Governing the compact city

Posted by Oliver Hogue on 19/06/2012

The key challenges facing the strata industry have been revealed following the completion of the first major study of the sector undertaken in Australia.

The research project called ‘Governing the Compact City’ brings together the views of more than 1500 strata owners, managers and peak body representatives. It was launched on May 21st at The Mint in Sydney by the NSW Minister for Fair Trading, Anthony Roberts.

The Minister said that the report is the culmination of two year's work that involved research and engagement with strata managers, executive committee members and strata owners.

"The report has already stimulated further interest in research on this important topic that until now hasn't received the attention and focus it deserves," Minister Roberts said.

"I have no doubt that the information in the City Futures report will provide important input into the NSW Government's current comprehensive review of strata and community laws."

The research was undertaken by the City Futures Research Centre at The University of NSW and funded by the Australian Research Council.

 Dr Hazel Easthope, Research Fellow at the City Futures Research Centre, says, “The project was a cooperation between peak bodies, private industry and Government and had never been done before.”

Project partners include NSW Fair Trading, NSW Land and Property Information, Strata Community Australia, the Owners Corporation Network, Lannock Strata Finance and Macquarie Bank.

“While the project is about the governance and management of strata schemes, really what we were trying to do is work out what’s working and what isn’t in the industry and provide some facts and figures around that,” she says.

Approximately three million people currently live in strata-titled homes in Australia, according to the research project's estimate.

“That’s one in ten Australians and in our major cities it’s even greater. The proportion of people living in strata in Sydney for example, is about one in four.”

“Living in strata really is a different kind of property ownership,” Dr Easthope says. “People are buying their own lot and a joint share in everything else. It sounds basic, but can be quite challenging for people to get their head around the implications.”

“One important aspect to come from the research is that owners corporations are effectively run like a fourth tier of Government. They elect representatives, they tax their members through levies, and they set and enforce rules that govern behaviour,” she says.

While the report focuses on NSW, the findings are expected to have implications for the entire Australian strata market given the similarities in governance and management arrangements.

Owner engagement

“One of the big issues to come from the study was owner satisfaction levels with other owners, and the level of knowledge about rights and responsibilities with strata,” Dr Easthope says.

“Our results found that 36 per cent of owners felt the level of general understanding amongst other owners in their scheme was less than satisfactory.”

And while 75 per cent felt there was some level of cooperation between owners, Dr Easthope says 37 per cent of executive committees expressed difficulties recruiting people to sit on the committee.

“Getting people to step-up and take committee roles is clearly tricky and there were essentially two ways of thinking found in study. Some people didn’t want to because they don’t have time or think the committee is doing a good job. The other way was that people didn’t know how, or feel that they were able too, and that’s a bit more concerning.”

Strata management

The study also explored the satisfaction levels with management of different types including executives, committees and building managers.

“29 per cent of owners, not on a committee, were dissatisfied with the performance of their executive committee, while 27 per cent were dissatisfied with the performance of their strata manager. Of the owners that hired a building manager, 16 per cent were dissatisfied,” Dr Easthope says.

“The single most consistent reason for either satisfaction or dissatisfaction with strata managers and executive committee members was communication. Where you had good communication, people were happy and where you had poor communication, they were not. This sat way above and far beyond any other factors like value for money,” she says.

Repairs and maintenance

One of the most striking findings of the study was the extent of concerns around building defects, according to the report.

“We asked owners whether they were aware of building defects in their scheme and 72 per cent of all owners said they were. Some of those owners had problems getting their building fixed and 75 per cent of owners reported that they were still experiencing problems.

30 per cent of owners surveyed said that they thought planning and budgeting for repairs and maintenance in their scheme was inadequate. With 20 per cent of owners reporting disagreement over repair and maintenance expenditure and 28 per cent of owners feeling that levies were inappropriate.”

Common disputes

Less surprising were the common causes of disputes in strata schemes with parking the main cause, followed by noise and the breaking of by-laws, according to the report.

“51 per cent of owners said they were aware of disputes in their building since they had moved in, however, 61 per cent of disputes were said to have been resolved informally,” she says.

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