Will Strata Implode in NSW?
I recently spoke with an SMH journalist about several issues surrounding the strata industry in NSW (link to the story below). After fifteen years building a career — and now my own company — I’ve become passionate about ensuring buyers are fairly represented and truly understand what they’re getting into.
Here’s one thing I’ve learned that never changes: Buying into strata will always be risky!
There are risks you can’t see.
There are risks you won’t be aware of.
There are risks you have no direct control over.
Most people buy into strata because they’re priced out of buying a house in the area they want to live. Very rarely do I meet someone who could afford a house but chooses strata instead. When they do, it’s usually for the promise of low maintenance and/or safety and security.
The 3 Reasons I Worry the Strata System Is Going to Implode:
1. The Quality of Strata Reports
A strata report can only include the information the inspector is provided during the limited 60–90 minute window granted by the Strata Managing Agent to access records. Considering there are often hundreds — sometimes thousands — of documents, this is not a lot of time. Inspectors must navigate ambiguous notes, poor organisation, and sometimes even records inherited from a previous manager.
Every building and every strata agent is different, so the information in reports is never guaranteed to be complete. It’s simply not feasible for inspectors to access and interpret all relevant documents 100% of the time.
As a result, the final report you receive may lack information you would’ve considered critical to your decision-making. Even commissioning an independent report doesn’t necessarily solve the issue — the underlying challenges remain the same.
2. The Lack of Personal Accountability for Maintenance Over Time
This one really concerns me. Let’s talk about waterproofing.
Waterproofing is designed to last 20–25 years. After that, it naturally needs replacing. It’s not poor workmanship — it’s just the end of the product’s life.
But here's the issue. According to the NSW Legislated Common Property Memorandum, here's who’s responsible:
If the waterproofing is original and on common property floors (which includes most apartment bathrooms) — it’s the Owners Corporation’s responsibility.
If waterproofing was later installed (i.e. through a renovation) — it becomes the lot owner's responsibility.
Do you see the HUGE RED FLAG?
If someone never renovates or maintains their original bathroom, and the waterproofing fails at the 20–25 year mark, the Owners Corporation has to pay for it. There’s no personal obligation on the owner to maintain or update it.
Meanwhile, owners who take initiative and renovate? They foot the bill themselves.
3. The Business Model Behind Strata Managing Agents
Without diving into a full-on rant (though I could!), I truly believe the current business model of Strata Managing Agents is ripe for disruption.
They’re paid an annual fee by Owners Corporations, and then often profit further through kickbacks on insurance premiums and, I suspect, from preferred tradespeople they funnel work to. That’s a huge conflict of interest.
Owners Corporations are made up of everyday people who bought into apartment or townhouse blocks. They rely on Strata Managing Agents to be transparent, trustworthy, and act in their best interests. But if agents are financially incentivised by third parties, how can that alignment truly exist?
My Advice Based on All of This:
If you can afford a house, avoid strata at all costs.
If you’re buying into strata, make sure you have expert help to navigate the risks and challenges.
If you know someone looking to buy into strata, feel free to forward them this newsletter. I’ve included a link below to my ebook Navigating Strata Reports — hands down the best $9.95 you can spend if you’re buying into strata.
Navigating Strata Reports with Confidence; How to spot red flags!
Upon purchase you will receive a link to download the guide. This link is valid for 24 hours only. Please ensure you save your download.
A$9.95
