The future is here. Our better run strata blocks are already looking forward, asking what kind of building they want to be in five or ten years and, crucially, how much it’s going to cost. Word is we could soon see a new trend – the double downsize.
Even at the pretty low levels of inflation we have now, the costs of services are constantly rising. Project those costs 10 years forward and the amounts are huge.
For retirees who have sold their free-standing home and put the money into a new flat and their superfund, this is a big issue: their incomes are static while levies rocket.
If they were in a free-standing home, they could let it fall around their ears, if need be. In strata, they don’t have that option and how they respond to the squeeze on their finances could profoundly affect everyone in their buildings.
Previously cashed-up empty-nesters often live in larger properties and therefore have more votes than individuals in smaller flats. That means they can mount a powerful campaign to take their building, especially one with lots of services, down market to something they can afford.
Security, swimming pools, cleaners and building managers are all expensive. Getting rid of them or going for cheaper alternatives is an attractive option for people paying constantly rising levies from fixed incomes. Same goes for the paint job required to freshen up the building, inside and out. Aesthetics always lose out to economics.
Meanwhile, people whose salaries are keeping pace with costs see their aspirations – and their property values – eroded as services, facilities and the appearance of the building decline. It’s the perfect formula for nasty in-fighting that no building needs.
What’s the answer? You could lock a prescribed level of services into by-laws – meaning 75 percent of owners would have to agree to change them.
However, if retirees moved to smaller apartments in their buildings – getting a boost to their finances – and the upwardly mobile owners took their place, at least the double downsizers wouldn’t have to start again in a new community.
The government should scrap stamp duty on in-house flat-plus-cash swaps. Better that than have good buildings go bad or force people to move out of their communities.