First Time Property Investing
Blog

Want more know how? Check back regularly for insights and updates on building your portfolio, upcoming events and more.

How To Avoid A Strata Nightmare!

How To Avoid A Strata Nightmare!

16th October, 2018

Strata living is a decidedly Australian phenomena, created half a century ago in order to make  chasing the Australian dream just a tad easier. It’s since been adopted internationally as a means of giving those living in apartment blocks and shared sites greater ownership rights, freedoms and sort of self-governance. Of course though, cohabitation can easily breed conflict, and that Australian dream of ownership can devolve into a nightmare of internal squabbles and a feeling of powerlessness.

A key problem with strata living is perception. That Australian dream has twisted the concept somewhat. Buying an apartment is not the same as buying a house. Yes, you’re buying your own property to do with (more or less) what you please, but you’re also buying into a collective and all that comes with it. It’s important to recognise this coming in and accepting that you’ll need to work with people and won’t always get your way, particularly in large buildings where concerns are more numerous and varied. 

There’s been a fair amount of legislative change in the sector recently, especially in NSW (where a quarter of the population lives in, owns or manages a strata), to try to hammer this point home. The main concerns in the past have stemmed from strata members having absolute power to stop change and very little to incite it. Renovations, sales and concerns could be blocked or stopped by a single resident, and the need for a unanimous decision meant that even important changes were going unimplemented.

In the last year or so these issues have been somewhat alleviated. Safety rails no longer require aesthetic approval from all residents, renovation schemes are more clear cut and the option of council intervention into shared parking is now on the table. Voting on strata decisions can also now be done through electronic services, and the voting now more closely resembles the ‘Singapore model’. 75% of strata members can compel a decision over a dissenting 25%, where once only one disagreement put the halt on things. An increase in government oversight has, by and large, reflected well on strata living.

Outside help can often further streamline things and it’s worth understanding the exact delegation of power of a potential strata scheme. The extent of desired involvement will also come down to taste. Some will prefer having an independent company acting as strata management. This sort of setup, if implemented properly, can get rid of a lot of headaches. It doesn’t make for totally hands-off living, but you shouldn’t be looking for that anyway. Trust me when I say that giving up all involvement in a strata is only going to increase your stress, not lighten it.

Even with a manager involved the board still needs residents, and you’ll want the right people. People with property experience, tradespeople, the financially minded and those willing to cooperate. You’re all in this together, so make sure you’ve got some good expertise! My view is that strata living agrees more with the proactive tenant or investor; someone who pays attention to the decision making process, the rules already in place and how the various members interact and the extent to which they cooperate. Regardless of whether you want to take a back seat or get involved, you’ll need to have your head screwed on and be tuned into the factors at play before investing.

If you’re looking at getting into a strata, talk to it’s current occupants for some insight. Ascertain their views on things and how the decision making process has gone in the past. Get to know these potential neighbours and how well you’ll be able to work with them. This is especially true in smaller properties, where tenants are going to have more interaction and involvement in things like common areas and renovations.

Examine what you’re like as a tenant. Whether you’re a smoker, a pet owner or a tad neurotic about renovations, make sure a strata agrees with your quirks. Legislation is having more and more effect on these sorts of things as well; with smoking and pet bans and restrictions becoming easier to implement.

Strata living is a cooperative endeavour, by definition and soul. Realisation of this simple truth, and a willingness to work with people rather than against them is imperative. Some of strata living’s most glaring issues are being swept away by some smart legislation. Finding a supportive and effectively run strata is not the task it once was but living in a strata effectively does still require a hands-on approach and respect for compromise. Come well researched and well mannered, or don’t come at all.

by Luke Moroney

Subscribe to the Mailing List

Get more know how. Sign up for Luke’s fortnightly newsletter to learn about upcoming events, tips and more.