$486 billion warning to NSW homeowners
New laws coming into effect on July 1 are a warning to NSW property owners to get their home affairs into order.
There is a tranche of strata laws starting on July 1 in NSW, and then even more later in the year, which are aimed at improving the lives of residents.
It comes at a time when data from UNSW Sydney and the Strata Community Association reveals their growing number to about 17 per cent of NSW residents.
There were 91,346 strata plans across NSW as at 2024, up from 89,049 in 2022. The total number of individual lots grew to 1,077,277, up from 1,043,690 in 2022.
The estimated total insured value of strata plans grew to $486bn, up from $456bn as the number of buildings and the construction cost to replace them increases.
With 55 per cent of all strata plans built before 2000, it means no let up in the pressure on repairs and maintenance for those owners corporations, according to Hazel Easthope, from the City Futures Research Centre at UNSW Sydney.
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Prior research put the number of annual call-out jobs at 1.7m, costing $2.5bn. Unfortunately the strata management industry has some dreadful practices. It was highlighted when the ABC reported in May last year that Netstrata, one of the state’s biggest, had been using its wholly owned insurance arm to charge apartment complexes excessively high insurance brokerage fees.
NSW Fair Trading recently issued a 24-page report by McGrath Nicol Advisory into Netstrata that identified possible breaches of the Strata Schemes Management Act 2015, including instances of nondisclosure of commissions received; instances of failing to obtain at least two quotes for expenses exceeding $30,000; and nondisclosure of commissions received from a third-party service debt collection agency, Strategic Collection Services.
The report advised there were other practices not in the best interests of the consumer, including charging a premium to strata plans who did not use Netstrata’s wholly owned insurance broker, Strata Insurance Services (SIS) along with a remuneration structure which incentivised its strata managers to bill for add-on charges.
It found a “highly saturated use of related entity suppliers” with whom Netstrata had a commercial arrangement. “Netstrata’s own interests appear to have trumped the interests of the people it had a duty to act on behalf of,” the Fair Trading commission’s Natasha Mann advised. Netstrata disputes this.
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Last month, Minister for Fair Trading Anoulack Chanthivong announced the appointment of Angus Abadee to oversee the strata industry as the NSW Strata and Property Services Commissioner.
Abadee will lead “initiatives to enhance industry integrity and lift consumer confidence” having held senior positions in the Building Commission NSW.
The McGrathNicol review did not consider Netstrata’s actions under the new laws.
The July 1 changes are aimed in part “to protect owners in strata from unfair contract terms and facilitate an uplift of strata management services to improve owners’ confidence”.
NSW Fair Trading advises a meeting needs to be held between the committee and strata manager to allocate and complete the new specific task.
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Originally published as $486 billion warning to NSW homeowners
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