Strata Schemes Underpin Apartment Living

Even to the most casual observer, the character of our major cities has changed greatly over the past few decades. We have become accustomed to and very comfortable with apartment living however, as more of us choose to live in apartments the impact of strata title living merits greater understanding.

Often described as the ‘fourth level of government’ approximately 17% of Australia’s population live in strata title properties. However, these numbers are somewhat conservative. The figure could be as high as 26%. In the ACT and Victoria, the figure is estimated at 19% and in NSW 18%.

Some major headline figures are not often published and might be a surprise. Nationally, there are 340,601 strata schemes – a figure which is constantly growing.

There are some 2,869,845 individual lots – small schemes are rare with only 67 schemes having only 1–5 lots, while 92% have 20 lots or fewer. Interestingly, while only 2% of strata schemes have more than 50 lots, but they account for almost 23% of all lots.

Current trends that show the growth is mainly concentrated in bigger schemes (buildings), and given land and building costs this is not unexpected.

Almost half the growth has taken place since 2000, so that more than half of strata buildings are at least 20 years old. These figures would tend to suggest a surge in renovations in the near future.

Apartment living in Australia

Beyond these numbers what’s even more telling is that nationally, almost 10% of the population live in apartments, and that accounts for 15% of households. It’s not unexpected that NSW has the most apartment-dwellers at 15% of its population and 22% of households.

Another notable fact is that apartment dwellers are mainly Millennials and Gen Z, with 50% aged between 20–39 years old. Further, 59% of apartment households are single person or couples living together, while households with children made up almost one-fifth or 19% of apartment dwellers.

Strata Committees

These figures are interesting by way of a brief introduction to the role and importance of Strata Committees.

In all of these schemes it is the Strata Committee that’s responsible for the day-to-day running of the strata scheme. Elected at each annual general meeting, these committees indirectly have the potential to impact some 3,000,000 households.

Given the widespread nature of apartment living, and that’s despite some recent trends brought about by the pandemic, it’s worth understanding what a strata committee can do and more importantly, what they cannot do.

The starting point to remember is that there are specific laws in New South Wales governing the functions and duties of strata committees.

Strata committees may range from 1-9 members. In a two-lot scheme, both lot owners must be committee members and in larger schemes, strata committees must have at least three members. The committee has to address core and on-going aspects of the building’s management and finances.

However, a majority of strata schemes will opt-out of directly doing these tasks and appoint strata managers to undertake many of the key tasks that could fall to the committee secretary and treasurer. For secretaries these tasks would include:

  • Managing the strata roll
  • Convening meetings for the strata committee and owners’ corporation
  • Providing notices of meetings & minutes of meetings
  • Enabling inspections of accounts and other committee records
  • Giving information to an individual for the owners’ corporation under section 184
  • Answering all correspondence addressed to the owners’ corporation.

While for the treasurer the main tasks are:

  • Sending levy notices
  • Receipting, banking and recording of any money paid to the owners’ corporation
  • Preparation of any strata information certificates under section 184
  • Maintaining all accounting records and preparation of financial statements.

From these brief descriptions it can be seen how important each role is and why sound external management is required and well-worth understanding.

What Strata Committees cannot do

Strata committees represent all owners however, they don’t make decisions on all matters. There are important restrictions in place and it’s important to understand what the limits are.

In New South Wales, strata committees cannot:

  • Improve or enhance common property
  • Set levy contributions
  • Spend more than 10% above the budgeted amount for any item, unless approved prior by ordinary resolution
  • Commence or obtain legal advice outside of strict limits
  • Approve by-laws
  • Terminate the strata manager
  • Obtain less than two quotes for any works exceeding $30,000.

A majority of the above items, that fall outside the role of the committee, must be approved by an ordinary or special resolution involving a formal owner’s meeting.

Apartments are an important part of our housing stock and it’s a trend that’s set to grow. As a result, the density of cities will continue to change, and this will lead to larger developments highlighting the important role of strata schemes and the need for experienced co-operative management.