Should strata schemes be run like a business?

Run them in a business-like manner, by all means. But like a business? Where the balance sheet is the prime and possibly only consideration? If you try to take the emotion out of strata you risk ignoring one of the prime motivators of owners and residents. You can’t let emotion rule strata schemes, that’s true, but you ignore it at your peril. “My home is my castle” is one of the great barriers to progress in strata communities, but it’s not going away any time soon. Recognise it, deal with it but don’t ignore it.

Me too. But I think you have to embrace the fact that people will bring their emotions to the table whether you want them to or not. And I wasn’t joking about the Qld perspective. The history of strata in Qld starts with holiday homes and predominantly residential blocks are a relatively recent (past 20 years) factor. It’s the opposite in NSW and Victoria, where strata started as residential (with the obvious exception of traditional holiday towns) but then was dragged into holiday rental territory thanks to things like Airbnb.

My thinking is more in line with JT’s. Strata developments are people’s homes and, ideally, form a community of neighbours whose interests go beyond getting a monetary return on a monetary investment. I agree that OC management should be business-like but it should not be without emotion. When dealing with people who are your friends and neighbours, it is best to make some allowances for people’s odd preferences, foibles and sensitivities. That is no excuse for preferential treatment, improper process or disregard for strata legislation but we are dealing with people in their homes, not purely financial investments.

Where I am, we have installed various community facilities and they have been great successes. People love having these structures in place that facilitate meeting their neighbours. To the few owners who were unimpressed, I say ‘Even if you never use them, if nothing else, they have increased the value of your property.’ They were worthwhile enough for that reason but the return on investment of social capital has been far more valuable than the crude monetary value of a unit.

Yes, Strata is indeed a big business ( but without a profit motive for the members running it ) when you are talking about a large strata with over 200 units. We spend about $1.5 million every year and about $900,000 are recurring fixed expenses.

Rest of the amount requires a lot of thought. In our Strata, we examine expenses line by line and see what can be done to reduce and where it can be increased to improve building’s attractiveness for prospects buyers.

All contracts must be reviewed periodically and competitive quotes obtained from  equally or more reputed service providers giving longer terms for better quotes.

Over the last 7 years we were able to keep strata levy increases to 2% per year as a result of these efforts despite spending large sums under CWF as per 10 Year CWF Plan.

This year is a disaster for us as a result of very high building insurance premium following large insurance water ingress  claims after 2020 February storms but owners understand the reason for the levy increase.

We entered into a 3 year energy futures contract with Energy Australia in 2020 when there was panic plunge in energy future prices following Covid19. As a result we now pay average 5 cents per kWh and saved $40,000 per year till end of 2024.

We saved another $15,000 per year after installing solar panels on our roofs in 2018. Saved another $30,000 per year by changing the Building Manager company.

Saved another $20,000 by making prospective strata managers quote strata fees and other expenses per lot and asking them to send meeting notices by post at owner’s expense if email is not given.

Hope this helps others to give better services in their communities.

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