Changes in the World of Strata Ownership

It’s been a busy start to the year for strata managers, as reform after reform is introduced that concern strata living. Although inflation may have peaked, owners corporations with their annual budgeting cycles are often feeling the pinch more than anyone come AGM time.

Here’s a round-up of what’s happening in the world of apartment living/ownership and what Strata Sense is doing about it to make sure that we are still providing strata management that is a level above the rest:

1. Various changes were made to strata laws late last year. For most buildings, these changes are not significant. Probably the most significant change for owners will be the increasing of notice periods for AGMs; hardly an earth shattering change! We do hope, however, that they are not the end of the government’s reform agenda, as there are other significant elements of the management of owners corporations that could do with reform. The recently appointed Strata Commissioner has assured us that further changes will be coming soon;

2. To the point of budgets, we know that the cost of living is only getting worse. Owners themselves are often financially strained and rising costs impact owners corporations as well, which in turn push up levies for the owners. We haven’t yet invented a cure for inflation, but in the meantime we have overhauled our budgeting processes for our clients to make it more thorough than ever before and starting earlier so that we can have the difficult conversations earlier so that owners aren’t taken by surprise by large levy increases;

Example Proposed Budget

3. We also as a business have had a practice for a while now (largely unknown to clients) of doing a very thorough desktop review of all clients at least once a year. We schedule these for each building about half a year after the AGM, so the “quiet time” of each building’s annual cycle. We’ve reviewed this process  and put in place more checks to look at things that can provide savings to the OC, such as checking all utilities are on competitive contracts and checking that insurance claims are being closed as quickly and comprehensively as possible. We are also keeping a closer track on conditions on our client’s insurance policies to ensure that not only are those conditions met but that that’s being promptly reported back to the insurers to keep premiums in check;

4. We’ve also refined our process of managing term deposits for our clients. Lots of our larger clients have quite large sums of cash in their capital works funds, so we’re making it easier than ever for your treasurer to invest those funds (with assistance from our office) in term deposits that earn interest which in turn offsets levy increases;

5. We’ve written to our owners before about the reports of unethical practices in the strata management sector, and you can find our statement on the matter here. There are a variety of matters being reported on in the media at the moment but most boil down to the issue of “self-dealing”, which is where agents appoint contractors on behalf of the owners corporation when those contractors are related to (or pay kick-backs to) the agent. This can be problematic either because the contractor engaged is charging more than the market rate for the services provided or because the provider in question might not be held to the same level of account by the strata manager as an independent company.  The insurances space is one particular area of concern where some prominent strata managers have set-up partnerships with brokerage companies and then signed large numbers of their strata schemes to those brokerage companies, in some cases while also professing that they don’t receive insurance commissions. Our take on this is simple. These sorts of arrangements should be banned. You can hear our licensee talking about this issue in more depth here. If you agree that this is an important issue (even if you don’t agree with us on how to fix it!) we would encourage you to make your views known to either the relevant minister in the state government (Anoulack Chanthivong) or the Strata Commissioner (John Minns). What struck us as an obvious scandal seems to be receding from public memory already. Strata management is not as exciting a topic as we would like it to be but millions of people in NSW own or live in apartment blocks and we believe they deserve better in terms of the management of their buildings than they get from some providers in the industry;

6. On a more positive note, we were pleased to get a shoutout from the Strata Commissioner following his attendance at our biggest ever meeting (see post here). We had 353 lots represented (as well as six of our team, the building managers, a lawyer, and the Strata Commissioner himself) in the room. It was a monumental effort and we were proud of our delivery. It was always going to be a contentious meeting but we set the tone right, got everyone signed in with a minimum of fuss, and were able to guide the owners to sensible decisions throughout and get the AGM wrapped up in a tight two hours. Well done to Alex for leading the evening, as well as Justin, Daniel, Esther, Qing, and A’leigh for support for the evening!

7. On the point of our company, we also want to take the moment to celebrate Rachel Nguyen’s ten year anniversary with our company. Rachel joined us in the accounts team all that time ago and now leads our new business efforts. Rachel joins Sher Lin in the ten year club (as well as Marc, of course, as our founder and sole owner). Our five year club also now includes eleven members, or more than a third of the entire company!

8. In terms of what the rest of 2024 has in store, we will just have to see. The government has stated that there will be further reforms for owners in strata titled buildings coming. Hopefully we’ll see our hopes of lessening of taxes on insurance policies, fairer and more consistent rules for managing BMCs, and more reasonable proxy restrictions for large schemes come through Whether we get our wishes on any of these points, we will wait and see. But you can rest assured we’ll be working tirelessly this year to continue to deliver for our owners a strata management experience to be proud of, whatever the challenges.

Until next time
The Strata Sense team

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