NSW Building Commissioner David Chandler’s team has revealed that apartment blocks are poorly built and the resulting flaws ignored under the not very watchful eyes of Strata professionals.
And at your first AGM, you might find your Strata manager urging owners to enter into maintenance contracts for elements of infrastructure that the developer was given free of charge.
These so-called embedded networks are the latest tactic that allows unscrupulous developers to profit by getting something for free that they would normally pay for, provided they convince naïve owners to sign up to ultra-long-term, overcharged maintenance contracts.
Then there are all too frugal committees. These are typically dominated by absentee investors whose main priority is to avoid ever increasing duties (or fees).
Because they do not need to know the results of their decisions directly, investors can often blindly see the structural deterioration of a building, especially when defects go unreported, repairs or basic maintenance are not carried out, and even cleaning is neglected.
A savvy investor should calculate fairly quickly that if demand for purchase and rental slackens, his run-down apartment building will be at the end of the queue for tenants and buyers.
Personally, as an investor or resident, I would never elect a non-resident to any Strata committee office.
Select people who literally have to live with the consequences of their decisions, and that includes how diligently they review prospective managers’ track records.
Just to be clear, there are many good, honest, hard working committee members and managers. But the bad ones can pile up and do irreparable damage to your investment
Finally, a word about Queensland. There, the tricky decision of who to hire as a janitor or janitor is likely to be pre-sold by the developers just so they can pocket more cash.
It is morally corrupt to take the right to choose the steward of your home and sell it behind your back to someone who will profoundly affect your life for decades to come.