Navigating Strata Management in WA

Transcript

Peter Fletcher

[00:00:00] Peter Fletcher: Welcome to the WA Property Q& A, the podcast where I explore the ins and outs of buying property in Western Australia. I’m your host Peter Fletcher and each week I interview local property experts to help you to develop a deep understanding of the nuances of buying property in WA. From market trends to legal considerations, no topic is off limits.

But before we dive in, a friendly reminder. While we provide valuable information, it’s important to note that nothing discussed in this podcast should be construed as personal investment advice. Always remember to seek the appropriate professional advice for your specific circumstances. Now, let’s get started and unlock the secrets to successful property buying in WA.

Well, welcome to another episode of the WA Property Q& A podcast and today I’m with My now business partner, Nikki D’Agostino. Oh my God. It’s so exciting. Well, that escalated.

[00:01:04] Nikki D’Agostino: It’s amazing what a couple of conversations in this booth around strata management and strata practices created.

[00:01:12] Peter Fletcher: It just went from zero to hero in no time at all. It’s awesome to be working with you again, Nick. Yeah. Now, but tell me, what was your motivation for wanting to start a strata management business?

[00:01:28] Nikki D’Agostino: Look, I think the time and the industry itself is going through big change and, yeah. Over the work I do at the Efficiency Co, we’re about creating a better industry and building the reputation of agency and, to align with the clients I’ve been working with. I get asked a lot, will you then manage this development that we’re working on?

And I haven’t had that service. To provide the service solution for my clients. So that was one aspect. The other aspect is to do it better. So what can we do to do better in light of the reforms and the changes to the way things are happening in the industry, the issues that have come to light and are very heavily focused on in the media at the moment.

And just conversations that I’ve had with various people in the industry, colleagues, people surrounding the general public, what the general consensus is and what, really has got me thinking is how can I do this better and how can I help others do this better?

[00:02:32] Peter Fletcher: So, Yes, there’s been a bit in the media.

I think there was a Four Corners report.

[00:02:37] Nikki D’Agostino: Yep. There was a Four Corners report recently, which brought to light focused heavily on disclosure and insurance commissions that are paid as well as, other various service providers, et cetera. And the lack of disclosure because there’s a lack of regulation for strata managers in that space.

[00:02:55] Peter Fletcher: So, let’s talk about. The lack of regulation. So, Strata Managers right now They don’t have to be licensed in any way, shape or form, is that?

[00:03:06] Nikki D’Agostino: Not in WA. So let’s talk WA. In WA at the moment, there is no license requirements. There’s no registration requirements. There is an educational requirement coming through in the regulations, which A certificate for which potentially is going to open a box of issues of its own, look at staffing and things like that.

Is it a career choice that is of desire for people to actually undertake a cert for, and then people like myself that have been around for 20 odd years now having and, well educated in the space as well as experienced having to go back and complete a certificate for, to be able to operate.

This is all due to come in between February and May 2025, and there will be a, Two year grace period to have our current industry up to date with education requirements by 2026, seven, 27.

[00:04:00] Peter Fletcher: So it’s going to be an an education requirement for whom?

[00:04:05] Nikki D’Agostino: People working in Strata and they have outlined, a Strata manager and their roles and responsibilities and assistant Strata manager and their roles and responsibilities.

Down to the receptionist. So it’s really vague at the moment and there’s a lot of contention around what this is going to look like and what people in your business are going to be able to do with or without that qualification. I think there’s still How are they going to police that? That’s That is just almost impossible to police.

Policing’s one thing. There’s also the common sense approach. How quickly, can you hire someone that, to do a strata management role that doesn’t have the Cert IV with a view to obtaining it, like we do with real estate agencies?

[00:04:46] Peter Fletcher: So a Cert IV to be a strata management manager. Strata community manager.

Strata community manager. So, wow that is a real can of worms because you are saying, well, who in the organization is a strata manager or who’s an assistant? That’s right. It’s a little bit like conveyancing where you’ve got the licensee. Who’s has to be licensed, and then you’ve got unlicensed assistants.

