If you own a strata title property in NSW — whether it's a unit in an apartment block, a townhouse in a complex, or a commercial suite in a strata building — your unit entitlement is one of the most important numbers associated with your ownership. It determines how much you pay in strata levies, what proportion of the common property you are deemed to own, and how voting rights are allocated in certain decisions of the owners corporation.
Despite its significance, unit entitlement is poorly understood by many strata lot owners. Some discover it only when they believe their levies are unfair relative to their neighbours — or when a dispute arises about how costs are being allocated across the scheme.
This guide explains what unit entitlement is, how it is calculated, when a formal unit entitlement valuation is required, and what happens when unit entitlement needs to be reviewed or changed.
What Is Unit Entitlement?
Under the Strata Schemes Management Act 2015 (NSW) and the Strata Schemes Development Act 2015 (NSW), each lot in a strata scheme is assigned a unit entitlement — a numerical figure that represents that lot's share of the whole scheme relative to the other lots. The sum of all unit entitlements in the scheme equals the aggregate unit entitlement of the whole scheme.
Unit entitlement serves as the basis for calculating each lot owner's contribution to the owners corporation's levies. If your lot has a unit entitlement that represents 10% of the total scheme entitlement, you pay 10% of the total levies raised by the owners corporation. The same proportion applies to your share of any special levies and your voting entitlement in levy-related decisions.
Unit entitlement is also relevant to the distribution of proceeds if the strata scheme is terminated — the proportion a lot owner receives from any distribution is typically based on their unit entitlement.
For newly registered strata schemes, unit entitlement is determined at the time the strata plan is registered. For existing schemes, the unit entitlement schedule is recorded on the strata plan and can be reviewed in some circumstances.
How Is Unit Entitlement Calculated?
In NSW, unit entitlement for residential strata lots must be based on the market value of each lot at the time the strata plan is registered. This is a mandatory statutory requirement under the Strata Schemes Development Act 2015 — the developer must obtain a valuation from a registered valuer to determine the market value of each lot, and these values are used to calculate the unit entitlement schedule that is lodged with the strata plan.
The registered valuer assesses the market value of each lot in the proposed strata scheme — typically on the assumption that the development has been completed and the lots are available for sale. The unit entitlement for each lot is then calculated as its market value as a proportion of the total market value of all lots in the scheme.
For example, if a scheme has three lots valued at $600,000, $700,000, and $800,000 respectively, the total value is $2.1 million. The unit entitlements might be 20, 23, and 27 (scaled appropriately) to reflect the proportional values.
For non-residential strata lots (commercial, industrial), different rules apply — unit entitlement need not be based on market value and may be determined by another basis agreed by the parties and registered with the plan.
Who Prepares a Unit Entitlement Valuation?
A unit entitlement valuation must be prepared by a registered property valuer in NSW. This is a statutory requirement, not an optional step. The valuer must assess the market value of each lot in the proposed scheme, and these values form the basis of the unit entitlement schedule lodged with NSW Land Registry Services when the strata plan is registered.
For new residential developments, developers engage a registered valuer at the design or pre-registration stage. The valuer assesses the "as if complete" market value of each proposed lot based on the plans, specifications, and comparable evidence for similar completed properties in the area.
The timing of the valuation is important — it should reflect market conditions as close as possible to the date of registration of the strata plan. In a rapidly changing market, a valuation obtained twelve months before registration may not accurately reflect conditions at the time the scheme is established, and the developer should consider whether an updated valuation is needed.
For existing schemes requiring a review of unit entitlement — for example, where a lot has been significantly altered or where there is a dispute about the fairness of the current schedule — a registered valuer is again required to provide the market value evidence that supports any proposed change.
When Is a Unit Entitlement Review Required?
The unit entitlement schedule recorded on a strata plan is not easily changed, and changes require formal legal processes. However, there are circumstances in which a review of unit entitlement may be sought.
