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Strata schemes should be run like a business with no provision for emotion – my view, anyway
This was originally a comment on a post about a family running a development for their own benefit (https://www.flatchat.com.au/topic/when-a-family-plan-is-a-bit-too-cosy-for-comfort/). It has now taken on a life of its own. – JT
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Run them in a business-like manner, by all means. But like a business? Where the balance sheet is the prime and possibly only consideration? If you try to take the emotion out of strata you risk ignoring one of the prime motivators of owners and residents. You can’t let emotion rule strata schemes, that’s true, but you ignore it at your peril. “My home is my castle” is one of the great barriers to progress in strata communities, but it’s not going away any time soon. Recognise it, deal with it but don’t ignore it.
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Me too. But I think you have to embrace the fact that people will bring their emotions to the table whether you want them to or not. And I wasn’t joking about the Qld perspective. The history of strata in Qld starts with holiday homes and predominantly residential blocks are a relatively recent (past 20 years) factor. It’s the opposite in NSW and Victoria, where strata started as residential (with the obvious exception of traditional holiday towns) but then was dragged into holiday rental territory thanks to things like Airbnb.
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So they are not people’s homes, then? Am I being trolled here? You certainly sucked me in, if that’s the case. Or is this a uniquely Queensland perspective?
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Seriously, if there was ever an area of life where one size doesn’t fit all, it’s strata.
Just to point up one difference, proportionately, twice as many people in NSW (14%) live in strata, compared with QLD (7%). That was 2019 figures from a UNSW survey so it may have changed (although we’ve had a pandemic since then which put a lot of changes on hold).
What surprised me was that roughly the same percentage of them (48%) were renters. The power imbalance is between investors and resident-owners, whom I see as “double investors” since they not only buy the properties but have to live with the consequences of decisions made partly by outsiders, some of whom may never have set foot in the building.
This website and Forum are full of stories from residents whose lives have been negatively affected by absentee owners whose only concern is the balance sheet.
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My thinking is more in line with JT’s. Strata developments are people’s homes and, ideally, form a community of neighbours whose interests go beyond getting a monetary return on a monetary investment. I agree that OC management should be business-like but it should not be without emotion. When dealing with people who are your friends and neighbours, it is best to make some allowances for people’s odd preferences, foibles and sensitivities. That is no excuse for preferential treatment, improper process or disregard for strata legislation but we are dealing with people in their homes, not purely financial investments.
Where I am, we have installed various community facilities and they have been great successes. People love having these structures in place that facilitate meeting their neighbours. To the few owners who were unimpressed, I say ‘Even if you never use them, if nothing else, they have increased the value of your property.’ They were worthwhile enough for that reason but the return on investment of social capital has been far more valuable than the crude monetary value of a unit.
absolutely stratas should be run as businesses. it cost me approx. $150,000 to resolve a strata dispute.
to cut a long story short the OC refuse to communicate with me, simply ignoring any request I make. it began when i first purchased the property over 25 years ago when they refused to renew my fence with the others because it’s leased. luckily the strata manager at that time insisted they did.
in fact over the years all the strata managers have resolved my issues until the last one who has now resigned. they’ve not followed engineering recommendations and how dare I query it and so it goes on.
i believe they’ve paid for things for works inside the lot of an owner who they like etc etc. there’s a strata law that an individual can’t spoil someone’s quiet enjoyment of a property but no strata law that an OC can’t do the same. they also intimidated my long term tenants until they left.
one of the top strata lawyers told me she often tells individuals not to go to court to resolve issues unless they have plenty of time and money – how fair is that?
i also owned a commercial strata which was run as a business, no favoritism. I only buy freeholds now.
Yes, Strata is indeed a big business ( but without a profit motive for the members running it ) when you are talking about a large strata with over 200 units. We spend about $1.5 million every year and about $900,000 are recurring fixed expenses.
Rest of the amount requires a lot of thought. In our Strata, we examine expenses line by line and see what can be done to reduce and where it can be increased to improve building’s attractiveness for prospects buyers.
All contracts must be reviewed periodically and competitive quotes obtained from equally or more reputed service providers giving longer terms for better quotes.
Over the last 7 years we were able to keep strata levy increases to 2% per year as a result of these efforts despite spending large sums under CWF as per 10 Year CWF Plan.
This year is a disaster for us as a result of very high building insurance premium following large insurance water ingress claims after 2020 February storms but owners understand the reason for the levy increase.
We entered into a 3 year energy futures contract with Energy Australia in 2020 when there was panic plunge in energy future prices following Covid19. As a result we now pay average 5 cents per kWh and saved $40,000 per year till end of 2024.
We saved another $15,000 per year after installing solar panels on our roofs in 2018. Saved another $30,000 per year by changing the Building Manager company.
Saved another $20,000 by making prospective strata managers quote strata fees and other expenses per lot and asking them to send meeting notices by post at owner’s expense if email is not given.
Hope this helps others to give better services in their communities.
The more I think about this, the more I realise that the whole system is perfectly imperfect. Some strata schemes will consider community engagement as a major component of their lives, others – especially those dominated by investors – will see the balance sheet as the prime and possibly only consideration.
The important factor in this is that the owners get to choose their committee at the AGM and the committee sets the course on how the scheme will be managed. The problem is that no one standing for committees (that I have ever seen) provides any kind of information about what their priorities would be.
So I suppose it’s then up to the owners to ask candidates for election what their priorities are and then vote accordingly. And maybe a smart and brave owner (who will be hated for prolonging the agony of an AGM) could turn the meeting into a kind of impromptu hustings by asking each candidate what their priorities are – cash or comfort?
And it would be handy if prospective purchasers could get a sense of the kind of community they were buying into – financially rigorous above all or community minded, albeit with a weather eye on the levies.
Otherwise, you get the committee you deserve, rather than the one you want.
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