Strata managers are well aware that owners corporations don’t want to think about borrowing money. But when there’s not enough in a capital works fund, and an essential project needs to be done, helping with finance is one way strata managers can make a real difference to clients.

Strata managers are best placed when they understand how strata lending works. They can then help owners corporations understand how strata loans can help them with their goals, as well as how they can introduce these finance options appropriately to their clients.

When it comes to the basics, there are some key things strata managers need to know:

• Who is strata finance for and how is it being used by owners corporations?

• What main finance options exist for strata corporations in 2025?

• How can strata managers work with owners corporations to obtain finance?

What is strata finance and what can strata loans be used for?

Strata finance, or strata loans, are typically sourced by strata managers, together with a strata scheme’s owners corporation, to carry out essential projects in a strata complex. Projects can include anything from enhancing strata scheme value through common area enhancements or refurbishments, through to extensive remediation work to replace flammable cladding.

Common strata loan uses include complying with fire orders, fixing structural defects, ensuring building code compliance and dealing with water ingress. For example, Austrata has recently financed balcony, window, roof and lift replacements, electrical fire and plumbing upgrades, as well as projects to repair stormwater and surface & sub-surface drainage systems.

What are some benefits or advantages of using strata loans?

Strata loans essentially help fund a project that needs to be completed, giving the owners corporation comfort that it has the funds to complete the work in full. Owners are able to pay the loan off over a period of time rather than finding the money to pay it in full straight away.

An upfront special levy would typically be the go-to method to fund projects for a strata committee. However, a strata loan can allow a scheme to proceed with flexibility and speed, rather than waiting for funds to accumulate or hitting delays due to special levy payments.

Strata loans are also useful because they are designed for the unique characteristics of strata schemes. For example, they can allow owners corporations to draw down on loans flexibly to fund successive project stages or allow lot owners to either pay in a lump sum or over time.

What options exist in the Australian strata lending market?

Strata loans usually go through three stages. First, strata managers work with strata schemes to decide on, source and apply for strata finance. Then, strata schemes commence and complete their projects. Throughout this time, a strata scheme will begin to repay their loan.

Stage 1: Choosing a strata finance loan
During this phase, strata managers compare special levy and strata loan options with an owners corporation. They provide opportunities to educate strata communities about strata loans and then assist with getting the option voted on and a finance application submitted.

For example, during this stage Austrata Finance conducts detailed information sessions alongside strata managers to support understanding of the loan products, after which a General Meeting is conducted to allow the lot owners to vote on whether to apply for the strata loan.

Stage 2: Using finance to complete a project
When owners corporations have their loan approved, they can then deploy their finance flexibly over the life of the project to get the project completed. As the project is undertaken, they will draw down on loan funds when required to pay for different stages or requirements.

Stage 3: Repaying the strata loan over time
From the time the first loan draw down takes place, the owners corporation will commence paying monthly interest only repayments for the funds that have been drawn. Lot owners will then be levied (per lot entitlement) for their share of the interest only repayments. When the final value of the project is confirmed – which could be after multiple drawdowns – the owners corporation will begin repaying both the loan principal and interest via the same method.

In some cases, if they have a hybrid loan with Austrata Finance, some lot owners may choose to take care of their portion of the principal that needs to be repaid as a lump sum to avoid further interest, while others pay the principal off with interest over time.

What do strata managers need to think about in 2025?

Strata managers play a critical role in supporting owners corporations with finance. As trusted service providers, strata managers can add value by making astute assessments of a strata community’s needs and introducing lenders who are in a position to fund those needs.

They can ask: Does a strata corporation have a future or urgent need for a project? Would that project benefit from considering finance, rather than a special levy? Which providers can provide trusted funding that benefits the community as well as the lot owners involved?

Ultimately, strata managers benefit when they understand the purpose, basic mechanics, and power of strata lending. That way, they can support their own business growth and reputation, while delivering the valuable solutions that their strata communities need.