They can call themselves conveyances, but they’re not actually licensed to do conveyancing. Yes. They’re working under someone’s license.

[00:05:26] Nikki D’Agostino: And I think that is the best approach to look at. I have put in, submissions and along with the Rewind Network Committee, Strata Network Committee we’ve put in submissions around what licensing may look like and how to You know, solve the problem.

And I know how you feel about this Pete, but I’ll say it. My view is bring it in under real estate licensing, bring it in as another subcategory registration. You’ve got your sales registration, your property management registration, bring in a strata management registration, because at the end of the day, you’re dealing with trust accounts.

[00:06:02] Peter Fletcher: Yeah. It’s a different beast though, isn’t it? Yeah. Okay. So, okay. So on that you’re saying. Bring it in at registration level.

[00:06:11] Nikki D’Agostino: That’s right. We think, bring it in at a registration level. The industry, I guess that’s predominantly working in strata management capacity is a real estate industry.

It’s very property focused. What clients expect of strata managers is a lot

[00:06:25] Peter Fletcher: more than It’s not going to work. Sorry to interrupt because so strata manager so if you bring under the REBA Act the REBA Act says that you’ve got to demonstrate sufficient experience to run an agency, to get your license as a real estate agent.

And if you’ve been a strata manager for 20 years, so you can say, well, I can run a strata management company. You couldn’t say that you could run a real estate agency, they’re different beasts.

[00:07:03] Nikki D’Agostino: But would you still need to do the diploma in agency management? You like, like that the moment you did the Cert IV in property to get your registration, you’ll do a Cert IV in Strata Community Management to get your registration in Strata and then do a diploma of agency management to run an

[00:07:21] Peter Fletcher: agency.

But as a registration, to get a registration as a sales rep, which is the highest level of registration you can get, that only takes, what is it, two weeks? So what’s the equivalent for Strata Management? So

[00:07:35] Nikki D’Agostino: at the moment it’s a 12 month course, but I’m hoping they’re looking at That’s licensee level.

That’s right. They’ve brought it in as a Certificate IV, which is the same as Certificate IV in property. So that’s licensee? You need new legislation. Yes. There needs to be new legislation or they could look at the real estate and business agents license and creating a restriction saying that it would just focus on strata management if that’s what the business needs.

Yes. Okay. But then what’s to say that a strata manager wouldn’t know what a property manager does or couldn’t transact in property. There’s many agencies running strata management portfolios within their business.

[00:08:13] Peter Fletcher: See, the reason property management got a run in the Real Estate and Business Agents Act is because of that it is a negotiation to exchange possession of the property, which is essentially what a new tenancy is.

So, you’re negotiating with, between buyer and seller. To pass possession to the tenant in the same way as buy a seller, you’re negotiating to change possession. In strata management, there’s no such thing.

[00:08:52] Nikki D’Agostino: Yeah,

[00:08:52] Peter Fletcher: there’s no transaction

[00:08:53] Nikki D’Agostino: in that sense. There’s no handover of property. You could potentially look under facilities management.

As a, as an overarching body, obviously we’ve put in our view being that it is predominantly real estate agents, other than strata managers operating without any license, it’s predominantly real estate agents managing strata and having compliance audits as such.

[00:09:19] Peter Fletcher: Is Demers so, that we’ll call it the Department of Commerce for shorthand.

Are they the right people to be running the register, the licensing and ongoing like checking, policing of this? Like, could you not have an act that says that in order to be a strata manager? You had to belong to a professional body that has oversight over that that section of the community.

So you might, they might say, well, REWA is now going to be taking the, that whole policing and management of strata managers, management licensing over and they become like, the policing body.

[00:10:12] Nikki D’Agostino: So, one thing you will see generally in bylaws so that’s the management statements or bylaws of the strata company itself, is that the strata manager is to be accredited or a member of such industry bodies, being like REWA or SCAWA.

