Owning a real estate property is a huge responsibility when you think about various things you have to juggle and take care of – the taxes, the maintenance, and upkeep, the neighbors, and neighborhood rules.
One way of taking care of the property is strata management – a type of real estate management highly popular in Australia and Singapore which is spreading around the world. So, here is what you should know about strata management and why it’s a smart move to ask help from these professionals.
What is strata?
“Strata” is a specific type of huge property that can be divided into smaller parts. These small parts are called lots, and are owned by different owners. Some lots may be bigger than the others.
By owning one of the lots on the strata property, you also gain shared ownership of the entire premises of the strata property. The premises include gardens, foyers, and stairs.
In short, it is a similar concept to an apartment building or a townhouse.
But every person who buys a lot (no matter how big or small it is) becomes also a member of the owners’ corporation.
What strata owners can’t do?
Basically, by becoming a strata owner, you are becoming a member of a community. You don’t buy just the unit – you also get the shared amenities.
However, just because you are a shared owner of certain amenities and areas, it doesn’t mean you can do what you want with them and use them as you please. Certain obligations and limitations come with the shared ownerships:
- you have to park only in your parking spot
- you mustn’t damage public spaces
- you have to clean after your pets and yourself in public spaces
- you have to follow the regulations and policies established by the owners’ corporation.
To make sure that everyone inside the strata property is following the rules, there is often a strata manager hired by the strata property. It can be either a person or an organization – they oversee the everyday upkeep and management to ensure everybody sticks to the rules.
The role of the strata management
In short, the role of the strata manager is an administrative one. Strata managers don’t carry out the repairs. Instead, they arrange a professional to come and fix the problem.
However, it’s important to note that the strata manager only acts with the approval of the executive committee of the strata property. Once they get approval, here are the duties that strata managers have and perform:
- helps with obtaining new policies and with insurance policy valuations
- sends out levy notices and collects levies
- arranges strata meetings, for example, executive committee meetings and the annual general meeting, as well as emergency meetings
- ensures that the strata property is compliant with Work Health & Safety regulations
- pays invoices and takes care of the budget for the expenses
- distributes meetings minutes and notices from the meetings
- acts as a mediator in neighbors’ disputes or between an owner and the executive committee.
Many Australian strata management organizations and managers have taken this role to another level to increase efficiency – good strata management in Northern Beaches, for example, provides a proxy if you are unable to attend a meeting. Others have a digital strata management platform that allows quicker assistance and organization of repairs.
Who runs the strata?
As said before, strata management cannot do anything without the approval of the executive committee, which is made up of some of the members of the owners’ corporation. The committee is usually made up of 3-7 representatives and they oversee the day-to-day maintenance of the strata property.
Besides the administrative role and the legwork involved, the strata manager also act as an educator and a guide to offer advice to the committee. However, they are NOT the ones making the final decision.
Where the levies go to?
A lot of people think that the levies they pay go to the strata management but that is not true. A strata manager sends out the levy notices and collects them but that is all. Levies get stored in administration and sinking funds, both of which are controlled by the executive committee.
To make it clearer why the levies are paid and where they go, here are the three main types of levies collected by strata management:
- Annual administration levies – they are used for day-to-day costs, for example, gardening and insurance.
- Sinking fund levies – used for long-term maintenance cost, such as repairing balconies or painting the entire building
- Special levies – used for unexpected expenses and emergencies. They are used when the sinking fund can’t suffice for covering the expenses.
Strata manager vs. property managers
A property manager acts on behalf of a property owner and answers only to him. On the other hand, a strata manager deals with multiple owners of a single property. They may maintain the property but they can’t represent the owners collectively. Their role is to ensure everybody is satisfied with the shared areas and amenities and that there are no conflicts.
Strata management can make your life much easier if you are a strata owner. If you’re not there yet, you should have in mind that strata management is one of the advantages of living on strata property.