A recent Four Corners report has put the spotlight on hidden strata fees and the damage they can cause to apartment owners.
Hidden Strata Fees and the Push for a Federal Inquiry
The ABC report alleges many apartment owners are being ripped off by strata management companies in the form of hidden fees, secret commissions and kickbacks, and it has sparked calls for a federal inquiry. Owners Corporation Network executive director Karen Stiles told the ABC strata ownership has not been taken seriously to this point and it was time for action. “It’s one thing to go, ‘You’ve been naughty’, it’s another thing to go, ‘And you’ll be handing back the money,’” she said.
Rising Strata Fees: Causes and Impact on Apartment Owners
Apartment owners have been copping rising strata fees as it is due to inflation, rising insurance costs and building defects. The scrutiny brings into focus the importance of understanding strata living and strata insurance before purchasing an apartment. Australian Apartment Advocacy director Samantha Reece said education kits she releases to apartment owners and buyers should be made compulsory. “We’ve asked the government to make that compulsory, because our research shows about 60 per cent of people who move into an apartment do so from a house, so they’ve got no experience with strata costs,” she told realestate.com. “It doesn’t matter where you are in your life spectrum; if you’re a professional couple, a single parent, a baby boomer or a retiree, if you’re forced to pay $70,000 in six weeks – like a case recently in Melbourne – it’s a shock that could cripple you financially.”
Understanding Strata Insurance Coverage and Responsibilities
Strata insurance is compulsory for all strata properties from the moment the strata plan is registered. It’s important for strata property owners to understand that this insurance only covers the common and shared areas in their building. Strata insurance is organised by the owners corporation (body corporate) and the lot owners pay the premium through strata fees. The strata insurance policy is held in the body corporate’s name rather than the individual property owners, and it does not cover contents and personal belongings, temporary fixtures and renovations, nor does it cover public liability inside each lot. The things it does cover include the building structure and common areas, shared facilities like the driveway/pool/gym, public liability in common areas and building fixtures. The owners corporation should renew the strata insurance policy each year, making sure they review the details and get multiple quotes so they get the best price, a price which accurately reflects the value of the property. It’s the responsibility of each individual lot owner to understand what is not covered by their strata insurance so they can then go out and get additional personal insurance in their name. This includes building insurance which covers the physical structure of individual property rather than the shared areas, contents insurance, landlord insurance and public liability within the individual property.
