This article is about high body corporate charges and the importance of committee attention to detail when it comes to the fine print.
Video: Body corporate charged $16k for Strata Manager to send 5 emails
On the 13 March 2024, Nikki Jovicic spoke with Ross Anderson, a Queensland lot owner about high body corporate management charges and what’s really in your contract after his body corporate noticed a number of unusually high fees for the simple task of distributing emails to owners. Considering the information that has hit the media this week about a strata management firm and unfair charges relating to referral fees and insurance commissions, this video illustrates the extent of the problem. Here we are speaking about a different large firm in a different state with different circumstances.
“In the strata world, particularly with our money, you have to be looking all the time. Asking questions, keeping an eye on it. …So often in the strata world, you lift up a rock and cockroaches crawl out”.
Contents of the video:
- Ross details charges that have been imposed by their strata management company between September and November 2023 for sending a series of emails with attachments.
- How additional charges for EGMs were also adding up to thousands of dollars.
- As the charges were included in the management contract, shouldn’t the committee have been aware of the charges?
- The committee’s responsibility: Whose job is it to monitor and address additional charges?
- What is the committee doing about distributing correspondence in the future?
- Are the fees you are paying your body corporate management company fair and reasonable?
If you’ve experienced a similar problem with high body corporate charges in your strata scheme, please share your thoughts and post your comments below.
Ross Anderson
Active QLD Lot Owner
This post appears in Strata News #687.
Have a question or something to add to the article? Leave a comment below.
Read next:
- Understand Strata Management with this Five-Minute Guide
- NSW: Q&A The Management Agency Agreement
- NAT: Q&A Yearly Increases To Strata Insurance
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Kick backs to building managers allows for a mark up of 120% in many cases….sub contractor quotes….contractor doubles the quote….kickbacks to get that overpriced quote over the mark….owners pay…..common as hens teeth……
Hi Eric, I’m a journalist at the Sydney Morning Herald looking into exactly this issue. The ACIL has reported something similar in its report. Are you able to provide more details? My email is amber.schultz@smh.com.au
Hi there – Hope you don’t mind me posting here but I encourage people to submit their strata stories to our ABC investigation if you haven’t already – you can get in touch via abc.net.au/strata.
Hi Flip
Thanks for your comment. We’ve been directing people to your request for submission page all week. We added a link to the ABC article in yesterday’s newsletter. we are happy to assist in any way we can. Just let me know.
Hi Nikki
Am I still allowed to post my story to the ABC investigation, its currently pending a VCAT hearing
The only way to complete a valid comparison is to issue a brief which the strata companies respond to. Most committees fail to do this as they are time-poor and follow on from what was done previously or what their current strata manager recommends.
There is an affinity to shun more frequent committee meetings which works against positive outcomes as items are either rushed or missed or avoided in the rush of the 3rd or 4th hour of that meeting.
With eternal vigilance as you suggest, there is a ;lot of push-back from the committee who do not want to look foolish.
Let’s not forget the insurance commission that the Strata company receives for doing very little.
Peter
Most strata management companies factor the insurance commission when calculating your base fee, Normally if you go to an insurer directly, you don’t get it that amount cheaper. The elimination of the insurer (which you choose from the min 3 quotes) providing the commission to us simply will see your base strata management fee increase i.e. you will pay it anyway.
Do you realise we have to undertake training in order to provide you the insurance and the information about your insurance – not to mention explaining the insurances to the Owners Corporation.
Although many strata managers use Brokers, brokers don’t need to declare the markup or commission they get however strata managers are.
You may believe that a strata manager is doing nothing however this also is not the case when we need to get disclosures together in order to even get your insurance let alone if we deal through a broker and deal with all the questions and providing them with the information in order for you to obtain insurance.
Unfortunately many owner believe we do nothing but if they stepped into a strata managers office for a day, they would more likely say we earn very little compared to other professions, deal with a multitude of complaints and most owners (and trades) say they wouldn’t do our job for quids.
Someone needs to read and understand the fine print of management agreements before signing.
many Strata managers will accept a more reasonable approach, but must do upfront.
They do not want too loose your management.
Agreed. Talking with your strata management firm is a great place to start.
A few years ago, a member of the UOAQ developed a standard form BCM contract tender which hilighted key points which the applicant BCMs needed to address. This was designed to allow the scheme to compare apples with apples when the tenders were received. This would be attached to the successful applicant’s contract, with the proviso that if there was any conflict between the tender form and the BCM’s contract, the tender took precedence. A number of schemes took up this process, for a relatively minor fee, and I understand it was quite suv=ccessful. however, getting BCMs to tender was a challenge.
I have seen the same proposal for lift maintenance contracts from the lift consultant favoured by the UOAQ. When you think about it, both the BCM’s contract and the lift company’s contract are of the same structure, ie Set Fee for Set Service PLUS Additional Fees for Additional Services. And both are intended to maximise the profits through the extras.
And Nikki is right, there are good people out there. The difficulty is finding them, and keeping them…but you still need to be vigilant, You owe it to the owners whom you represent.
Pete…thanks for sharing this. Do you have a Cmttee which is on to this, or asleep at the wheel?
As I said in the podcast, every time I lift a rock in our strata world, more cockroaches crawl out.
Their fees are ridiculous! We are a small complex of 20 townhouses and 20% of our levies goes to BC management. The committee does most of the work organising any trades needed, quotes etc. All BC do is pay invoices etc. and send out emails to owners.
Our base fee is $4750. Then we pay around another $5k in fees for emails, phone calls, which are pretty minimal.
We’re looking around for someone cheaper!
Fiona…welcome to strata shark world, where we are the ‘chum’.
Does your BCM ‘organise’ your strata insurance, find your auditor if you need one, find a Quantity Surveyor for your Sinking Fund Forecast and Insurance Replacement Valuations, etc, etc, etc?
If you have been able to isolate your BCM from these 3rd party services then you are doing well, even if the BCM’s add-ons may be concerning.
We know there are some companies in the industry who have questionable practices, and as Ross says in the video “In the strata world, particularly with our money, you have to be looking all the time.”
However, the LookUpStrata Team would like to remind everyone that there are plenty of strata management companies across Australia that carry out these services for the buildings they manage with their clients best interests at heart. They have reputable and reliable contacts within the industry and the relationships are above board with no kickbacks.
Fiona, you may be able to have a chat with your current Strata Managers. Requesting a breakdown of the charges is a great place to start. To reduce costs in the future, the company may be open to negotiation or the committee can take on some of the work to reduce costs. Numerous strata management firms charge fees for tasks they perform because the work is essential, and certain committees may lack the time or expertise to take on these responsibilities.
Why not do it yourself? With good accounting software and the EC involvement it should be fine!
We just got hit with $21,000 in a year for photocopying for around 150 pages for 200 lots. They could’ve had the materials printed, illustrated, hardbound as books and sent for less.
Companies make a lot of money from photocopying. Ours charges 62 cents per black and white copy when Officeworks charges 10 cents per copy. Therefore if your AGM notice has say 50 pages that is a cost of $31.00 per owner to the body corporate. In your case 200 lots x 31.00 = $6200.00.
Pete, I suggest you make sure that your BC manger has all your owners email addresses, if not arrange for that to happen and then inform the company that from now on all correspondence to owners is by email You should see a good saving in fees.
Thanks John, it’s been proposed to the owners corporation but they refuse to allow email only because they “feel that owners can ignore email more easily”. I am proposing that printed material be opt in at an extra cost so hopefully that gets across the line.