Six Ways To Save Money On Your Strata Costs - Updated

January 2, 2023 Edward Dever

Since this article was written in 2020, the Australian economy has changed.

Following Covid-19 and the downward pressure on residential property rents, the rental market has since developed chronic under supply issues. This has caused rents to increase, in many cases dramatically.

While rents have increased, so have costs. Consumer price inflation in Australia is currently 7.1 per cent per annum although increases for some costs borne by landlords such as insurance are increasing at a far greater rate than CPI.

It is therefore worthwhile revisiting ways to manage strata costs.

Here are six things you should be doing to keep a lid on strata expenses:

1. Get involved in the management of your strata community. You are an owner, it's your money they are spending, so you should be aware of how it is being spent.

2. Review your strata building insurance. It is quite likely that you are not getting the best deal. Shop around. Also, update your building valuation and check the appropriate valuation is being used in your insurance. I have seen one example where the (much higher) building valuation used was from a different building.

3. Get quotes and get them often. I have lost count of the number of times I have seen competing quotes which are thousands of dollars apart. If you have the time, talk to the contractors. Get to know which contractors have a good reputation and are genuinely interested in the work. Not all contractors will be interested and may be submitting high quotes that reflect their level of interest.

4. Find a reliable handyman. Worth their weight in gold and may save you just as much. A reliable handyman can fix a lot of the little common property issues that often get farmed out to the large contractor agencies. They operate on a different cost platform and will invariably cost more. That's not the fault of your strata manager. They need to streamline work orders and the large contractor agencies allow them to do this. I recall an example where a handyman's $90 fix solved a problem a contractor agency wanted to solve by a partial demolition and rebuild.

5. Don't over fund your administrative and sinking funds. While you need to ensure annual expenses are met and the sinking fund is adequate, it doesn't need to be over funded. Remember, it's your money and you won't get it back if you sell. I don't know of an instance where there was an adjustment at settlement to reflect a generously funded administrative or sinking fund.

6. Stop talking to your strata manager. At least minimise the discussions and have a single person act as point person. Many of the larger strata managers charge on an hourly basis for dealing with your building's file. If you are discussing every issue in minute detail with them (or several owners are separately), the cost will add up.

This list is by no means exhaustive.

January 2023

The content of this publication is intended to provide a general overview on matters which may be of interest. It is not intended to be comprehensive. It does not constitute advice in relation to particular circumstances nor does it constitute the provision of legal services, legal advice or financial product advice.

Pets in Apartments - NSW Update

July 27, 2021 Edward Dever

Some interesting comments in the post-Cooper March 2021 decision in McGregor v The Owners – Strata Plan No 74896 [2021] NSWCATCD 1.

This NCAT matter involved the refusal by an owners corporation for a dog to be kept in an apartment block which was part of a larger complex, each block with separate by-laws and all subject to a community management statement.

The applicant dog owners were self represented. And that was probably their downfall.

The by-laws expressly prohibited dogs but not other pets such as cats, with an exception in the townhouse by-laws for small dogs which were permitted in the townhouse section of the complex.

The applicants placed significant reliance on the decision of the NSW Court of Appeal in Cooper. In that case, the effect of the Court’s decision was that a “blanket ban” on the keeping of pets was “harsh, unconscionable or oppressive”.

The applicants' prime application was misconceived as it sought relief under Section 157 of the Strata Schemes Management Act which allows the Tribunal to approve a pet where the by-laws permit a pet with owners corporation approval and that approval has been unreasonably withheld. Neither of these conditions was met.

The applicants also chose the wrong by-law to request the Tribunal to declare as invalid. The applicants should also have included the Community Association as a respondent.

In the circumstances, it was not necessary for the Tribunal to consider the effect of Cooper on the relevant by-law but the Tribunal did note that the by-law did not, in any event, constitute a “blanket ban” of the type considered in that decision.

It will be interesting to see whether other owners corporations seek to distinguish Cooper on the basis that their by-laws, while prohibiting dogs, do not prohibit other animals.

July 2021

Six Ways To Save Money On Your Strata Costs

February 19, 2020 Edward Dever

With the Australian economy stagnating, shopfront retail in the doldrums and the added economic impacts of the recent bush fires and coronavirus, it is harder to increase residential property rents. Not impossible in some markets but generally rents are pretty flat.

At the same time, council rates, water rates, land tax and other property related expenses are all increasing, putting a squeeze on property owners.

The only way to increase yields is to carefully manage expenses.

Here are six things you should be doing to keep a lid on strata expenses:

1. Get involved in the management of your strata community. You are an owner, it's your money they are spending, so you should be aware of how it is being spent.

2. Review your strata building insurance. It is quite likely that you are not getting the best deal. Shop around. Also, update your building valuation and check the appropriate valuation is being used in your insurance. I have seen one example where the (much higher) building valuation used was from a different building.

3. Get quotes and get them often. I have lost count of the number of times I have seen competing quotes which are thousands of dollars apart. If you have the time, talk to the contractors. Get to know which contractors have a good reputation and are genuinely interested in the work. Not all contractors will be interested and may be submitting high quotes that reflect their level of interest.

4. Find a reliable handyman. Worth their weight in gold and may save you just as much. A reliable handyman can fix a lot of the little common property issues that often get farmed out to the large contractor agencies. They operate on a different cost platform and will invariably cost more. That's not the fault of your strata manager. They need to streamline work orders and the large contractor agencies allow them to do this. I recall an example where a handyman's $90 fix solved a problem a contractor agency wanted to solve by a partial demolition and rebuild.

5. Don't over fund your administrative and sinking funds. While you need to ensure annual expenses are met and the sinking fund is adequate, it doesn't need to be over funded. Remember, it's your money and you won't get it back if you sell. I don't know of an instance where there was an adjustment at settlement to reflect a generously funded administrative or sinking fund.

6. Stop talking to your strata manager. At least minimise the discussions and have a single person act as point person. Many of the larger strata managers charge on an hourly basis for dealing with your building's file. If you are discussing every issue in minute detail with them (or several owners are separately), the cost will add up.

This list is by no means exhaustive.

PELEN

February 2020