Avoid these 5 Mistakes Buying a Townhouse in WA

Lenders treat townhouses differently to houses

Most lenders assess townhouses using different serviceability rules than standalone homes, and those differences can cut your borrowing capacity by tens of thousands. Body corporate fees are treated as ongoing expenses in the serviceability calculation, which reduces the loan amount you can borrow. A FIFO worker earning $140,000 with quarterly strata fees of $1,800 would see their borrowing capacity drop by around $40,000 compared to a house with no strata fees, even though the repayments on the actual loan would be identical.

Lenders also apply different risk weights to strata properties depending on whether the complex has fewer than six lots or more than six lots. Complexes with more than six lots are classified as standard residential under most lender policies. Complexes with fewer than six lots may attract higher scrutiny, particularly if the adjoining lot is commercial or if there is no registered body corporate in place. A two-lot strata subdivision where one lot is a commercial tenancy can trigger non-standard lending conditions or a declined application with some lenders.

Work out what you actually need in writing from the seller

You need a copy of the strata plan, the body corporate budget, and the last 12 months of meeting minutes before you make an offer. Most buyers ask for these documents after they sign the contract, which is too late. A buyer looking at a three-bedroom townhouse in Baldivis found out after signing that the body corporate had approved a $60,000 special levy to replace the roof across the complex, due within six months of settlement. The levy was mentioned in the minutes from a meeting four months earlier, but the buyer did not request the minutes until after the cooling-off period had ended. The buyer could not secure finance because the lender treated the levy as an immediate liability, and the contract went unconditional with no finance clause.

The strata plan shows you the lot boundaries, any exclusive-use areas like courtyards or carports, and whether there are easements affecting your lot. The body corporate budget shows you what is included in the strata fees and whether there is a sinking fund in place for future repairs. Meeting minutes show you what maintenance has been deferred, what disputes are on foot, and whether any major works or levies are planned. Lenders will ask for these documents during the application, and if the documents show outstanding levies, legal disputes, or deferred building maintenance, your application can be declined or subject to conditions you cannot meet.

Strata fees are not always comparable between complexes

Two townhouses with identical strata fees can have completely different inclusions, and lenders do not adjust for that when they assess your application. A complex in Canning Vale with $1,200 quarterly fees might include building insurance, council rates, and a professional strata manager. A complex in Ellenbrook with the same quarterly fees might cover building insurance only, leaving you to pay council rates and water separately. The lender treats both as $1,200 per quarter when calculating your borrowing capacity, but your actual cost of ownership in the second scenario is higher.

Some body corporates include gardening, pest control, and external maintenance in the strata fee. Others charge those as separate call-outs or special levies when the work is needed. If the strata fee looks low compared to other complexes in the area, check the meeting minutes to see how often special levies are raised and what expenses are excluded from the quarterly fee. A pattern of annual special levies for routine maintenance usually means the sinking fund is underfunded, which is a red flag for lenders and for you.

Lenders will not settle if there are outstanding strata levies

Your settlement will not proceed until all strata levies are paid in full, including any levies that fall due between contract and settlement. The seller is responsible for paying levies up to settlement, but if the seller does not pay, the liability transfers to you as the incoming owner under the Strata Titles Act 1985 (WA). Lenders will request a strata search or clearance certificate before settlement to confirm there are no outstanding levies or legal action against the body corporate. If the search shows an unpaid levy or a pending tribunal claim, the lender will not release funds until the issue is resolved.

A buyer purchasing a townhouse in Wellard had settlement delayed by three weeks because the seller had not paid two quarters of levies, totalling $2,400. The seller's conveyancer argued that the levies were not yet overdue under the payment terms in the body corporate by-laws, but the lender required a nil balance before releasing the funds. The buyer had to negotiate a settlement holdback with the seller to cover the outstanding amount, and the buyer's moving date was pushed back as a result. If you are relying on a specific settlement date to align with a work roster or to vacate a rental property, an outstanding levy can derail your timeline.

Not all townhouses qualify for the WA First Home Owner Rate

The First Home Owner Rate of duty applies to homes valued up to $800,000 from 7 May 2026, with no duty payable on homes valued up to $600,000 and a concessional rate on homes valued between $600,001 and $800,000. The concession applies to strata-titled townhouses, but the valuation used by RevenueWA is based on the dutiable value of the property, which includes your share of the common property. If the individual lot is valued at $580,000 but your proportional share of the common property adds another $30,000, the dutiable value is $610,000, and you pay the concessional rate rather than nil duty.

Buyers also assume that newer townhouses will automatically qualify for the $10,000 First Home Owner Grant, but the grant applies only to new homes, and a new home is defined as a home that has not been previously occupied or sold as a place of residence. A display townhouse that was used as a sales office or a townhouse that was rented out for six months before being listed for sale does not qualify, even if it was built within the last 12 months. You need a statement from the seller or the builder confirming that the home has not been previously occupied, and RevenueWA may request additional evidence during the application process. If you are counting on the grant to cover your upfront costs and the application is rejected after settlement, you will need to find that $10,000 from another source.

Fixed rate and split rate loans make sense for townhouses with high strata fees

FIFO workers buying townhouses often lock in part of the loan on a fixed rate to protect against rate rises while keeping part on a variable rate to maintain access to an offset account. A split loan structure lets you fix 50 to 70 per cent of the borrowing at a rate that does not change for two to five years, while the remaining portion sits in a variable loan linked to an offset. The offset account reduces the interest charged on the variable portion, and because FIFO workers often have irregular pay cycles with large lump sums hitting the account during on-site periods, the offset can cut years off the loan term without locking you into higher repayments you cannot afford during quieter work periods.

A worker on a 2-and-1 roster borrowing $520,000 might fix $350,000 for three years and leave $170,000 variable with a linked offset. During on-site swings, when living expenses are minimal, surplus pay goes into the offset account and reduces the interest on the variable portion. During off-swing periods, the offset balance might drop as funds are used for living expenses, but the fixed portion of the loan remains unaffected. The structure works because you are not paying break costs to access your own money, and you are not exposed to rate rises on the full loan amount. Lenders calculate serviceability on the total loan amount using the higher of the two rates, so the structure does not reduce your borrowing capacity, but it does reduce your risk once the loan is in place.

If you are looking at a low deposit loan for FIFO workers or you are eligible for the Australian Government 5% Deposit Scheme, a split loan structure can be arranged from day one. You do not need to wait until you have built equity or paid down the loan. The key is to set the structure up at application so the offset account is linked to the variable portion from settlement, rather than trying to restructure the loan six months later and paying discharge or variation fees.

Call one of our team or book an appointment at a time that works for you. We will go through your roster, your deposit, and the specific townhouse or complex you are looking at, and we will tell you which lenders will actually approve the deal and which ones will knock it back before you waste time on an application that goes nowhere.

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