Thursday, 15th April 2021

register | forgot password?

Strata - What it Needs to Be

Friday, 20th February 2015

I have been thinking a lot recently (and have done so for several years prior) about what the strata industry needs to do/make happen in order for it to move from infancy and become the profession it so wants to be

I have witnessed many positive changes over the years, however, I become ever so frustrated every time an agent is reportedly found to have embezzled trust funds or, has blatantly ignored its fiduciary responsibilities they owe to the clients they manage.  It is not only those respective clients suffering a loss, it is the strata industry at large that also suffers.  It  impacts poorly against those companies and agents that are out there in the “stratasphere” doing right!

At times I am hesitant to tell people what my occupation is.  In many instances they either:

A. have no idea what strata management is; or,

B. have had a bad experience with, or know someone that has had, a bad experience with a strata manager (which might be as small as the difficulty in obtaining a key, however, has been their only experience).

Furthermore, we send you periodic bills (levies) and can often be the bearers of bad news (e.g. think defects and remedial repairs, budget hikes etc) - what's not to like about that!

Until moving into the strata industry by chance, I had no idea the profession existed. I knew what a strata plan was, however, I wasn't aware of the third party professionals that worked on behalf of an owners corporation to help fulfil its statutory duties (i.e. keeping of records, convening meetings, effecting insurances, fire maintenance and compliance to name but a few.) or, resolve issues as they arise, collect levies from owners, etc. (I think I must have naively believed all buildings were self managed or managed by an asset manager such as Jones Lang Lesalle, Knight Frank or Colliers International).

Fast forward eight years and things have really changed (and I'm now fully aware of what's going on the industry). Buildings are bigger and more complex than ever before, the industry is growing at a rapid pace, legislation is at the precipice of change and there are more and more people piling into strata and community titled residences. This trend is not likely to slow having regard to the University of NSW City Futures Reports (published each year).

To my mind, these industry developments are great things, however there are many hurdles we need to overcome as a profession (and we need a push from consumers to demand these things).

The below areas of focus is what I see to be vitally important to ensure positive growth in the industry and success for all stakeholders.

Education In NSW (and from what I understand it's much the same in other states), the barriers to entry into the strata management industry are close to non-existent. You need only a strata licence/corporation licence to operate a business. The course to obtain such licencing is neither difficult nor is it expensive. People can also work as a strata manager having completed a certificate of registration, which takes a couple of days to complete. You do not have to be Einstein to see that in circumstances where agents are entrusted to handle millions of dollars of client funds, coupled with the limited statutory requirements to achieve standing to do so, that there is the potential to attract the wrong people to the industry. Moreover, with increasingly complex legislation and massive remedial projects on the rise, all industry stakeholders will continue to face some risk, one way or another and will continue to do so until such time as these issues are addressed.

I like to think of myself as being a jack-of-all trades and master of none and in many respects, this sums up the role of a strata manager. It is important to recognise that strata managers are not engaged to be your auditor, your engineer, your financial advisor, lawyer or your psychiatrist! Our role requires, however, that we undertake to do a part of all of these things and, sometimes more. Essentially, strata managers are here to facilitate matters on behalf of owners corporations/associations and should (with client instruction) defer to other experts when the need arises (our insurance certainly doesn't cover us to be acting as lawyers or engineers).

There’s enough to strata management that a tertiary degree should exist, covering legislation, asset management, insurance, finances, trust funds, people management, project management, problem solving, etc. (the list goes on).

The SCA has made movements with a tiered strata manager accreditation system and whilst this represents a start in the right direction, it is but a very small step and more must be done in this area.

Corporate/Professional outlook

Gone are the days when strata management was just another service the local real estate agency offered. Strata management employs over 15,000 people in NSW alone and companies are getting bigger and more professional than ever (and these companies focus solely on strata and community titled services). There are also several publicly listed strata companies which could give some insight into the magnitude of potential the industry benefits from.

Strata management is very much distinct from property management and the sooner the two are clearly separated in people’s minds the better. A good strata manager doesn't necessarily make a good property manager and vice versa.

Property Managers (in an apartment building) are responsible for managing apartments on behalf of landlords - the leasing of such and any repairs/maintenance associated with lot property. Strata managers however look after the common property and building as a whole - basically everything outside of individual apartments falls under the remit of the owners corporation (all owners in that particular building).  The strata manager manages the owners corporation’s affairs subject to the appropriate authority an owners corporation may give to the agent by way of contract (i.e. the owners corporation is the entity that makes the decisions, including contracting with the strata manager).

Strata Laws

Australian states have some of the most advanced strata laws in the world - these have been used as the basis for similar legislation in Europe, the Middle East and Africa.

