If you’re a strata property owner, how necessary is it to have a strata manager to manage your body corporate? Can you manage your strata on your own?
Well, the short answer is yes. You can, and there are a lot of strata owners doing this already, as you’re not legally required to engage a strata manager.
However, the question of “should” you do it doesn’t have a simple answer.
There are a ton of responsibilities that come with owning a strata. As you probably already know, a body corporate is in charge of managing and administering all common property within the strata, and a lot of this involves raising fees and handling financial statements and records.
That said, a self-managed strata is not a bad idea to pursue, but before you decide on it, it’s important that you know what having a do-it-yourself body corporate entails.
What does self-managed strata mean?
Before you choose to self-manage your strata, you must first know exactly what you’re getting yourself into. The first step to do this is having a clear understanding of what a self-managed strata is.
All strata schemes have an owners corporation or a body corporate, which is a legal entity that consists of the strata’s lot owners when a plan has common properties such as lifts, gardens, and driveways.
All lot owners are automatically part of the body corporate. Members contribute to the maintenance of these shared spaces usually through fees, while others are appointed to be part of the scheme’s owners corporation committee.
Typically, strata owners engage strata managers to manage the scheme and directly liaise with the committee. These strata managers perform the daily operations in the body corporate, including things like:
- Handling maintenance issues for common property
- Selecting insurance providers and maintaining insurance
- Preparing, archiving, and providing documentation and records
- Preparing and monitoring budgets and payments
- Enforcing the body corporate’s rules
- Holding information events
However, for smaller schemes with a maximum of around five units, many strata owners prefer a self-managed scheme, where they opt not to hire any professional strata manager to save money.
The reason why this is most commonly done by smaller schemes is that self-managing a large strata will be difficult, given the amount of legislative compliance needed to be met and monitored.
NSW: Especially with the NSW Strata Laws in place, there’s a plethora of additional compliance requirements that every self-managed strata needs to meet.
How to manage a body corporate yourself
Now that you have a more concrete idea on what a self-managed strata means, we can guide you on how to actually start and manage it on your own.
As the manager of your strata scheme, you’ll have to take over the responsibilities of professional strata managers. But the tasks listed above are more complex than you think.
Self-managing your strata’s body corporate means you need to balance all of this work with your day job (and other commitments, if you have any).
And that’s no walk in the park – if your body corporate is mismanaged, a lot of things can go wrong, from damaged or unmaintained property and unhappy lot owners, to potential investors quickly losing interest in your lots.
Here are some things you need to do in order to properly self-manage your body corporate:
- Understand the technicalities – As your own body corporate’s manager, you need to know what shared properties you will manage, what insurances you need, what compliance requirements you need to monitor, and how to manage finances and funds.
- Issue and collect bills on time – You need to ensure that all the owners are paying on time, otherwise, you’ll risk dealing with legal issues for late or nonpayment.
- Schedule and hold an annual general meeting – Every body corporate should have an annual general meeting where the members of the body corporate decide on concerns such as annual budget, contributions, and insurance. The Federal Government also requires the minutes of these yearly meetings to be taken.
- Handle maintenance issues – Schedule maintenance regularly and always be aware of more maintenance issues that arise so that you’re ready to address them as soon as possible.
- Settle disputes – Not everyone gets along, that means if owners have a disagreement, it will be your responsibility to deal with it.
- Handle land registry and settlement agencies – These are important for owners within the strata who decide to sell their property.
- Enforce body corporate rules – Without a professional strata manager, the task of enforcing your body corporate’s rules goes to you. You will be the one who has to deal with any non-compliant tenant or owner.
Self-managed strata pros and cons
Managing your own strata as opposed to having a professional strata manager to do it for you has its own advantages and disadvantages.
Whether you should self-manage your strata or hire someone else to do it for you depends on your priorities and how you weigh up the pros and cons of each.
- You get to save money. Engaging a strata management agency is an expense you need to plan for. The strata manager has a lot of work to do to handle compliance, maintenance, budgeting, and etc, so it will cost a lot each month. Self-managing your strata scheme will allow for lower levies.
- More control. Managing your own body corporate means that you will have more control over the budget, the advice given to the committee, and how tasks should be done.
- It fosters a sense of community. A self-managed strata can lead to a closer-knit community, since you will be collaborating a lot with the other owners in the body corporate.
- It’s unpaid work. There’s so much work involved, but there isn’t really any monetary incentive for it. Engaging a strata manager will relieve you from this heavy load, from record-keeping and fee collection to mediating between disputes.
- It will take up your free time. Or even bleed into your work time. More work means more problems. And if something comes up, you might need to stop what you’re doing at work (or in your leisure time) to address any concerns. If you aren’t able to prioritise managing your own strata, more issues may arise such as late payments, complaints about slow response times or provision of documents, etc.
- Lack of industry knowledge. Hiring an experienced strata manager guarantees that the person in charge has the professionalism and know-how to manage your scheme correctly, from legal matters to budgeting and scheduling maintenance.
- More chance of disputes. While a self-managed strata can foster a sense of community, such collaboration also leads to a risk for more disputes, since each owner will inevitably consider their own interest. Professional strata managers can provide a more unbiased approach to managing the strata scheme, since they don’t really share the property.
Self-managing your strata is an option to any owner of a small strata scheme. It will save your body corporate money and allow the owners to have more control in decision-making.
However, doing so has its downsides as well. There’s so much additional work for each owner that can add to a lot of stress and even some mismanagement.
In the end, it comes down to what you value and prioritise. So make sure that your decision is completely informed before you make it.
If you want to know more about how professional strata managers can help make your strata experience easier, contact us.