises fees from lot owners, but it isn't a party to your loan.
Do unpaid strata levies affect a loan?
They can. Unpaid levies are a debt connected to the lot, and lenders will want them up to date or paid from the loan. Tell us upfront if there are arrears.
Is industrial strata good security?
Industrial strata units in established estates are common and well-understood commercial security. Access, clearance, parking and the estate's quality all affect value.
What documents help with a strata property?
The lot and plan number, a recent levy notice, any owners corporation certificate or strata records you have, and details of any known building defects or special levies.