So, restricting Who can manage the property in that sense, but it’s coming down to a bylaw level. At the same time, these industry bodies aren’t regulators. Landgate actually administer the Strata Titles Act, so they’ve been lumbered with all this stuff, but who’s going to police it? DMIRS. or Department of Commerce are set up already with conciliation, mediators licensing, regulation, audits, etc.

They, they’ve got the resources there that could be expanded into strata management as opposed to Landgate who would probably need to build it from scratch and as they aren’t a regulatory body, they’re a land titles office. At the same time, would it be. It doesn’t fit in Landgate. Well, it’s sitting in Landgate at the moment, so all these reforms, it does

[00:11:17] Peter Fletcher: not.

They should get out of that, off that track because they’re not suited to it. There’s only a very minor part of what a strata manager does that really has any association to Landgate.

[00:11:33] Nikki D’Agostino: Yeah.

[00:11:35] Peter Fletcher: And I’m not convinced Demers has, is the right, right body either. I get that they’ve got conciliation and all that sort of stuff.

But I think that in the same way as, so Demers doesn’t manage CPAs. Chartered Practicing Accountants. Yeah. So, I think that there are, self regulatory body same with lawyers. There’s self regulatory body. Well, why wouldn’t REWA or SCAWA, Or both set themselves up as the regulating body for property strata managers.

[00:12:12] Nikki D’Agostino: Does that take away from being the industry representative? Each of those industry bodies at the moment provide services of giving information for the customers that, or members that need legal advice and things like that on their REWA hotline, as example where if you’re a REWA member, you can call and get legal advice on matters.

They’re not. Giving general public necessarily advice. Neither is Landgate in that sense. It does come down to legal advice and now there’s the realm of mediators because everything needs to be resolved in the State Administrative Tribunal. Let’s call that SAT.

[00:12:48] Peter Fletcher: Yeah I certainly think that REWA could play a role there.

They used to do that. Back in the day when there was disputes between agents about commissions and stuff. Yeah. And and I think they probably still have that, but I think that from from Rewa’s perspective I think they could look at broadening their tent to make to allow.

this circus to be bigger.

[00:13:14] Nikki D’Agostino: Yeah.

[00:13:14] Peter Fletcher: Yeah. I just think there’s an opportunity there for them to take a position that, look, Demers, we actually don’t want government in this. We think we can do it better than government and to be truthful, I think they could. I genuinely believe that.

[00:13:30] Nikki D’Agostino: Yeah, look I can’t speak on behalf of REWA in that respect.

No, I don’t

[00:13:34] Peter Fletcher: expect you to.

[00:13:35] Nikki D’Agostino: But it is a good idea to have a, an industry body that’s potentially regulating. I think SCAWA has tried to do that in the past. But being that, for whatever reasons REWA may be in a better position to do so, having the experience managing licenses.

[00:13:53] Peter Fletcher: Yeah. Yeah. A hundred percent.

And you know what? It wouldn’t come as any surprise to the public because right now if something goes wrong in a real estate transaction, guess what the punter’s going to say? I’m going to report you to REWA.

[00:14:07] Nikki D’Agostino: That’s what I was going to mention is that everybody still thinks REWA is the regulator for the real estate industry.

Yeah. They are the first point of contact for the general public. Yeah. Yeah. Yeah. Yeah. And they’re the trusted body. They’re a trusted body.

[00:14:18] Peter Fletcher: Yes. Yes. So, so you could end up with some sort of legislation. I don’t know whether So it, it’s similar to like the Painters Registration Board, I think it I think there are.

[00:14:31] Nikki D’Agostino: I feel like they fall under DMERS because it comes under the Building and Tenancy. Are they? But aren’t they self regulating? I’m not sure. Or is there a, yeah. I’m not sure. I mean, I remember the days when the hairdressing licences were a thing and that was under DMERS, back then, DOCEP. Yep.

Yep. Yep. And being that they deal in building and conciliation and tenancy, I think a lot of the building registrations and licences fall under, like energy safety, your plumbers and your electrical as well.

