Scary future awaits for many strata owners

Scratching beneath the current strata buildings reform agenda suggests there is still a scary future for many strata buyers who go in naively.

More than 1.2 million people live in strata communities in NSW, ranging from first-home buyers, young families to downsizer couples.

By 2040 half of Greater Sydney residents are expected to live in a strata complex. Many will be there by lifestyle choice while others will be there by virtue of the cost of freestanding houses.

This week saw another set of strata reforms from the state government affecting the 85,000 strata schemes that started in 1961 at 189 Liverpool Rd, Enfield, at Lindsay Garden, which was celebrated as a world-first as previous multi-living spaces were typically company titles.

There were 139 reform recommendations but they initially have done just 31 updates which are no-brainers.

The 85,000 strata schemes in NSW started in 1961 at 189 Liverpool Rd, Enfield.

Scratching beneath the reform agenda suggests there is still a scary future for many strata buyers who go in naively. Buyers who do not undertake due diligence ahead of their strata purchases will potentially face the frustration of serious challenges.

Buyers who have lived in their own house making unilateral decisions for decades ought to have a checklist.

Searching the strata record will see many of the issues discoverable, but sometimes they are hidden.

It’s important to ascertain the overall building wellbeing.

Of course, much of the recent attention on strata has been on new build, off-the-plan protections.

Existing NSW strata buildings are insured for more than $404bn.

But for long-established buildings it is important to check:

+ If the strata has decent money in its capital works sinking fund for future works

+ Is its 10 year budget plan being updated as required?

Also, stratas that have regularly not spent on vital rectifications and renewal over past decades now face the prospect of having unbelievably high insurance premiums.

These are important insights to glean, especially since the latest reform permits an owner’s corporation to strike a special levy to mitigate a serious and imminent threat to the health or safety of the occupants with just 14 days’ payment notice.

NSW strata owner bankruptcy filings already sit at 18 per cent of all total bankruptcy filings.

It is also important to review the overall building harmony, that is how residents generally get along with each other, and how issues have been dealt with by the owner’s corporation and their strata management.

The latest tranche of rules allows strata owners to bring their pet with increased peace of mind as they cannot be charged an onerous fee, bond or insurance by an owner’s corporation for this right.

The other key recent reform surrounds the compulsory renewal of older blocks, with buyers needing to seriously anticipate whether their proposed purchase runs the risk of being seized by developers who intend to demolish and rebuild.

There will be little joy downsizing into strata only to face being booted out shortly after your arrival if 75 per cent of your fellow owners want out.

Originally published as Scary future awaits for many strata owners