PICA: New laws threaten strata managers’ viability

The boss of PICA, one of Australia’s strata management giants, says owners’ education should come before the planned radical changes in strata law if the financial viability of his industry isn’t to be reduced to “aged care levels.”

And Bobby Lehane, Group CEO of PICA, warns that the additional burden of explaining law changes to owners will inevitably lead to increased strata management fees.

PICA is arguably the biggest player in Australian strata management, owning 15 subsidiary companies with more than 30 branches across Australia, including BCS Strata, Dynamic Property Services, GK Strata Management and Sydney Company Title Management.

The proposed changes include compulsory training of strata committee members, properly estimated and independently certified levies for new blocks, and off-the plan purchasers being allowed to rescind their sales contracts if they have been duped into accepting embedded network contracts.

They will also, says Fair Trading, ensure a robust initial maintenance schedule is in place for new builds, protect owners corporations from unfair contract terms and give property owners under financial stress more options to pay levies debts.

Fine threat

New regulations on strata manager conflicts of interest and transparency have already come into force, with fines of up to $110,000 for miscreants who fail to inform owners about prior relationships with developers and service providers, or neglect to reveal commissions that they receive.

However, an education program for owners’ committees should be delivered BEFORE other significant changes within the legislation, PICA says in a press release.

“We know that the strata manager inevitably becomes the face of these changes, and without the prerequisite training of committee members, the additional burden will have a negative impact on both strata managers and consumers, and will undoubtedly result in increased costs,” states Mr Lehane.

“Whilst our focus as a strata management company is working with owners to deliver exceptional service and truly enhance these communities, much of our time is consumed interpreting legislation while informing and educating owners committees,’ he adds. “Without first delivering education to owners, any changes will create chaos.”

Financial viability concerns

The comments come as this week PICA Group says it is engaging with the Minns Government, NSW Opposition and crossbenchers to make recommendations around owner education, as the NSW Parliament considers the legislation.

“According to Macquarie Bank benchmarking the strata management sector will soon struggle for financial viability after a decade of decline. This is concerning, as it is expected that 50% of people in New South Wales will be living in strata over the coming decades,” says Mr Lehane.

“We need to find an approach that works, and educate all parties involved so they are aware of their responsibilities.”

The PICA Group claims it has up to 200,000 properties and 500,000 residents under its management across the country.

“Strata managers are dealing with a complex set of issues that often are outside of their control, without proper support, owner education and reform the sector viability will continue on its decline towards aged care levels of profitability,” says Mr Lehane.

More information about the proposed strata management law changes are available on the NSW government website.