[00:15:01] Peter Fletcher: See, when it comes to plumbing and electrical I’ve Especially electrical, I get that the importance, because they’re dealing with people’s lives there.

Like, this is a, we’re not dealing with people’s lives here, we’re dealing with a, like, really it’s an accounting transaction and, I think that there’s better ways to have the government, than to have the government involved. Mmm. Watch this space, Nick. We need you, the industry needs people like you to.

Advocate common sense

[00:15:38] Nikki D’Agostino: outcomes. And look, I think without a doubt, I think common sense will prevail. People are up in arms and the what ifs, what happens when we can’t hire anyone because there’s a Cert IV, et cetera, et cetera. There’s going to be a common sense approach.

[00:15:54] Peter Fletcher: This

[00:15:54] Nikki D’Agostino: is one thing that we can rely on.

[00:15:56] Peter Fletcher: It’ll

[00:15:56] Nikki D’Agostino: be built out. It’ll be consulted and we’ll make it happen. We’ll pioneer it if we need to.

[00:16:04] Peter Fletcher: Yeah. But I definitely care enough. And if the industry doesn’t do it and I’m talking Rewa because Rewa has the most clout. If the industry doesn’t do it, then they, the government will. And the government will.

If the government do it they’ll make a mess of it. Yeah. It will be heavy handed and overbaked in just the same way as the current compulsory disclosure statements on strata title properties. Like we have gone from back when I started in real estate, a two page contract with about six pages of general conditions.

To now, I’ve seen them be 200 pages, and that’s just the standard unit in mail lands 200 pages, Nick. And that the punters are just looking at this shit and going, what do I look at here? What do I, what am I reading? And then they’re going, well, I need someone to to, to translate this for me.

[00:17:13] Nikki D’Agostino: And that’s where, I’d hope to add value. in the services we provide by being open to having those conversations with our clients and owners, with their real estate agents and acting companies. A lot of the time out there running blind with Strata or so confused by it or hate selling Strata because it’s, it can be so confusing, but there’s also issue with, It’s getting information from a strata manager or having a relationship, building communication.

[00:17:43] Peter Fletcher: Why does strata managers have such a bad reputation when it comes to just working with them? Like it’s just I sat in a

[00:17:51] Nikki D’Agostino: workshop recently and one of the questions we asked the group, it was a group of property managers, and we asked the group of property managers. Property managers, what is the challenge you have in working with strata managers?

And the words coming up were arrogance, lack of communication no response. These were just echoed through. And I hear it all the time. And you think, why? Yes. Okay. Strata managers are busy. Yes. Okay. Maybe they’re taking their rights under the act too seriously, they can charge for inspecting records.

So essentially, why should I give you information that I can charge for? Ask the owner. The owner should know. Owners aren’t necessarily active on the council or know what’s going on. Owners tend to have, issues getting answers from the strata manager themselves too. I’m not sure. I do not believe in.

Look, I do believe in open communication, transparency, helping, camaraderie, working with your stakeholders. And your stakeholders aren’t just the Council of Owners, it’s every owner in that strata company and every contracted person to that owner.

[00:18:59] Peter Fletcher: I’m very new to strata management as I can, cannot understand for the life of me why a strata manager, if a real estate agent rings them up to ask them a pretty basic question, why they would say.

Things like, we’re going to charge you for it or we, like you need to put it in writing in triplicate to, to get the information. Why do they do that?

[00:19:22] Nikki D’Agostino: Look, there’s an there’s an issue around the fees and charges for the service, so a lot of Strata managers have additional services and can charge.

for things under their management agreements. The other thing is there’s legislation allowing prescribed fees for certain actions like inspecting records. And then in the same token, it’s just this inbuilt old mentality of this is the way we do it, so this is how it’s done. And, Almost like the power goes to their head or something.

It’s just a little bit sorry to those that I know there’s many making, change and moving forward in another direction, but there is this, almost a power trip. I shouldn’t have said that.

[00:20:08] Peter Fletcher: No, it’ll be fun. It’ll be fun. It’ll be, there’ll be people, contacting you saying, Oh, I can’t believe you just said that.