What I don't understand is how there's different laws in Tweed Heads to that in Coolangatta (or Queanbeyan to Canberra). Why on earth haven’t the laws been homogenised as yet? Strata managers should be able to practice from state to state on a single licence and the bigger schemes should be able to seek out the best manager in the nation.

Regardless of the legislation, the principles are the same. This ball is in the governments’ court and it's probably far from being a priority.

Consumers

Consumers (strata owners) need to take a greater interest in the affairs of the buildings in which they own. Read the general/committee meeting minutes, take time to review the financial affairs of the building, know who is on the executive committee. It's surprising how passive and uninterested people can be given the amount of money they have tied up in owning an apartment. Too often major works are on the cards for many years and you still get people "shocked" to receive a special levy.

An example Wellman Strata can provide is relevant; a 330 plus lot residential strata scheme which has been managed by the firm now for approximately 5 years, consistently  year upon year records between 5 and 10 owners at its Annual General Meeting. To my mind, this is perplexing!!

Also, if your strata manager doesn't give you online access to financial reports and a variety of ways to pay levies, you're already behind the 8 ball.

Strata Managers as Advisers

We aren't there to run your building on your behalf (as such) and don't wield much power at all. We have powers as delegated by our agency agreement and at any time the owners corporation may choose to curtail these powers. We are there to advise the owners corporation/executive committee through the potential minefield that arises when running a building and help it to make decisions which are to the long term benefit of all stakeholders.

I hear of agents that operate as to a law unto themselves; they don't keep owners informed (or may choose to be instructed by a handful of power-brokers) and maintain a climate of fear and no transparency of their actions. These agents are hopefully on an express train to being sued or pushed out of the industry.

Our job is simply to empower owners and committee members to make the best decisions as it concerns their respective asset.

Transparency

I would be happy for each and every one of my actions to be seen and scrutinised by owners at the schemes I manage. Too many people do not understand or see the volume of work that a manager performs on behalf of their respective clients and perhaps if owners understood this aspect of the role, there would be a greater appreciation for the individual alone and, more importantly go some way to curb the negative views most outside the profession currently hold.

People are increasingly demanding and we are expected to do more than ever for around the same, possibly less, money we were being paid 5-10 years ago. As such, I would also be pleased if  there was more transparency around our fees (including insurance commissions) as I feel (in many instances) we as an industry are disproportionately remunerated for the work that we do, which at times can be incredibly stressful, long hours and thankless. However, that is our issue to resolve and it will only be resolved once we become a more recognised and respected industry (see my discussion above under “Education)” however, that will take time.

What I am hoping is that technology changes the way that we work. There is already software in development that allows near complete transparency over our actions and that of a strata schemes’ affairs. If we had the following available to us and owners took the time to buy into the concept and used said software properly (obviously it would need to be incredibly user friendly), everyone could quickly get on the same page and strata managers could spend more time moving forward and less time putting out fires:

Finances - online approval of invoices and viewing of finances.

Work orders / Online Requests - self service issue logging

Electronic noticeboards - matters affecting the building to be publicised (i.e. water outages, inspections, upcoming AGM)

Scheme documents – stored and available for viewing online

Asset register – every building should know what assets (and when I say this I am referring to electrical/mechanical largely) it has, how are they maintained, who maintains them, what they cost to maintain, when the assets were last serviced/replaced and when are they due for overhaul/replacement and what’s it going to cost. Warranties are known.

Communication – centralised communication for owners, flexible meetings (voting in writing, electronic attendance)

Planning – schemes should have an agreed (and dynamic) plan in place for the short and medium term. This way people are on the same page and the manager/committee has a mandate. Too often buildings are behind where they should be and not planning for the future.

If we had the above available and used properly, people would be abreast of issues and should have much less reason to be concerned.

Conclusion

At the end of the day, this all comes back to the concept of agency (this is straight from the Rules of Conduct provided for under the Property, Stock and Business Agents Act 2002 (NSW)) – “An agent must act in the client’s best interest at all times unless it would be contrary to the Act or regulations under the Act or otherwise unlawful to do so.”

If all agents did this and at the same time harnessed available technology and experts to ensure they were doing things in a forward-thinking manner, the industry would be better off as a whole and owners would be getting great outcomes.

I want a future where strata management is a well regarded and viable option for school leavers as there's much to love about the job - it changes every day, you deal with fantastic people and you have an opportunity to influence things for the better.

By Andrew Terrell

Bookmark and Share

Comment from kelvin25 on Saturday, 25th June 2016

You did really good work. I really appreciate your new and different post. Please guys keep it up and share with us some unique post in the future. 1z0-803 dumps

Comment from Norahair on Saturday, 28th May 2016

The Australian government should take some effcetive steps to provide a useful and smooth services for the benefits of the people in the australia.The custom paper writers are giving the opportunities for the students who want to learn more regarding the various types of business strategies.

Search for services

Find tradesman or property services in your local area.

Search for services