We’re sorry, this feature is currently unavailable. We’re working to restore it. Please try again later.
Add articles to your saved list and come back to them any time.
When Eloise O’Connell joined the strata committee for her apartment in Liverpool, their first task was to raise the fees to prevent insolvency.
O’Connell has experience managing restaurants, but not buildings, where she has faced unexpected costs, high debt, heavy workloads and resistance from other residents in the high-stakes volunteer position.
“Whether your building can be well run is just by the sheer luck of the combination of people who put their hands forward,” O’Connell said.
Eloise O’Connell and her husband Prakash Khatri-Chetriat at their building apartment in Liverpool, Credit: Flavio Brancaleone
Since volunteering to be treasurer in 2021, she has spent up to 15 hours a week, on top of work and study, managing a budget of $900,000 and does not believe buildings should be run with inexperienced strata committees.
She and her husband Prakash moved into the property once construction was finished in 2019. They are both in their 50s and plan to retire in the building.
The 2018 sales brochure advertised that fees would start at $500 a quarter for a one-bedroom apartment, which O’Connell said was underquoted.
Fees increased to $948 following the building’s first AGM in 2019, and have risen incrementally to $1248 as the committee fundraised to avoid insolvency and maintain the building.
By 2021, when she joined the committee, the building was $112,000 in debt.
“People were budgeting on a certain level and are suddenly finding they’re paying twice as much. In a couple of months we’re going to have to raise the levies again,” she said.
Insurance costs have increased from $65,000 to $100,000 since 2019 and the building needed a defect report, emergency lighting replacement, and preventative maintenance scheduled.
When Eloise O’Connell joined her Liverpool apartment building’s strata committee it was seriously in debt.Credit: Flavio Brancaleone
Understanding “incredibly complex” legislation and maintenance has been a huge learning curve, and trying to get owners to understand costs or participate in subcommittees has been a major hurdle, O’Connell said.
“There needs to be much more focus on educating people about what it means to own an apartment. The legislation currently, is not fit for purpose for these bigger apartment buildings.”
There are more than 84,000 strata schemes in NSW, and it’s estimated 50 per cent of Greater Sydney will live in strata schemes by 2040.
Minister for Fair Trading and Better Regulation Anoulack Chanthivong has warned there are “no quick fixes” for strata schemes, but said he was working with the sector to examine the system.
“We’ve got to get the balance right between effective, well run strata schemes and a system that keeps owners in control of decisions about their shared property,” he said.
“Developers are looking for the cheapest strata budget to entice buyers.”
Director of Australian Apartment Advocacy Samantha Reece does not think the complex task of financing and managing a large building should be volunteer-based.
“We’ve been lobbying very hard with state governments that if a building is over a certain size you actually should be paying a sitting fee for the committee, and members should have to apply for the role,” she said.
Reece said strata fees were being under-quoted in new buildings while increased construction and insurance costs were leading to fire sales as owners struggled to keep up with costs.
“Developers set the strata budget … and strata managers will know that the developers are looking for the cheapest strata budget to entice buyers,” she said.
“There needs to be more accountability across the board.”
Real estate agent and financial adviser Nathan McCullum said strata fees had increased by a minimum of 30 per cent on average across the past 18 months, which he attributed to ageing builds, high insurance costs and high-interest rates on loans.
It has led to a number of owner corporations agreeing to sell the building to developers, he said.
“We’re almost specialising in that at the moment. Because of the increasing strata, sometimes there’s no other option but to sell,” he said.
Strata managers, who are licensed professionals hired by body corporations to assist strata committees, have a high rate of churn with one in three changing employers in 2022, according to a Macquarie Group benchmarking report.
Head of the peak body for residential strata owners the Owners Corporation Network Karen Stiles said the strata management industry needed reform.
“I don’t think the strata management industry has kept pace with the exponential growth of strata buildings with regard to training, continuing professional development and all the churn in the industry,” she said.
NSW is the only jurisdiction in Australia that requires strata managers to be licensed, but Stiles said tiered licensing was needed based on prior experience and training.
Last year the government launched Strata Hub, requiring strata schemes to lodge annual reports, but does not collect data on strata fees.
NSW Property Services Commissioner John Minns said when professionally managed with responsible a proactive owners’ corporation, strata schemes were well-placed to obtain “the best outcomes for all owners”.
High costs, he added, were a result of market pressures.
“[Stakeholder] engagement has identified there is significant consensus that ensuring equity, transparency and competence at point of sale, scheme establishment, and ongoing asset management are priorities,” he said.
The Morning Edition newsletter is our guide to the day’s most important and interesting stories, analysis and insights. Sign up here.
Copyright © 2023

source