Could we ever have a not-for-profit strata manager?

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I fielded a phone call from a former NSW Fair Trading Minister the other day asking why there isn’t such a thing as a not-for-profit strata management agency.

By the way, I’m not dobbing anyone in here – there are at least five former strata managers currently roaming the corridors of power in Macquarie St, Sydney.

Back to the “social profit” strata manager – at first glance, it seems an unlikely proposition.  Strata management firms are a business, not a social service.

However, legal firms are businesses too, yet there is still a need for services like the Redfern Legal Centre which provides legal advice and advocacy across a broad range of issues, for people who can’t afford to pay for lawyers.

But why would apartment owners need an agency that was more focussed on service provision than profit?

My caller was appalled that the strata manager for the small mixed-use block in which he has an office would only turn up once every three months, if that.

Considering that half the strata schemes in Australia don’t have strata managers, and strata legislation, and its interpretation and implementation, are getting more complicated every year, you can assume that some strata residents, somewhere are missing out on essential advice.

More people than ever are moving into strata for the first time, most with little idea of what their rights and responsibilities are. As a result, many strata schemes are beset with problems with no one to offer them clear solutions or support in achieving them.

It’s the small schemes that miss out. Larger schemes have enough financial heft to be able to demand a top-of-the-line service.

The average cost of strata management can be around $280 per unit, per year, give or take.  In a scheme of 100 units, that’s $28,000 a year and a competent strata manager could easily handle 10 different schemes, if not more, bringing more than $280,000 into the business while still providing quality, hands-on service.

Scale that down to a 12-unit block and the income is less than $3,000 a year. The strata manager would have to look after 90 buildings of that size to generate the same income.

The result is that small blocks can’t expect to get the same level of attention as larger schemes, even though they may have just as many issues. In fact, the politics of small strata schemes can be more intense because it’s individuals against individuals or small groups.

Okay, but do you really need professional advice?  Isn’t that what NSW Fair Trading, Consumer Affairs Victoria and Queensland’s niftily named Office of the Commissioner for Body Corporate and Community Management are for?

No.  They will only offer general advice on the law and they certainly will not fight your corner in a dispute, regardless of how clear-cut the issues are.

So maybe it’s not such a crazy idea after all. Sydney’s Redfern Legal Centre manages on a mixture of government funding, support from city councils and other agencies whose clients benefit from its work, private donations and pro bono work by professional lawyers.

Maybe our state governments could look at funding a basic service for small schemes on a capped user-pays basis, with support from the strata management industry, both in funding and pro bono work, all hooked into an online self-management system.

Let the small schemes look after themselves until they hit a problem that requires professional help.  Then have an agency on standby to provide it, staffed by young strata managers getting a taste of real strata life.

Crazy? One CEO of a major strata management firm that I spoke to said this would be a great training tool for freshly qualified strata managers.

And I know at least one government minister who would vote for it.

A version of this column first appeared in the Australian Financial Review.

 

2 Replies to “Could we ever have a not-for-profit strata manager?”

  1. Pro Bono Strata Management ?
    Not sure how ready the SM industry is for this…not sure whether at $200 per hour charge rates SM’s have the wiggle room / capacity for pro bono work that lawyers have with their $400 per hour rates……

    What’s missing is the Partnership between SM’s and Owners / Committees.

    Too many owners corporations / bodies corporate view their strata manager as someone they can delegate all responsibilities to, washing their hands of responsibility for their building’s future. Uninformed expectations of strata managers from unengaged owners & committees fuel tensions and help perpetuate the blame game that we are all spectators to.

    It is indeed hard for small schemes to find the money to pay for an effective strata manager.
    If owners thought about exactly how they spent their $5000 per year, then they could make the money go further.

    The SM industry needs to look more closely at client needs and figure out where at $200 an hour they can offer value and where owners and committee members need to step up and contribute to some of the work.

    The first thing that lawyers, doctors and other professions do, is to get a feel for their clients and their client’s needs; the SM profession needs to look more to this model and move away from offering a generic commodity called strata management.

    SM’s genuinely partnering with schemes can make the money go further.

    S T R A T A A N S W E R S PTY LTD practical solutions for strata living
    abn 11 600 590 083
    solutions@strataanswers.com.au
    http://www.strataanswers.com.au

  2. Avatar Jimmy-T says:

    This is now being discussed in the Flat Chat Forum

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