[00:20:14] Nikki D’Agostino: Yeah. Don’t post that. And scrap that. No,

[00:20:17] Peter Fletcher: don’t. It’s fun. Because it’s, no I think it’s true that there are the, those, the power trippers that go, well, I’ve got the information and I’m not going to share it or I’ll share it when I’m not

[00:20:30] Nikki D’Agostino: going to charge you for it because this is how I’m making money back.

And it brings us to this vicious. So, cycle of, are you undervaluing your service and not obtaining enough to do the job that you’re then charging for all these things that are day to day in the job and you’re charging an additional service? We, it’s that coaching the industry to see their value, to be able to increase their fees coaching, educating.

Strata community owners and the wider public to understand the value of what a Strata manager is doing. Will education help with that? Will understanding better what the service being offered is help with that?

[00:21:07] Peter Fletcher: There’s technology, technological solutions for this, isn’t there? As in owners portals or

[00:21:14] Nikki D’Agostino: Yes.

And, a lot of, as property managers as well. We all know communication and email can be the biggest part of your day, getting through, answering questions that you’re not actually able to get on with your job. So a lot are trying to push. Towards using online systems and, accessing your own information through a portal, et cetera.

And there is a place for that, definitely. It’s great to be able to log in and get what you need straight from the portal if it’s up to date and managed well. It can also reduce a lot of communication, but where is That gap of building a relationship with your clients and having those interactions and being available.

There’s still, we’re losing a bit of touch with all the tech and things like that, or trying our best to reduce communication that we’re missing out on those valuable conversations and learnings and

[00:22:04] Peter Fletcher: understanding. How do you manage a council of owners, Nick? So imagine if you have, let’s say, eight people on a council of owner, like that’s Three to seven, generally.

Probably too many. Yeah. Three to seven. Three to seven. Yeah. Three is a good number. Three is a good number. Five would be okay. Anything beyond that? Yes. Problematic, probably. Do you take calls from all of those?

[00:22:31] Nikki D’Agostino: I would. Generally you can nominate, so you have the council have a meeting and nominate their members, the chairperson who will generally be the voice and the communicator between the strata manager, your treasurer and your secretary.

Depending on the size and scale of the building, what goes on there is obviously dependent on what it looks like managing a council of owners. But also consultation with them. How do you want this to run? These are your options. This is what we can look at. What works best for you as a team here to get the best outcomes?

Does it look like a monthly meeting? Does it look like, email correspondence or other software that can perhaps, create a forum for you to then issue notice, like we can put something in and you can come back to us with a response after you’ve consulted.

There’s many different ways and many different things work and it’s.

Just like anything, I think there’s got to be some level of consultation and education with your council to work out what’s best for them and put a process and strategy in place and stick to it with them.

[00:23:31] Peter Fletcher: Yeah, cause the building I’m in when there’s something to be done, there’s just this email daisy chain that just goes around and around.

Yeah. Eventually that they, the strata manager takes votes based on, The number of people that say yes on the email, which is a pretty horrendous approach because your inbox is just full of,

[00:23:53] Nikki D’Agostino: There’s tech coming out or out there to help with that kind of thing.

And it would reduce communication. Holding regular meetings is another way of just having it all on agenda and taking it all off in a room together or online together. And I wanted to come back to your question earlier as to why strata managers won’t give information or talk to you when you’ve got questions.

And I really and again, I’m going to push again, real estate licensed agents managing strata as opposed to a strata manager managing strata and the level of professional indemnity insurance held and the level of risk on that person or that business. Giving advice and recommendation. Now, obviously as real estate agents, we can give advice and recommendation.

We are insured for that. As a strata manager, they need to go seek the advice and recommendation and often act as a communication conduit as opposed to a value adding service that can provide you with,

[00:24:54] Peter Fletcher: you

[00:24:54] Nikki D’Agostino: know, advice.

