NAT: A Fair Future For Strata: Navigating the Crossroads of Strata Management Fees

The recent webinar hosted by LookUpStrata on fair strata management fees in Australia successfully initiated a lively and thought-provoking discussion, attracting over 1100 registrations and, at one point of the session, a live audience of over 570 attendees. The webinar was moderated by Nikki Jovicic, the managing director of LookUpStrata and Tower Body Corporate, and included a panel of six industry professionals offering diverse perspectives:

• William Marquand, General Manager and Senior Body Corporate Manager at Tower Body Corporate
• Michael Teys, Strata Management Consultant and Researcher
• Luke Downie, Head of Strata and Business Development Management at Realmark Strata
• Leanne Habib, Chief Executive Officer at Premium Strata
• Michael Kleinschmidt, Partner and Legal Practitioner Director at Bugden Allen
• Aaron Petrilli, Director at Property Recruitment Partners

The webinar focused on the crucial issue of declining strata management fees and their impact on the industry’s sustainability and the quality of service provided to lot owners. Panelists acknowledged the increasing complexity of strata management due to factors like evolving regulations and the growing diversity of strata schemes.

A central theme of the discussion was the need for strata managers to move away from the prevalent “race to the bottom” pricing model, where companies undercut each other on price, often at the expense of service quality. Panellists urged strata managers to focus on demonstrating their value to clients and justify higher fees that reflect the true scope of their work. They suggested that clearly articulating the value proposition at various points during the client-manager relationship, including before appointment, during handover from previous managers, when addressing out-of-scope issues, on annual anniversaries, and at the end of the contract term, could facilitate more transparent and productive fee discussions, resulting in fair strata management fees.

NAT: A Fair Future For Strata: Navigating the Crossroads of Strata Management Fees | Panel – Nov 2024

The Insurance Commission Dilemma

A significant portion of the debate on fair strata management fees revolved around the ethical implications of insurance commissions, with differing viewpoints on the best approach.

• Luke Downie argued for complete abolition, asserting that commissions create a barrier to professionalism and transparency.
• Leanne Habib, while recognising the validity of transparency concerns, proposed a recalculation and revision of the current model, emphasising the value of these commissions in subsidising lower management fees.
• Michael Kleinschmidt, a strong proponent of eliminating conflicted remuneration, argued that commissions create a conflict of interest for strata managers and proposed converting commission-based work, such as claims processing, into fee-for-service arrangements charged directly to the owners corporation.

Key Actions for Stakeholders

The webinar offered valuable takeaways for various stakeholders in the strata industry.

Strata Managers and Strata Management Companies

• Embrace Technology: Utilise technology to improve efficiency, streamline workflows, and reduce operational costs.
• Focus on Value Proposition: Clearly articulate the value and benefits they provide to lot owners, justifying their fees and moving away from the “race to the bottom” pricing mentality.
• Transparency and Communication: Engage in open and honest communication with lot owners, providing detailed breakdowns of fees and clear explanations for any cost increases.
• Reconsider Fee Structures: Explore alternative fee models, such as user-pays or time billing, to more accurately reflect the workload and complexity of managing different strata schemes.
• Prioritise Staff Wellbeing: Recognise the importance of a sustainable workforce by addressing workload pressures, providing opportunities for professional development, and offering competitive remuneration packages.

Lot Owners

• Active Participation: Actively engage in their strata communities, attending meetings, asking questions, and understanding their strata management contracts.
• Realistic Expectations: Recognise the value of professional strata management services and the need for fair compensation that reflects the scope and complexity of the work involved.
• Advocate for Transparency: Demand clear and comprehensive breakdowns of fees from their strata management companies and question any charges that seem excessive or unjustified.

Industry Bodies

• Advocate for Fair Pricing: Facilitate industry-wide adoption of a fairer pricing model that ensures the financial sustainability of strata management companies and reduces the pressure to seek alternative revenue streams.
• Standardised Schedule of Tasks and Pricing: Consider developing a standardised schedule of tasks and pricing structure to promote transparency and provide a benchmark for fair pricing across the industry.
• Transparency and Education: Promote transparency and educate lot owners on the role and responsibilities of strata managers, emphasising the value they bring to the table.
• Strengthen Regulation: Work with government agencies to strengthen regulation and enforcement of ethical practices within the industry.

The webinar served as a valuable platform for raising awareness of the challenges associated with declining strata management fees and initiating a crucial dialogue on the industry’s future. The diverse perspectives shared by the panellists emphasised the need for a collaborative effort between strata managers, lot owners, and industry bodies to create a more sustainable, ethical, and transparent strata ecosystem that benefits all stakeholders.

Presentation slides

Download Leanne Habib’s slide pack from today’s presentation

Download Aaron Petrilli’s slide pack from today’s presentation: The critical connection between sustainable strata management & a fairly compensated workforce

Presenters

Michael Kleinschmidt
Bugden Allen
E: michael.kleinschmidt@bagl.com.au
P: 07 5406 1280

Michael Teys
Strata Advisory
E: michael@michaelteys.com

Luke Downie
Realmark
E: ldownie@realmark.com.au
P: 08 9328 0999

Leanne Habib
Premium Strata
E: info@premiumstrata.com.au
P: 02 9281 6440

William Marquand
Tower Body Corporate
E: willmarquand@towerbodycorporate.com.au
P: 07 5609 4924

Aaron Petrilli
Property Recruitment Partners
E: aaron@propertyrecruitmentpartners.com.au
P: 02 8313 5591

This article was written by The LookUpStrata Team.

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Read next:

• Live Event: A Must-Attend Event on Ethical Strata for Queensland Lot Owners
• NAT: Race to the Bottom or Sustainable Future? The Strata Management Fee Debate
• NAT: Strata Management Charges – Why the race to the bottom is not good for anyone

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