Strata managers: Under the pressure to renovate
The rage for renovating, swing to strata living and seemingly ever upward property demand is creating new pressure for Strata Managers and Owners Corporations.
Almost a quarter of the Australian population live in a Strata titled home and with the rise in apartment living the number is increasing every day in parallel with the obsession for home renovation.
Influenced by the heady allure of extreme makeovers and the promise of instant profit, Australia has become a renovation nation. Owners often rush to remodel unaware of the costly pitfalls and long-term repercussions.
“Rarely is any renovation experience straight forward but when this is compounded by the lack of, or lax Strata by-laws, as is commonplace, it is just a matter of time before there is a problem.
“Most strata issues and disputes relate to renovations where the owner is unaware of just where their responsibility starts and end. As Strata living is on the rise so too are related renovating disasters,” says Matthew Wrigley, Managing Director of Perpetual Strata Management. Mr Wrigley should know, initially a builder, he has worked in the construction industry for more than 10 years. His career change, into Strata management three years ago, was sparked by the fact that most serious strata issues sprang from a lack of experience and understanding of the complexities of building and construction.
“Strata renovation mistakes and mishaps are often borne out of naivety and compounded by regulations and legislation that are mired in confusion.”
Strata Management schemes have a raft of legislation and regulation to consider when renovating. Any breaches or poorly executed work can have long lasting consequences and cause considerable expense for home owners, fellow residents and impact the value or the sale of everyone’s property.
Residents generally do not set out to fall foul of the system but the mores of Strata regulations and by-laws are open to interpretation, have plenty of grey areas and often are just poorly written and executed in the first place.
Sophisticated investors, first-home buyers, DIY renovators and those from non-English speaking backgrounds are all expected to be familiar with ever the changing technology and terminology of the Australian building code (BCA), tradespeople of varying skills, licences and permits updates. None of this is straightforward.
There are many hidden caveats for the uninitiated: It is a little known rule that all risk lies with the owner and it is the owners’ responsibility to employ a solicitor, expert in Strata matters, to have a by-law written which specifies the planned renovations. Just that exercise can be expensive.
Owners are often not aware of what the term renovation means and indeed there are different interpretations in every building, council and state.
Mr Wrigley recalls one inner-city apartment owner who added down-lights, ducted air-conditioning and a new ceiling, believing that as the owner, he was within his rights.
The renovations only came to light once a council fire order was placed on the building. Not only did this raise the need for a change in by-laws with ensuing legal implications and costs, but the property had to rectified to comply with fire regulation. As this was the responsibility of the Owners Corporation (OC), a special levy of more than $100,000 was struck and each of the Strata unit owners had to foot the bill. And this was in a small strata scheme of 20 units.
A bitter lesson when the owner-renovator has made a tidy profit, sold up and moved on.
Mr Wrigley says, “It happens from time to time and extreme examples are known as a Hollywood renovation where a property is glammed up to sell. The owner knows full well what corners to cut with scant regard for approvals. The only aim is a quick turn around and a quick profit.”
“Hollywood-type builders have made it their business to know how to get around insurances, warranties, approvals and Owners Corporations (OC).
“With a building industry background you can head off any signs of trouble before there is a dispute – but for someone without an insider’s skills and nous it would be very difficult.”
Perpetual Strata Management’s guide to strata renovations:
No secrets no surprises
Advise the OC before the hammer hits the nail to avoid any squabbles. Get in first. Get in early. If in any doubt about what requires the permission of the OC it is safer to assume that permission has to be sought. Put your intentions in writing, to the OC together with plans and documentation.
Secret or illegal renovations done under the cover of darkness can backfire and cause grief and financial repercussions and may affect the value of the property.
Neighbours, everybody needs good neighbours
Face it – renovations can be annoying for the neighbours. The Owners’ Corporation should advise the neighbours of the impending disruption. Even if the OC does this formally the courtesy of a personal note in the letterbox will sooth potential fracas. Renovation noise and mess should be covered under the by-laws including what time renovations start and finish, what happens with debris and mess and tradies access and parking.
Tradies’ parking is one of the biggest issues so best to work that out upfront when you are talking about access.
Down Mexico way – across the border
Each building is unique. Each council will be different and each state will be different in terms of regulations and by-laws and what’s deemed minor and major works. What applies to a property in Queensland is not the same as New South Wales or Victoria. What’s accepted as renovation and what is a cosmetic update will vary. Be sure you understand where your property envelope starts and finishes and where the common property starts as this will be the responsibility of the OC. Familiarise yourself with the terminology as it is not obvious or simple.
Cousin Vinnie renos
For small renovations the home-handyperson is fine. If the work is worth more than $1000 you will need a licenced builder. There has to be a formal contract between you and your tradesperson. It befalls you to check the licences are update and in order. Best to keep a copy of these to provide to the OC. Where the work is worth more than $20,000 Home Owners’ Warranty Insurances is mandatory. This is considered an insurance of last resort if the builder defaults, goes bankrupt or dies.
Avoid the damp squib
Be aware that anything to do with water is potential for trouble. To an amateur DIYer what could be simpler than buying a bucket of waterproofing-liquid-membrane and slapping it around the shower recess. But a disregard for application and drying times will see more leaks than the Trevi Fountain in years to come. Usually it is years later that a leak springs and you may have to rely on the paperwork at the time of the project to decide who takes responsibility and ultimately who pays for damages. Where plumbing is involved bring in a professional plumber.
Wires and cables get the chop
Mistakenly cutting through wires, cables and pipes can happen to the most experienced builder or contractor. The repercussions of this can be costly particularly if the premises are commercial. But it is the inexperienced or illegal renovator who is unaware of their obligations. The builder has the responsibility of preparing a defect report before the works begins so that there can be no mischievous claims for damages when the work is finished. Illegal work and defects can come back to bite the Strata scheme years later
Coordinating people and events is fraught at the best of times. With any renovations there are myriad details from permits, licences, plans and quotes to organise, add to this the caprices of councils, committees and corporations as well as other residents. Best to allow for a flexible time frame and not rush into renovations.
“Strata Management is intertwined with responsible asset management as property is usually a significant investment. There are changes afoot as people wise up and Strata living becomes more common place. Now even owners of the smallest strata schemes are challenged to become responsible for setting the tone and culture of the building and add value to important assets,” adds Mr Wrigley.
The author Matthew Wrigley is managing director of Perpetual Strata Management. Go to www.perpetualstrata.com.au for more information.