[00:24:55] Peter Fletcher: Okay. So. Right. Okay. Right. So yeah, and there’s value in that, isn’t there? Where, there’s the Council of Owners saying to you, well, what do you think we should do, Nicky?

Is that right?

[00:25:11] Nikki D’Agostino: Yeah.

[00:25:12] Peter Fletcher: Yeah.

[00:25:12] Nikki D’Agostino: Yeah. And more often than not, the response will be, I can’t tell you that you need to make the decision, but we can consult someone. We can get legal advice. We can do whatever. As a licensed agent and with the appropriate PI in place I would. Turn around and give advice within my remit, if it’s advice about the property, or what to do in repairs, or how to better handle your life cycle maintenance, or a budget, etc.

Things that we, that come under our real estate license abilities, that we are ensured to provide, and we are educated on.

[00:25:47] Peter Fletcher: What are the key issues get floating around the industry right now?

[00:25:53] Nikki D’Agostino: Oh, look, I think the biggest one that comes to mind is receiving commissions. Okay. When there’s this, all this bad press about strata managers taking.

Commissions under the table, essentially. Now, Pete, we’ve had many conversations around this. Is it so bad that a strata manager might take a commission or a referral fee, or is it bad because they’re not disclosing that? So, it’s coming to light a lot now that. They just shouldn’t, as a licensed agent, it’s something throughout any business, say having a selling agency, I would always advise, no, we don’t take any kickbacks for referring to a mortgage broker as example, because we’re so heavily regulated and there’s so much disclosure around it.

While Strata doesn’t have that, it’s coming in, there’s certain industry bodies have their codes and things like that. And because of the media, press and bad press at the moment, it’s come more to light and it is a question being asked of Strata Managers, are you taking commissions, insurance service providers, et cetera.

A lot are stepping up, especially those that are licensed agents are stepping up to say, we are not accepting commissions, et cetera. But in turn, Are we increasing our fees to provide the service? Does that insurance commission or referral fee for placing insurance cover then cover your costs as a business to be able to manage claims?

[00:27:16] Peter Fletcher: I don’t know why people would get bent around the axle on this because if you go to a broker, the broker is going to get paid a commission from the bank. Exactly. And the broker provides a really good service. The borrower doesn’t pay anything more. They often in fact get a better deal as a result of going through the broker.

And the broker so why would that be any different in the insurance space inside of Strata Management?

[00:27:43] Nikki D’Agostino: It’s actually not very different. So as example, if you go through a broker, the broker gets paid insurer. If you go to The insurer just keeps that commission, but you’re paying the same price or that same policy.

What happens is the broker for the referral might offer a percentage of that or a referral fee to the strata manager for doing that. But in turn, as the strata manager, you’re then the one managing the insurance claims and doing the day to day work, ensuring the policy is in place and covered, etc.,

etc., dealing with the stakeholders involved in insurance. In turn, should you be Upping your fee to carry out that service because you’re not taking a commission or should the customer think, Hey, it’s actually good that our strata manager is taking a commission because they’re not passing that cost on to us.

It’s an interesting conversation to be had. Everybody’s jumping on that bandwagon, using it as a selling point because of the bad media press and what ABC’s done around it. It’s now like, let’s jump out here as strata managers and say, we don’t collect commissions. And that’s your selling point, but really, if you looked at why you might and how that could be rebated to the scheme through reduced fees, et cetera, et cetera.

Is it really all that bad?

[00:29:01] Peter Fletcher: Well, even if it was. As long as there’s disclosure, of course. Nikki, even if it wasn’t rebated to the scheme, even if it was, this is how we earn our money. Like, you’re not paying anything more. If the Strata scheme’s not paying anything more for their insurance. And you’re getting a win as a strata manager, why should that be a, why should that be an issue for anyone?

Like it’s almost like, Oh no, we’re not going to take commissions for insurance because we think it’s wrong. And you

[00:29:33] Nikki D’Agostino: go, well, but do you think it’s wrong because the ABC’s put so much bad press out in there or is that actually, or is the non disclosure actually what’s wrong? And I think that’s where the media’s skewed in and it’s become like.

