Strata reform failure leaves apartment owners at the mercy of predators

When then consumer affairs minister Nick Staikos announced a review of the laws governing owners’ corporations a year ago, he was clear about its aims.

The panel of three experts, headed by one of his predecessors in the ministry, Marsha Thomson, needed to look at “dishonest business practices, unfair contracts, and inappropriate commissions”, the ultimate goal being “to ensure the one in four Victorians who call a strata-managed property home are treated fairly”.

The Allan government knows, then, that the current system is not delivering fairness across the board to strata owners.

In the last year alone, our reporter Rachael Dexter has uncovered management companies in the $471 billion Victorian sector charging unlawful “administrative” and “debt recovery” fees; pocketing hidden commissions of up to 20 per cent from the insurance companies they present to apartment owners – a practice that is currently quite legal; and most recently an employee of one of the country’s largest strata management firms trawling for a kickback on a contract tender.

Since the Owners Corporations Act was legislated in 2006 by the Bracks government, in which Thomson was minister, the number of corporations has risen from 65,000 to 128,896 in 2024, with the number of lots rising from 480,000 to 1,044,400 over the same period. It is a sector into which more and more people are expected to move as governments encourage medium and high-density living.

When the contents of the review – submitted to the Allan government six months ago – were finally released this week, they included some welcome recommendations. The panel called for a ban on commissions to strata managers from insurance companies, with such payments to be replaced by a fee-for-service model. It also said that in the case of strata properties being used as Airbnbs, the act “should be amended to explicitly address the issue of parties” being held at properties.

Most importantly of all, the panel concluded that Victoria’s current regulatory framework, overseen by Consumer Affairs Victoria (CAV), is inadequate. Pointing to the outcomes of the Hayne Royal Commission into the banking sector, the panel argues it’s not good enough to rely on disclosure by strata management firms; “prohibitions are necessary to prevent harm”.

The review explicitly lays out how CAV has failed to execute a single enforcement measure and has not cancelled any strata manager registrations since 2019, despite thousands of complaints and requests for help from owners each year. It also shows how the burden for pursuing cases of misconduct o