New strata manager laws: $110k fine warning

Strata management companies who don’t fully inform their apartment owners about connections with developers and suppliers, as well as commissions and brokers fees, could face hefty fines from NSW Fair Trading due to new strata manager laws.

Greater accountability and transparency are at the heart of newly announced regulations that recently came into effect, requiring strata managers in NSW to be upfront with owners about kickbacks and conflicts of interest. 

The announcement of fines suggests that Fair Trading is looking to a more aggressive pursuit of miscreant strata management firms than previously, when the worst punishment poorly behaved companies could expect was a stern phone call.

“The reforms give property owners better information and increase accountability for strata managers through improved transparency around their financial relationships and potential conflicts of interest,” says a Fair Trading press release.

The expanded disclosure regulations require strata managers to be more upfront and proactive in informing strata schemes about their current and past deals.

Under the new laws, strata managers must:

• Disclose any connections with suppliers and developers, including the nature of the relationships
• Provide detailed breakdowns of insurance quotes, including commissions and broker fees  
• Report in real time if any new connections or interests arise during their appointment

Additionally, strata managers must now detail any supplier and developer connections in annual reports to owners corporations.

NSW Fair Trading says it will be enforcing these new obligations, with strata managers being encouraged to audit their previous disclosure practices to identify any gaps, so that they can fulfil new requirements.

Strata property owners and their committees are being urged to familiarise themselves with the changes and discuss any concerns with their strata managers.

Transparency and accountability

Unlike the formerly notoriously passive and low-engagement practices of Fair Trading, the regulator says it plans targeted compliance and education initiatives to enforce recent reforms and thereby improve consumer confidence in strata management.

Managers who fail to meet the new disclosure obligations could face penalties of up to $110,000.

“These reforms are about ensuring transparency and accountability for everyone living in strata communities,” says Minister for Better Regulation and Fair Trading Anoulack Chanthivong.

“These enhanced disclosure requirements will give strata property owners the confidence they need to make informed decisions about their homes or investments.

“Strata managers have an obligation to act in the best interests of their clients, which includes maintaining the trust of owners corporations. These reforms will improve oversight and ensure strata managers’ practices are open and transparent.

“Strata owners deserve clear, timely and honest information from their managers, and these laws provide a vital step in restoring trust and supporting better decision-making for strata communities.”

Ensuring fairness and trust

Fair Trading Commissioner Natasha Mann says her department will be working to educate the industry on their obligations and monitor compliance with NSW strata laws, with penalties of up to $110,000 for those flouting the law.

“With more than 87,000 strata schemes and more than 1.2 million people living in strata across NSW, these reforms are vital in ensuring fairness and trust for everyone living in strata communities,” adds Mann.

These new rules form part of the second tranche of reforms the Government has passed through the NSW Parliament to improve the strata industry.

A third tranche of reforms, currently being debated in the NSW Parliament, will increase accountability of developers to ensure initial strata levies are accurate so owners aren’t hit with higher fees once they move in, and will introduce financial hardship provisions for people struggling to pay their fees and protect owners from unfair contract terms. 

For more information on the new regulations, you can visit the NSW Fair Trading website.