I’m particularly interested in Victoria, but left open.
When I look at costs over last 20 years, the owners corporation managers cost escalations are the highest year on year single charge increase. They generally have default annual increases (eg the higher of inflation or 5%) for members to fight each year. Even when you contain the annual management fee, the extras costs & they way they implement them makes up for any negotiated management rate. The third area we’ve been got at is the diminishing of responsibilities and moving of other services to sometimes related maintenance service companies. Oh, and the kick backs like high commissions on the insurance they take back.
All in all, a dirty ‘corrupt’ industry.
I’m particularly interested in Victoria, but left open.
I don’t think Qld is any better, from recent experience with two different strata titled properties.
The respective BC Managers have been sold out to a nation wide private company who is buying up client lists and reducing effective competition.
Most owners in strata title schemes find it very difficult to change the manager who holds all the records and arrange/manage the meetings. Owners need to actually step away from a manager to seek alternatives before proposing a change. Or choose to run their BC directly without a separate provider. They also need to have the support of their unpaid committee members, most notably the chairperson who has key authorities necessary to act independently of the appointed manager.
Recent experience with major maintenance works and insurance renewals suggests that there is a closed shop environment that favours the larger managers. Most smaller Strata title schemes do not have owners with the knowledge or experience to question their manager.
Notably while the BC books are subject to audit, the financial dealings of the managers within their own businesses are not. Hence any evidence of impropriety through kick backs or dealings with related entities is difficult to discover. It is a one way relationship?
It appears that for smaller schemes you may often have unsophisticated investors and owners entering into contracts with advanced well developed businesses run by managers whose primary interest is maximising the value and returns for their business. Many of these are private companies, and hence subject to minimal public accountability or scrutiny of their performance.
For schemes with many owners (50, 100 or more) the annual BC managers fees can total in the $100,000s.
Hence the managing company can dedicate a full time professional backed up by substantial resources to a single strata title scheme. Few BC owners would ever have the knowledge, skills or resources to match their contracted management provider in any dispute between the two.
With many more consumers now buying into strata titled property or retirement facilities each with their own variations on form of service agreements it may become a substantial area of concern for Choice and government. Annual BC fees for MDU with 3 or more levels and lifts can easily exceed $10,000pa. There has been an industry wide past practice of developers understating or providing poor estimates of future costs to lure buyers.
Google does it’s usual Smokey Goggles trick (nothing to see here?) when you try to use it as a research tool around Body Corporate Managers or Insurance. This is caused by swamping of the results with sponsored or favoured advertising and business hooks.
Note there are more than 1.2 million dwellings classified as apartments by the ABS in 2016.
With typical BC fees of $5,000 or more per apartment the BC managers may be handling more than $6b annually, while the statutory balances in sinking funds may be many times more than this. It is a genuine billion dollar business worthy of closer examination as to profits and cash flows.
This link may be of interest Queensland related, however it may also reflect circumstances or views elsewhere. The reliability of the content is open to comment.
It’s critical that if you are seeking specific guidance the laws applicable to strata titles are unique to each stafe. There is no agreement between states to enact similar legislation. The terminology used may also differ between states. The legal precedents in one state may not be relevant to a determination in another.
So it would be wise to check carefully which juristicition/state any commentary is referencing before using it as a reference.
Totally agree and sympathise. This is why our little block of four individual units has ditched the Managers and we are now self managing. They had the gall to charge us $700 for early termination even though we terminated at an official annual general meeting, which, by the way, was held a month after their contract was due for renewal.
We could go through the VCAT and Consumer Affairs routes but we are so glad to get rid of them we have just let it go.
Setting up self managing was a little tricky. While the rules are all available from Consumer Affairs there is no logically set out guide to help you through the labyrinth. However we have been FREE for six months now.
Great. I’m happy you don’t have any problematic members! A difficult member or managing a non-payer are probably the two main reasons for a manager being appointed. That’s what happened here - before I came along - to cause trouble to the manager
Did you consider something like ourbodycorp.com.au ?
I can understand your point.But the way the industry is now it’s very complicated and for a resident to do a manager job and their is so much to learn and it changes all the time.But to have a Owners Corporation Manager to do the job for the residents you may pay for the service but in the long run it’s well worth the time.Anything serious comes along they are their to help and as a resident you do nothing it’s all in their hands to take care of it.Then it also stops possible arguments with residents if they go it alone.Don’t forget if your not happy shop around for a better deal
That’s probably my biggest issue. If anything comes along, they send it to their favourite contractors for a quote, pass-through that to us and then ask us, “which one do you select?” with no added advice or value even if requested. And yes, we’ll be going to market at the management contract expiry.
Weren’t aware of them at the time. We essentially only have a driveway and two security lights as common property. We found insurance through Bendigo Bank and use them for our account. Two of our residents are approaching ninety and have no computing skills so much of our communication is over the back fence, so to speak. This lead to lots of impromptu meetings. :-). One of our owners is absentee but not interested in Air BnB. So very simple really.
