Best Strata & Property Management Services
If you've just bought a new strata property, you might be confused by all the added rights and responsibilities compared to owning a regular house or commercial building. If you're looking for the data on strata, we've got you covered.
What is strata in property?
Strata in property refers to a system of shared property ownership. It’s often a system that comes into play when residential or commercial property is divided into distinct private areas and shared areas.
For example, you often see strata title schemes in the following types of properties: Apartment complexes, townhouses, duplexes, retirement villages, and commercial buildings where companies rent out offices.
There are two kinds of ownership in a strata title scheme:
This refers to the private space you own, and is also known as an ‘individual lot.’ For example, if you own a unit in a multi-storey apartment complex, this is privately owned by you (and anyone else on the mortgage). It’s not shared by your neighbour or the guy downstairs playing his drums too loud past midnight (luckily).
This is what makes a strata title scheme strata. You and the other residents of the complex will share ownership of what’s known as ‘common property’ in the building. With this ownership comes both additional rights and responsibilities that you wouldn’t normally have if you lived in a house.
How does strata work?
When you buy a property that operates under a strata title scheme, you automatically become a member of what’s called the owner’s corporation, or body corporate. Together, the individual members of a body corporate collectively own the common property. These communal areas may be used by both residents/ owners and the general public.
Common property includes but is not limited to: shared gardens, driveways, pathways, stairways, carparks, pools, elevators and lobby areas.
Upkeep of common areas
This may include, for example, paying for a gardener to mow the shared lawns, or organising for a pool cleaner to come and periodically make the pool pleasantly swimmable. Or, it could involve paying for a facilities manager who single-handedly organises maintenance and repairs of common property.
Paying strata fees
These go towards the ongoing costs of running the building, and are usually charged in the form of a quarterly levy. This includes:
- Administrative fund levies: such as include paying for shared utilities and other daily expenses, like the electricity bill for foyer areas or elevators.
- Contributing to a sinking fund: The sinking fund covers larger expensives, such as roof repairs or getting new tiles. (If you’re familiar with the Barefoot Investor’s buckets, this is like the Fire Extinguisher bucket for strata).
- Special levy: Occassionally, a special levy may be charged as a one-off, to cover the cost of extremely high, unforeseen expenses. An example is fixing a roof that caved in over a hallway, because of severe storm damage.
Deciding how to manage their strata title scheme
This is ultimately up to the members of the body corporate. Since strata can be a bit of a beast in terms of compliance and legal requirements (it’s a type of property ownership, after all), many owners’ corporation’s decide to enlist the services of a professional strata management company to help them.
What is strata management?
A strata manager is a person whose job it is to carry out the day-to-day running of a strata title development. This can involve overseeing the entire operation, including the mixed bag of tasks - from administrative, to financial, to legal duties. Or it can involve a that the body corporate sets out, then pays the strata manager to perform.
Strata managers are appointed by an owner's corporation after a formal vote is taken, typically at the owner's corporation's AGM.
A strata manager (usually an employee of a company that offers strata management services) is hired by, and works for, an owner’s corporation. Their duties are wide in scope, and most will be able to help with the following tasks.
Duties of a strata manager
- Administrative: Organises meetings, such as the AGM, committee meetings, and any special meetings, handles communications with third parties to do with repairs and maintenance, maintains an owners corporation register, schedules periodic maintenance to ensure the building remains in good health and safety.
- Financial: Arranges for strata insurance, handles payment of levies and all related matters (e.g. preparing invoices, collecting arrears), puts together budgets and financial statements.
- Legal: Resolves disputes concerning any by-laws (the internal rules governing how members are allowed to use shared property, like parking spaces), deals with orders, submissions, appeals.
What to look for in a strata company
While there are no formal educational requirements to become a strata manager, the individual or company you choose should have the following when it comes to being considered a forerunner for the job.
- Strata Manager'ss License with the relevant government body in the state they're operating in, such as Fair Trading NSW.
- Professional indemnity insurance cover means that if you suffer any financial or physical loss as a result of professional advice, insurance makes it more likely you'll be able to get damages awarded in your favour.
- Professional development courses should be regularly attended, so they can stay up-to-date on any changes in the law when it comes to managing strata title.
