After decades in the political wilderness, it’s as if ‘strata’ has been found.
Once, state premiers barely knew of strata. They certainly never spoke about it publicly. The responsible minister for strata was either a rising star cutting their teeth in the consumer affairs ministry, low on the totem pole, or they were a fading shadow nearing retirement. In either case, they never stayed long. There was no money for strata. Why bother? There were no votes in strata.
Today it’s different. Not long ago, NSW Premier Chris Minns visited a troubled strata company for a photo opportunity, applauding their contribution to society. State ministers everywhere are spruiking reform to improve safety and the customer experience. Now we read about strata more often in the popular press - SMH and Four Corners ABC. We see it in satirical posts - Betoota Advocate, and it’s everywhere on the soapbox that is LinkedIn.
Disasters changed everything
There are several reasons for this surge in attention, and they’re not all good. Hardly any are good. People are dying in catastrophic strata disasters - Grenfell, Champlain Towers, Wang Fuk. People are being evacuated and displaced - Opal Tower, Mascot Tower, Lacrosse. People are ripped off by developers and strata managers -Toplace, Result Strata Management. These are cases that terrify politicians; hence our sector gets noticed.
But there’s another angle that explains recent political attention. A more convenient angle. Strata high-density developments have been identified as part of the solution to the housing and cost of living crises. This may or may not prove right, but when other solutions are hard, strata is an easy talking point.
The reform paradox
Paradoxically, as strata becomes the darling of politicians seeking a solution to their problems, the laws they are passing are making strata more expensive to buy and hold. This pushes strata ownership beyond the means of many. For example, this week in NSW, AS 1851 – 2012 Routine Service of Fire Protection Systems and Equipment became applicable to all buildings that require annual fire certification. Effectively, a move from flexible, schedule-based maintenance to a uniform, mandatory national maintenance standard. The inevitable result? Levies will increase.
This type of reform is not an isolated case, nor is it confined to Australia. Building and construction law reform worldwide post-Grenfell drives up levies. Mandatory structural inspections for mature age buildings post-Champlain Towers drive up levies. Consumer protection reforms in NSW to temper strata lawyers’ enforcement of levy arrears by bankrupting owners drive up levies.
Strata academics and experts at IFMOP agreed this year that managing strata (and condos worldwide) is becoming too hard for volunteers, and too expensive for many to own.
It’s hard to see the political winds shifting. It’s unlikely politicians will stop reacting to building defects in new strata, and growing catastrophic risk in ageing, underfunded strata falling into disrepair.
The new strata reality
So, levies will continue to rise. This is the new strata reality. Owners and managers will have to adjust their practices to cope. Simplistic strategies like cutting costs and deferring maintenance won’t cut the mustard. We must find more intelligent solutions.
Michael Teys advises strata management businesses on improving profitability through professionalisation and streamlined operating systems.
He has more than 30 years’ experience as a strata lawyer and academic and has owned 11 strata management agencies throughout Australia. He has a Master of Philosophy (Built Environment) and Bachelor of Laws. He lectures and writes widely about strata management issues in Australia and internationally.
