The stakes are high for volunteer shift committees, with neighborhood fighting, debt and a $1 million budget

Insurance costs have increased from $65,000 to $100,000 since 2019, and the building required a deficiency report, emergency lighting replacement, and preventative maintenance plan.

Understanding the “incredibly complex” legislation and maintenance has been a huge learning curve, and trying to get owners to understand costs or get involved with subcommittees has been a major hurdle, O’Connell said.

“There needs to be a lot more emphasis on educating people about what it means to own a home. Current legislation is not appropriate for these larger dwellings.”

There are over 84,000 strata systems in NSW and it is estimated that by 2040 50 per cent of the greater Sydney area will be inhabited by strata systems.

Fair Trade and Better Regulation Minister Anoulack Chanthivong warned there were “no quick fixes” for Strata systems but said he was working with the sector to review the system.

“We need to find the right balance between effective, well-run shift systems and a system that keeps owners in control of decisions about their common property,” he said.

“Developers are looking for the cheapest Strata budget to attract buyers.”

Director of the Australian Apartment Advocacy Samantha Reece

Australian Apartment Advocacy Director Samantha Reece doesn’t think the complex task of funding and managing a large building should be done on a volunteer basis.

“We’ve lobbied very hard with state governments that if a building is over a certain size, they should actually pay a meeting fee for the committee and have members apply for the role,” she said.

Reece said Strata fees are undervalued on new builds, while increased construction and insurance costs are fueling distress sales as owners struggle to keep up with costs.

“Developers set the Strata budget… and Strata managers know that developers are looking for the cheapest Strata budget to attract buyers,” she said.

“There needs to be more accountability everywhere.”

Real estate agent and financial adviser Nathan McCullum said Strata’s fees have increased by at least 30 percent on average over the past 18 months, which he attributed to aging buildings, high insurance costs and high borrowing rates.

This led to several owner companies agreeing to sell the building to developers, he said.

“We’re pretty much specialized in that at the moment. Because of increasing stratification, there is sometimes no other option than to sell,” he said.

Strata managers, who are licensed professionals hired by corporations to support Strata committees, are seeing a high churn rate, with one in three employers changing jobs in 2022, according to a Macquarie Group benchmarking report.

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Karen Stiles, director of the homeowners’ umbrella body, the Owners Corporation Network, said the shift management industry needs reform.

“I don’t think the Strata management industry has kept pace with the exponential growth of Strata buildings in terms of education, continued professional development, and overall turnover in the industry,” she said.

NSW is the only jurisdiction in Australia that requires a license for Strata managers, but Stiles said tiered licensing based on prior experience and training is required.

Last year, the government launched the Strata Hub, which requires Strata systems to submit annual reports but does not collect data on Strata charges.

New South Wales Property Services Commissioner John Minns said that when managed professionally with a responsible, proactive ownership society, Strata programs are well placed to achieve “the best results for all owners”.

High costs are a result of market pressures, he added.

“[Stakeholder] The engagement has revealed that there is a large consensus that ensuring equality, transparency and competence at the point of sale, putting systems in place and ongoing wealth management are priorities,” he said.

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