This is an industry that moves under the radar . I read somewhere that the Body Corporate industry is the equal of the Superannuation industry in terms of dollars , but it is under much less scrutiny and regulation than banking or other elements in the financial industry.
You can see the Recommended Schedule of Fees and Charges which the SCA (Strata Community Australia) Victoria have recommended. The hourly rate recommended is a range between $110 to $240 an hour,
SCA is the professional association for the Victorian owners corporations industry. They represent the Industry , they train and they politically Lobby.
This is the link to their site.
Lot owners may not get all the facts associated with appointing a Manager - The fee paid by the lot owners may be only a fraction of what the Manager is able to acquire. This is as a result of their appointment, as additional fees and surcharges may be charged for various tasks with commissions up to 20 percent from Insurance forming part of the income stream.
See this link for further details.
Excellent that you have raised these issues which tend to get ignored/neglected by consumer/community orgs. yet which are very important for unit owners. However, unit owner orgs are very aware of them and more unit owners should join, and participate in the work of, such orgs.
It would also be be beneficial if Choice did more work in this area. For example, on what various contents insurance policies do and do not cover when the body corporate also has an insurance policy.
My observation from being party to two small but very different BC under Qld law is that these owners in small schemes are simply out to minimise their costs. They may be interested in key decisions, but are not that motivated to put in free time when they are paying in their view for someone else to do it all for them.
When ever the BC has genuinely needed to act the manager has been useless. It has been left to a motivated owner every time to carry the burden while every one else sits back.
So as much as I would like to take one of these BC to self manage, after more than 30 years in the same scheme it is unlikely to happen.
In our instance there are three investor owners and two occupier owners. There are and have been different priorities between these two groups as well as differing interpretations of the use of the BC funds in particular the Sinking Fund. A reasonable expectation is that with a competent manager you should not need to argue over as many items as the manager is supposed to know the correct interpretations. Even under duress or if pressured the BC Manager can only fall back to the proper legal position providing at least one of the owners persists. I’ve been there several times and needed to quote advice from the State Dept of Justice to reset the positions.
Given Body Corprate and Strata Title Legislation is a state responsibility and the businesses providing management services are registered under Federal law it seems unlikely the management companies will ever be subject to total regulation. The states can’t even agree to one only set of national traffic rules or criminal codes nation wide. They all have variations.
The BC Mangers may sensibly have formed a single national body to further their interests, something they can pick at state by state. For owners there appears to be more than one not for profit organisation vying for membership. And within each BC there are at least three competing interest groups - owner occupiers, investors, developer/builders. There are also tenants, the special interests of those who own the penthouses in the upper levels, and for some properties someone who has purchased the building management rights.
It appears to me that owners interested in change need not only a strong and united single voice at national and state level, the representative body would also need to hold all the fractious groups together. This is unlikely to come without substantial financial support.
On the other side the management companies have not only their wealth, they have massive funds they manage for each BC and in turn use to support substantial legal teams an business managers through the BC fees. In a way these companies have accrued strengths over time through BC owners fees and are able to use these strengths against the interests of the owners in any action. The owners are starting from a long way behind?
Further to this post .For owners what are the names of the organisations that are vying for membership ?
I live in Qld. Specifically for Qld one readily found on the web is the - Unit Owners Association of Qld
You might like to look at the following link to the Owners Corporation Network. It lists others for Qld and other states.
There is also the Strata Community Association qld/Australia which appears to represent the companies involved in strata title management.
This is not exhaustive. Which organisations are you familiar with or have identified for your area?
p.s. It seems unlikely the industry is not going to be as large as the super industry. BC fees typical averages on the web are between $5k and $10k pa. With some million plus residential properties in the bucket the annual cash flow will be significant. Ball park $10 billions annual. Sinking funds may be several times more than this in value. I’m ignoring retail, hotel/resort share, commercial and industrial use property in this view.
PICA has been buying up managers and profitising (bleeding the customers).
EDIT: add: This is BIG business!
The PICA Group (Prudential Investment Company of Australia) plays a significant role in the local property landscape by delivering a full range of strata management services, including facilities and receivables management. It has over 700 staff and 30 branch offices across 11,000 strata schemes which include residential, commercial, resorts, and mixed-use properties.
The Vic OCN http://ocnv.com.au/ looks dead, or hasn’t changed since I found it a couple of year back.
A single holding page with no information. There is no dedicated active Victorian group that I can find.
Flatchat has occasional Victorian discussion, but seems to have a NSW emphasis.
Certainly big business. As I suggested previously they probably collect order of Magnitide $10B in Trust each year and take at least 10% of this in fees. Who knows about any side deals? It’s surprising there is no specific owners organisation for Vic?
The Qld Govt Dept of Justice has provided a degree of support for owners in understanding the regulations that apply to Strata Title and Body Corporate operation.
There remains a significant need for oversight of Strata Title Managers. I may have mentioned previously they operate in respect of State Legislation. They are in effect Trust Fund Managers with much discretion. And fly under then radar as the management agreements are effectively commercial comtracts. Nothing to see here.
I only recently became aware that our Manager in Brisbane may be owned by CSR.
Strataville are the new kids on the block in terms of information for strata living.