Inquiry to put booming but troubled strata sector under microscope

How Canberra’s strata properties are managed will come under the scrutiny of a Legislative Assembly inquiry that could shape the role of a promised Strata Commissioner and new laws to govern the burgeoning sector.

The Legislative Assembly’s Standing Committee on Legal Affairs has kicked off the inquiry and is calling for submissions from all interested parties ahead of holding public hearings.

Chair Peter Cain said it was an important inquiry given Canberra’s changing housing choice and where the government was focusing its development and planning outcomes.

“Given a significant proportion of ACT residents live in a strata property, an examination of how well they presently function is important,” he said.

“Even more people will live in apartments, townhouses and mixed-use developments.”

The inquiry will focus on the application of the Unit Titles (Management) Act 2011. It will include the role of strata managers, the roles and responsibilities of executive committee members, decision-making in strata developments, issues arising in mixed-use buildings, access to sustainability initiatives by residents, and the potential for a Strata Commissioner in the ACT.

The terms of reference list potential conflicts of interest for strata managers, their level of qualifications and licensing, as well as fee models as topics to investigate.

Decision-making models in strata properties and the training and skills required by executive committee members are also on the table.

The inquiry will also examine the demands of the energy transition in strata properties and the issues that arise with investment decisions, such as electric vehicle chargers, solar power generation and replacing gas appliances with electric ones.

At the last election all parties committed to establishing a Strata Commissioner to oversee the sector, something the strata industry and the Owners Corporation Network also backs.

“I’m sure those who tell us it’s needed will suggest what that person should be doing and what powers they should have and the degree of independence they should have,” Mr Cain said.

Mr Cain said he wanted to hear from owners and renters, strata managers, contractors, lobby groups and executive committee members.

“Even the community councils because they’ve all got emerging unit title developments happening in their areas,” he said.

Owners Corporation Network president Gary Petherbridge said the strata sector had grown to about 5000 unit complexes containing between 80,000 and 100,000 homes, but the supporting legislation was more than a decade old.

Mr Petherbridge said it needed to be updated to take into account the changing strata environment in the ACT.

He said the strata management industry needed to be more transparent when it came to conflicts of interest, for example, insurance and relationships with developers.

Strata managers also needed to be more qualified and skilled, and executive committees better educated so complexes could be run better.

“It’s not the same as being a rental manager or a property manager or a salesperson in the real estate sector,” he said.

Mr Petherbridge said complexes were like small businesses, with big ones having budgets of over $2 million.

He said people were losing confidence in moving into strata because of potential conflicts with fellow owners and residents, but that was associated with the quality of the executive committee and the strata manager.

The owners corporation needed to accept that they were at the top of the governance tree, followed by the executive committee and then the strata manager.

“The strata managers have been too much seen by owners corporations as the boss, and that’s the fault of the owners corporations themselves,” Mr Petherbridge said.

“They need to take control of things, and the more and more we see decent owners corporations taking control, the better we’re going to be.”

Mr Petherbridge said fee and levy creep was also an issue with owners, mainly because sales agents minimised these costs instead of being upfront about how much it really costs to run a complex, including sinking funds to maintain them.

Strata Community Association Australasia CEO Alisha Fisher welcomed the inquiry, saying the industry has long advocated for minimum qualifications for strata managers and a Strata Commissioner.

Ms Fisher said that at present a strata manager only had to have a real estate licence, which was irrelevant.

“We’re open to be involved as much as we can to make sure that they have the right requirements for the actual job that a strata manager does,” she said.

Ms Fisher said NSW had legislated for better education for executive committees, which often pushed back against strata managers who were obliged to ensure they met their legal requirements.

Ms Fisher said the SCA’s best practice guide, introduced last July, was mandated across its membership and addressed conflicts of interest.

She said it required full disclosure on insurance, right through from commissions to relationships, and managers could face a code of conduct breach if they didn’t comply.

Independent MLA Thomas Emerson, who made the establishment of a Strata Commissioner a condition of supporting the Labor Government, said the inquiry was an opportunity to bring the community into the policy development process in an open, transparent way.

Mr Emerson said many unit and townhouse owners struggled with getting defects fixed, electrifying their complexes and coping with high strata management fees, poor service delivery and growing insurance premiums.

“Independents [in the Assembly] listened to our community and were the first to propose the establishment of a Strata Commissioner during the 2024 election campaign. It has been encouraging to see multi-partisan support grow for this policy since then,” he said.

“I’ve been engaging with [Attorney-General Tara] Cheyne about the early work around establishing an ACT Strata Commissioner.”

Canberrans have until 7 March to make submissions.