Is it taking a commission that’s so wrong or is it the non disclosure of taking that commission? Is there the option to have this conversation with your customer up front

[00:29:57] Peter Fletcher: and

[00:29:57] Nikki D’Agostino: gain their approval to do so for that scheme?

[00:30:00] Peter Fletcher: Is

[00:30:01] Nikki D’Agostino: there a problem then, is it more about educating or just jumping on the back of the media flurry and using it as a selling point right now?

[00:30:09] Peter Fletcher: Yeah, I, I. That’s a real, that’s a really good point. Yeah. Each way is self serving. Okay. Well, we’re just going to put it in, into our mix up front and say, do you mind if we do this? Yeah.

[00:30:24] Nikki D’Agostino: If you do, we were doing, this is our fee. If you don’t, this is our fee. Yeah. Yeah. It’ll be disclosed in your contract right now.

And like I said, both are using it for self interest. It’s self interest to promote that, Hey, we’re not using commissions to make a frenzy around that. Or it’s self interest To take the commission because you’re earning some more income.

You know what I mean? So really it’s just some media hype that’s created a opportunity for others to have a selling point or a point of difference because it’s in front of the consumer’s mind.

[00:30:55] Peter Fletcher: Yes. Ex. Interesting days ahead, Nick, on that one. What are the other big issues going around industry? There’s something about developers in, in, in this space, isn’t there? Like developers having an interest in the strata manager or something?

[00:31:14] Nikki D’Agostino: Oh, so a lot of the time, obviously a developer Especially if they’re retaining properties within the development, want to keep a level of reputation.

I don’t think it’s the worst thing for a developer to have a bylaw to say that they will be on the Council of Owners. One, it can be really good because you’ve got a voice there handling through the defects liability period. They’re, they are interested in keeping that scheme running at a high level because it’s their reputation and their brand on display.

I don’t think it’s the worst thing to have the developer on the council. A lot of people One of the,

[00:31:46] Peter Fletcher: one of the criticisms, Nick, was that you have developers that artificially set artificially low initial levies.

[00:31:57] Nikki D’Agostino: Oh, it’s not that they’re artificially low. It’s just that, On a new build, many items that you would generally pay for in, service and maintenance of a building come under warranty or have, a defects liability period, which means that it’s done for free in that first year.

So the developer’s not wrong in putting forward the first year budget that they do. But what they may perhaps think about is putting a two year forecast. So for the purchaser coming in, they can see this is what it looks like. Understanding there’s a DLP and warranty period. This is what it actually is going to look like in year two.

So I’m not gobsmacked when my levies go up. Up the second year. Yeah. I think this has been talked about enough as well. And I would hope that more people are understanding it, but I, my recommendation to my developers is always put in that second year forecast for your off the plan sales. That’s

[00:32:55] Peter Fletcher: a good idea.

Yeah. And then does that find its way onto, oh, so. So, that would find its way onto the Strata Disclosure document. That’s right. You’d have it in the sales contract

[00:33:07] Nikki D’Agostino: with the budget. You’d have year one proposed Strata levies and then year two forecasted budget. You wouldn’t have to give the levy schedule for that or anything like that.

It’s just additional information you’re providing as a courtesy to educate your buyer who are going to be the owners.

[00:33:21] Peter Fletcher: 10 year maintenance plans, Nick, they strike me as being a a bit of a box ticking exercise and they’re not used in any sort of real strategic way to go, well, this is the plan for this building.

[00:33:37] Nikki D’Agostino: So look, it is a box ticking exercise because a lot of strata managers that aren’t property people are checking a compliance box under the Act, or the strata companies

[00:33:50] Peter Fletcher: are. The

[00:33:51] Nikki D’Agostino: value could be added for those that understand property by either engaging a facilities manager to manage and forecast and put something together, or having a real estate agent or property professional managing the strata.

