A pre purchase strata report is a review of body corporate records for a specific scheme to, at best, give buyers peace of mind they’ve chosen well, and at worst to allow them to walk away from difficult situations. But when you’re buying into a new body corporate, there’s an obvious problem: there aren’t many records to review.

And as more investors looking to negative‑gear turn to new properties, this lack of information becomes a bigger issue. New schemes simply don’t have the history that helps predict what’s ahead.

Below are the key risks — and the practical steps buyers can take to reduce them.

1. Building Defects

One of the biggest risks when buying into a new body corporate is construction defects. They’re common, they’re expensive, and they can take years to resolve.

For a body corporate defects can lead to:

• ongoing damage to common property or individual lots
• escalating legal action and the associated costs of lawyers, inspections, and expert reports
• major rectification works that must be funded by the body corporate

For most owners, this means higher contributions or special levies.

For an unlucky few, the consequences are far more severe: Long‑term disruption inside their lot, repeated repairs, or periods where the lot becomes partially or completely unusable. In catastrophic situations, the entire building can be affected, as seen in the Opal Tower and Mascot Towers crises.

Why buyers can’t identify this early

A body corporate doesn’t even vote on whether to inspect for defects until the second AGM, often 12–18 months after registration. Until then, there may be no reports, no investigations, and no formal acknowledgement of emerging issues.

In short: buyers take their chances with defects when buying into a new body corporate.

How buyers can reduce this risk

While you can’t rely on body corporate records in the first year, you can:

• Research the developer and builder, especially their track record with defects
• Arrange an immediate inspection of the lot, with someone experienced in multi‑unit construction and report any identified defects
• Speak with early residents, who often notice issues long before they appear in formal records

2. Majority Sharehold Control

Another issue buyers face when buying into a new body corporate is the developer’s early control.

In a new scheme, the developer effectively controls the body corporate for the first year. Off the plan contracts can include a clause that a voting rights power of attorney be granted to the developer for any lot sold. With the combination of both the developer will hold majority shareholding irrespective number of sales.

This isn’t unusual — developers do it so they can enter agreements, finalise construction, and carry out any remaining development work without being blocked by owners. But it does mean that early decisions are made without meaningful owner input.

During this period, the developer can lock the scheme into:

• caretaking or facilities management contracts which in Queensland can be for up to twenty-five years
• long‑term service agreements
• other arrangements that will shape how the building operates for years

How buyers can reduce this risk

While you can’t influence the developer’s control period, you can understand what you’re walking into:

• Carry out a search of the records as soon as the building is registered to see what contracts and agreements have already been entered into
• Read Schedule B of the CMS, which explains the planned development of the scheme land — what’s completed, what’s still to come, and how the developer intends to stage or expand the project

3. Levies Will Increase

A major financial consideration when buying into a new body corporate is the likelihood of levy increases. A new building has zero maintenance requirements. That changes quickly as the building fills up causing upward pressure on levies.

New schemes are particularly vulnerable to special levies. Because they’re starting from zero, they have no surplus to cover unplanned works.

That has implications as while the building may be “finished”, it’s rarely “furnished”. Items like pool area furniture, CCTV, or shade structures are often added by the body corporate – and all require funding. These costs are seldom included in the initial budgets.

On top of that, several financial pressures build quickly for new bodies corporate:

1. Developer holding many lots and not paying contributions

If the developer retains several lots and but doesn’t pay contributions on time, debt levels rise and cash flow is strangled. This is one of the fastest ways a new scheme ends up needing a special levy.

2. Annual increases in service contracts

Caretaking, cleaning, lift maintenance, waste services — most of these contracts include automatic annual increases. Even modest percentage rises compound quickly and push the budget upward.

3. Underfunded initial budgets

Developers often set the first budget low to make levies look attractive during initial sales. Once warranties expire and real maintenance begins, the numbers no longer work.

When these pressures combine, owners usually face:

• significant levy increases, and / or
• special levies to cover shortfalls

How buyers can reduce this risk

• Get clear on the current financial position. Don’t walk into an existing problem without preparation or renegotiation.
• Plan for increases. They’re going to happen — the key is understanding what those increases are likely to be.
• Get involved. Consider joining the committee at the first AGM and play an active role in shaping the early years of the scheme.

Buying in a new body corporate

Buying into a new body corporate comes with more uncertainty than buying into an established one. The simple reason is that the documents you’d normally rely on just aren’t there yet. Defect reports, financial history, maintenance patterns, contractor performance — all of these take time to emerge.

That doesn’t mean buyers are powerless. It just means they need to do more of their own research upfront.

What is available — the CMS, early contracts, budgets, development plans, and any records created after registration — can still be sourced and reviewed. Combined with independent inspections and a clear understanding of the developer’s track record, buyers can make informed decisions even in the absence of a long paper trail.

A new body corporate isn’t inherently risky — but it is inherently uncertain. The key is knowing what that uncertainty means for your future costs, your building, and your peace of mind when buying into a new body corporate.