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Recent media investigations into the strata sector have highlighted deep-rooted issues, prompting calls for reform to ameliorate a system plagued with secret deals, hidden fees, and unethical practices.
While evaluating the parties appointed for the initial and ongoing management of the strata scheme may not previously have been a key factor in off-the-plan buyers’ decisions, media coverage such as a recent Four Corners exposé is prompting increased vigilance and scrutiny from consumers, something developers must now be prepared for.
Heightened vigilance for buyers
The development of strata schemes will play a pivotal role in bolstering Australia’s housing supply, with 50 per cent of NSW expected to live in strata-titled properties by 2040. With consumer confidence having taken a hit in recent years due to high-profile cases of serious defects in new apartment buildings, such as those at Mascot and Opal Towers, recent reports are likely to raise further concerns.
With stories of cosy relationships between strata management companies and developers, hidden fees unknowingly charged to owners and secret deals between industry service providers, buyers must not only evaluate the quality of the development but also scrutinise the reputation and governance of the management companies they will inevitably be tied to.
The pressure on developers
For developers, the Four Corners exposé means they must rethink their historical relationships with strata management firms and adopt more transparent and diligent practices when considering who to appoint.
In an increasingly wary market, consumers will demand higher levels of accountability regarding the post-sale maintenance and management of their properties. Developers who continue to engage with poor-performing strata management firms may risk drastic reputational damage.
This renewed focus on due diligence may also force developers to present clearer and more detailed information regarding long-term management plans, making strata management an important part of the marketing and sales process for off-the-plan purchases.
Transparency will be key to winning back consumer trust.
Moving forward
In the wake of the exposé, both off-the-plan buyers and developers face new challenges. For buyers, the focus must shift from the short-term appeal of new builds to the long-term financial health of their investments, making strata governance a major deciding factor. Developers, in turn, must prioritise transparency and ethics, not just in construction but also in management partnerships. This shift will ultimately lead to a more robust and trustworthy strata sector.
The Four Corners investigation has prompted a much-needed wake-up call for Australia’s property industry, particularly for those entering the strata market.
Ben Ruddell is the director of Tender Advisory.
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