Where a lot has been significantly altered — for example, an owner has amalgamated two lots, or has made substantial improvements that significantly increase the lot's value relative to others in the scheme — the current unit entitlement may no longer be proportionally fair. In these cases, the owners corporation or an individual lot owner may seek a review.
In some situations, an error in the original valuation may come to light — for example, if it can be demonstrated that the original valuer made a significant mistake in assessing one or more lot values. Challenging an original unit entitlement valuation is a complex legal process.
Where a strata scheme is being consolidated, subdivided, or has lots amalgamated or divided, a new unit entitlement determination may be required as part of the plan amendment process.
Why Does Unit Entitlement Matter to Lot Owners?
For lot owners, unit entitlement is directly relevant to the cost of owning the property over time. Strata levies — which cover the costs of maintaining common property, building insurance, management fees, and other shared expenses — are allocated in proportion to unit entitlement. An owner whose lot carries a disproportionately high unit entitlement relative to its actual market value is effectively subsidising the owners of undervalued lots.
In large strata schemes with significant common expenses, even a modest difference in unit entitlement can translate to thousands of dollars in additional levies over a period of years. Lot owners who believe their unit entitlement is disproportionate to their lot's value should seek professional advice — both from a registered valuer (to obtain an independent assessment of relative values) and from a strata lawyer (to understand the legal process for challenging or amending the schedule).
For buyers of strata lots, reviewing the unit entitlement schedule before purchasing is basic due diligence. It is recorded on the strata plan and should be disclosed in a strata inspection report. Understanding how the lot's unit entitlement compares to the other lots in the scheme — and whether it appears proportionate to relative market values — is relevant to assessing the ongoing cost of ownership.
For developers registering a new strata plan, getting the unit entitlement right from the outset is important. An inaccurate or unfair unit entitlement schedule creates ongoing disputes and legal exposure. Engaging an experienced, registered valuer who understands the statutory requirements and the specific nature of strata valuation is essential.
Frequently Asked Questions
Who pays for the unit entitlement valuation when a strata plan is being registered?
For new strata developments, the developer is responsible for obtaining the unit entitlement valuation as part of the plan registration process. The cost is typically treated as a development cost. For reviews of unit entitlement in existing schemes, the costs depend on the nature of the review and who is initiating it — in some cases the owners corporation bears the cost; in others, the applicant who is seeking the review.
Can I challenge my strata levies if I think my unit entitlement is wrong?
The strata levies themselves are set by the owners corporation based on the approved budget, allocated in proportion to unit entitlement. If you believe your unit entitlement is disproportionate to your lot's value relative to other lots, the correct course is to seek a review of the unit entitlement schedule — not to dispute the levy directly. This is a formal legal process that requires evidence from a registered valuer and, in most cases, legal advice from a strata specialist.
How does unit entitlement affect my vote in an owners corporation?
Voting in owners corporation meetings is governed by the Strata Schemes Management Act 2015. For most motions, voting is on the basis of one vote per lot (lot entitlement basis). For some financial decisions — including decisions about levies — voting may be on a unit entitlement basis where each owner's vote is weighted by their unit entitlement. The exact rules depend on the nature of the motion and whether it requires an ordinary resolution, special resolution, or unanimous resolution.
Does unit entitlement affect the stamp duty I paid when buying a strata lot?
Not directly — transfer duty in NSW is assessed on the dutiable value of the lot being transferred (the purchase price or market value), not on the unit entitlement. However, unit entitlement does determine your share of any common property, which is part of what you're buying when you purchase a strata lot. In most standard strata purchases, transfer duty is assessed on the purchase price, which is accepted as the market value.
Does a registered valuer inspect each lot individually for a unit entitlement valuation?
For new developments, the valuation is typically conducted on an "as if complete" basis — the valuer assesses each proposed lot based on the plans and specifications, without inspecting the completed units (as they don't yet exist). For reviews of unit entitlement in existing schemes, the valuer would typically inspect each lot individually to assess its current market value. The inspection process depends on the nature of the assignment and the information available to the valuer.
