We Need A Strata Scrap Heap

Strata law reform has become an interstate sport to rival any national sporting league. Each state and territory compete, holding enquiries, roundtables, and issuing endless white papers and press releases. They proudly claim their ideas to be the latest and greatest. The rules of the game require them to largely ignore independent research, and critical evaluation of the lessons of each other’s previous attempts.

As a counter measure to this sport, each week, until we are done, we will take one strata law that has become conventional wisdom and consider why it should be scraped to make strata management better. Here we go.  

For the Scrap Heap this week - 10-year maintenance plans 

In practice, maintenance plans (aka capital work plans) are not useful. Most are generically produced on a desktop basis by consultants working on minimal instructions about the age, nature and construction materials of the building. Most are worth what you pay for them, very little. 

They are distributed widely but seldom referred to when preparing budgets or making decisions about spending. They are generally not updated when expenditure recommended by the plan is deferred or bought forward. And to be fair, amending calculations can be a complex task. 

Providing for the financing of maintenance would be more effectively done by regulations prescribing an annual contribution to the maintenance fund / capital works account. This sum should be calculated as a fixed percentage of the insured replacement value of the building. 

In the Netherlands, for example, this is set at 0.3 – 0.5 per cent of the reconstruction value of a building. While rules of thumb are not perfect, this would be a better outcome than the present situation where there is no easily identified metric for assessing compliance. 

So what do you think – scrap it, or save it?