A Victorian review of the Owners Corporations Act has revealed 'declining consumer confidence' and widespread concerns about governance, transparency, professional standards, and dispute resolution. The findings come as more owner-occupiers are taking control of their strata schemes, bypassing commercial management companies amid high costs and industry dissatisfaction.
Consumer Confidence Plummets
The review, which examined the Act governing strata properties, found that only 11% of survey respondents believed the laws ensured managers acted honestly. With an estimated 1.27 million Victorians living in strata-controlled properties, the need for high-density affordable housing is increasing, yet consumer trust is eroding. The review also noted 'an absence of proactive compliance and enforcement' by Consumer Affairs Victoria and 'a lack of effective deterrence for non-compliance.' Cases took an average of 23 weeks to go through the tribunal, with only 54% successfully resolved.
Rise of Self-Management
Adam Promnitz, founder of the Strata Owners Alliance, says many owners believe they need strata managers when they do not. 'People believe they need strata managers in many cases where they don't,' he said. 'There's an arrogance within the industry that they're infallible or that they are indispensable.' The alliance, founded in 2019, promotes grassroots empowerment through knowledge. Promnitz noted that about 40% of strata complexes are self-managed, according to industry estimates, yet they remain largely invisible in the strata system.
In Victoria, only complexes with more than 100 occupiable lots are required by law to have a manager. These account for just 1% of schemes nationally, while 84% have 10 lots or fewer. Despite this, the industry's main lobby group, the Strata Community Association (SCA), recently advocated for changes to Victorian law to make it mandatory for strata schemes with more than 10 lots to appoint a professional manager. The SCA Victorian branch's 2024-2026 strategic plan listed 'owners' groups' under 'threats.'
Industry Concerns and Owner Experiences
Submissions to the Victorian review detailed numerous issues: managers receiving huge commissions for securing building insurance; hidden financial relationships between managers and brokers or contractors; unlawful or extortionate fees; and unlawfully withholding access to details, including owners' corporation records or funds, even after contract termination. 'Proxy-farming'—collecting absent owners' proxy votes—was also mentioned as a tactic to influence meeting outcomes.
One owner, Lauren*, a 45-year-old single woman in inner Sydney, found herself in a battle after her strata fees suddenly doubled. All but three owners in her 26-lot building were investors, and the entire committee was composed of investors. 'They had no financial interest in doing maintenance, and they also couldn't care less about the day-to-day experience of the people who live in the building,' Lauren said. She forced the committee to resign and was elected to it herself. 'I was like, I would rather be getting a root canal than be elected on to this committee. But if I don't do it, the building will fall into the street.' Nearly two years later, two-thirds of the building backs her, and repairs are being performed in order of urgency. However, the experience took a huge toll: 'It made me hate my home. It made me hate every person around me. There was no escape.'
Transitioning to Self-Management
For those considering self-management, the transition process can be surprisingly straightforward. One owner, who successfully sacked their property manager, found the process involved just ten steps. After arranging the handover of documents and funds, the former manager apologised and waived the transfer fee. The owner was able to cut back levies immediately, many by hundreds of dollars, and saved on insurance commissions by using accounting software. 'Occasionally, I am struck by fear that I've overlooked something or made some huge mistake. But this is my home, and it's my responsibility to do my best to look after it,' they said.
*Name has been changed.
