ICA Advocates for Overhaul of Victoria's Strata Legislation

According to the ICA, approximately one in five Victorians resides in strata-titled properties. Many of these residents are facing higher insurance costs or difficulties in securing coverage due to governance issues and delayed maintenance. The ICA's submission to the Expert Panel Review of the Owners Corporations Act 2006 emphasizes that building defects in residential apartments are costing Australians an estimated $1.3 billion annually. Without reform, more buildings could become uninsurable or face unaffordable premiums as a result of structural problems and insufficient risk management.

The ICA's recommendations focus on several key areas:

• Enhanced Governance: Strengthening the governance within owners corporations by improving transparency and accountability. This includes targeted education for committee members to better manage complex financial and insurance matters.
• Licensing of Strata Managers: A careful review of proposed licensing schemes for strata managers, ensuring that any new requirements are evidence-based to avoid unnecessary costs or unintended effects.
• Disclosure of Commissions: Full disclosure of payments to strata managers that could influence insurance product selection, with a thorough assessment of market impacts before considering a ban on commissions.
• Facilitating Building Renewal: Lowering the threshold for collective sales of strata properties to facilitate the renewal of older buildings, mirroring New South Wales's move to a 75% owner agreement.
• Enforcement Mechanisms: Introducing stronger enforcement mechanisms, such as public complaints registers, to hold owners corporations accountable for defects.

These proposed reforms aim to address the root causes of rising insurance premiums by improving the overall management and maintenance of strata properties. Effective reforms backed by proper compliance and enforcement are essential to de-risk strata complexes and deliver better outcomes for all stakeholders.

As the number of residents in multi-unit buildings continues to grow, managing the expenses linked to strata properties becomes increasingly significant. The ICA's call for legislative reform is a proactive step towards ensuring that strata living remains a viable and affordable option for Victorians.