- Membership of a professional organisation such as the Strata Community Australia can also be helpful, as this will help strata managers stay current, and also give them a professional network of peers.
Since there's no formal compulsory training required for strata managers, the amount of experience a prospective manager has can make all the difference.
In addition to this general experience, look for someone who has specific experience managing your type of building (for example, residential, commercial or mixed), as well as experience managing the various facilities onsite.
If it's not clear from a strata agent's resume or portfolio how much - or what type - of experience they have, remember you and other body corporate members can interview them to make sure they're suitably experienced for the job.
This goes hand-in-hand with professional integrity, and broadly includes handling the affairs concerning your strata title property with care and commitment.
It includes replying to phone calls or messages on time, and always keeping the body corporate in the loop when communicating with third parties, for example concerning the upkeep of common property. Above all, your strata manager should give you the reasonable impression that they care about their work and take it seriously.
Having an strata agency agreement is really important. It sets out clear expectations on the duties required of a strata manager, and those duties belonging to a body corporate. It ensures the two parties to the agreement are on the same page.
It includes terms such as the ‘service levels’ that must be performed by a strata manager. These will likely fall within the scope of a strata manager’s usual work, but sets parameters. For example, a strata agent can be required to respond to requests from tenants about maintenance jobs within 2 days.
The strata agency agreement is also a good place to delegate responsibilities between a strata manager and the body corporate. You might choose to hire a strata manager, but only for some tasks - which reduces fees.
Choose a strata manager or strata management company that's physically close to your building's location. Since a lot of a strata agent's work is to do with the day-to-day running of the property, it's going to be much more helpful if they can actually come to the site. This may be to do inspections, check facilities for repair status, or respond to a property-related emergency.
It also gives an edge to someone who just has skills in property management, as the strata agent will have local familiarity with tradespersons, which can prove handy when scheduling and organising upkeep (including repairs and maintenance) at an affordable price.
Strata management companies are competitive businesses at the end of the day, so they don't all charge the same rate. Brand and industry reputation will play some part in this, but mainly the price discrepancy is due to the range of services that different strata managers offer.
It's not a one-size-fits-all approach, since every property is different. The services you opt for (and the invoice total you ultimately receive) will depend on your specific property, as well as its size and purpose. It also depends on how much work the body corporate is willing to put in themselves, or source out to other staff members, like a facilities managers.
Can you self manage strata?
The short answer is yes, you can. There’s no law that states that body corporate members of a strata title development must hire a strata management company.
However, the decision to choose a self-managed strata scheme should be a mutual decision, ideally after taking a vote with members of the body corporate.
- Can save money as you’re not paying a strata management company
- More control for body corporate members, as there is no ‘middleman,’ the body corporate directly deals with any third parties about matters to do with the building.
- Could be suited to small properties, like apartment complexes with 10 apartments or less. Smaller properties may be easier to self-manage, or partly self-manage.
- Really time consuming, due to the detail record keeping and other admin work needed
- Complex compliance requirements: Understanding strata legislation is likely to take a lot of self-learning and dedication. In total, there are 8 pieces of legislation that outline the duties of an owner’s corporation.
- Can be stressful as neglecting to maintain a strata title property can have consequences for health and safety. For example, a member of the public may trip and injure themselves on an unsafe pathway, leading to legal or other financial consequences.
Partly self-managed strata
Your strata title scheme doesn’t have to be either completely self-managed or professionally managed - you can have a combination of the two.
Usually this will involve hiring a strata manager to perform a record keeping service. This leaves the paperwork, finance and accounting tasks, as well as legal compliance requirements to a strata manager. The rest is left up to the owner’s corporation, and will typically involve the day-to-day running and upkeep of the property.
Having a clearly drafted in place makes it easy to set out who is responsible for what. It also provides a good reference point in future should a dispute or other uncertainty about the division of management tasks arise.
Whether you choose to hire a strata management company or self-manage your strata title development, having a solid understanding of the sometimes-complex requirements that go into achieving a smoothly operating strata title development is important. For most body corporates, having a professional to do at least some of the tasks is really helpful, and it saves tenants a great deal of time and self-learning.