10 year maintenance plan for the lifecycle of the building and ensuring routine maintenance and things that are recommended, as well as what’s recommended for budgeting, are undertaken to align with that plan. So I think part of the problem is the legislation just says you need to do it. Yep. So it’s like, okay, let’s get it done, but there’s no further.

Yes. Nothing further around. How it needs to be implemented or managed. And that’s where the lack is. And this is where you may see strata managers should probably align with facility managers and add that into budget and part of the service or like, or get your strata property managed by a licensed real estate agent that can deal in those kind of, that kind of space, like a commercial property.

A life cycle maintenance plan, 10 year, 10 year maintenance plan, as they call them in Strata, is nothing new in property. It has been around for years. All your astute commercial property We’ll have one and are operating under one. And we need to look at how commercial property management practices can enhance strata management practices.

[00:35:16] Peter Fletcher: So in the building we’re in we had this conversation about signage and it is actually a bit difficult to put signage on our building the way it is because there’s been walls put up in weird spots and so it’s a bit of a, it’s not an easy, it’s an easy fix, but it’s plonking stuff together.

So we had this conversation about where do we want to put the signage And then I go, well, what do we want the building to look like in 10 or 15 years time? What’s the grand plan for it now? Well, that should be in the 10 year plan is it, well, what’s the grand plan? Well, okay.

How do we know what the grand plan is? And that’s when I encouraged the Council of Owners to employ an architect. I want an architect to come in and do a full on project. Refurb of the building. Like, okay, well, we’re going to take it from where it is today and we’re going to repurpose the car bays downstairs.

And we’re gonna, stackers and all sorts of stuff in there. Yeah. Like we’re talking one, one and a half million dollar project. Yeah. Now that’s, It hasn’t got approval yet, but at least if you know what the grand plan is, you know the numbers to start putting in into the 10 year plan.

And without that sort of idea of, well, where do we want to go in the future? It’s just all maintenance stuff. That’s right.

[00:36:50] Nikki D’Agostino: And I guess this is one thing at Resistrata that we talk about all the time, Pete, and The people that I love working with most are the aspirational owners. They have a vision and a view of what the future looks like and work towards that.

I’ve seen those plans and they’re brilliant. You can look at redevelopment, you can create more lots. The strata company can then, Earn income by selling off new lots in the scheme, there’s activation, there’s engagement, there’s activation of the property in dead spaces or putting in retail, et cetera, et cetera.

[00:37:22] Peter Fletcher: There’s any number of these older style, seventies and eighties buildings with, let’s say, small buildings of eight, ten tenancies where you could go, well, Let’s make use of the land that we’ve got. Let’s make use of the property we’ve gotten, like how could we rejig it and get together and do a JV with a builder and

[00:37:44] Nikki D’Agostino: Yeah.

And in turn Pete, it can solve other issues. So say you have one of those properties like you’re talking about, you can solve issues by redeveloping and adding new lots. You might add another floor on it if it was structurally okay to do so. And as part of that, you would then have a lift installed and emergency access and, all access and.

Yeah. End of trip facilities. Yeah. Yeah. There’s there’s a lot that. There’s a lot of opportunity to reignite. What’s already existing. Yes.

[00:38:14] Peter Fletcher: Yes. I like that. Reigniting what’s existing. Yeah. Cause it’s so easy just to, be so focused on well, what must, Mistrata levies of, 1, 500 a quarter of, in our case, I think it’s about four and a half grand a quarter.

Yeah. And they’re certainly not cheap. But you know, you get so focused on that, you lose sight of the big picture. Yeah. And people

[00:38:37] Nikki D’Agostino: love to complain. Unless they can see where the value is being added.

[00:38:42] Peter Fletcher: Yeah.

[00:38:42] Nikki D’Agostino: So I think there’s a big step in educating, inspiring, working with the aspirations of the owners, making things happen.

So often I’ve seen things sit stagnant for years and years, taking on a new strata management and I’m have it sorted and, refurb something within a year of management. And they’re like, we’ve been trying to do this for eight years.

[00:39:02] Peter Fletcher: Yeah.

[00:39:03] Nikki D’Agostino: And it really matters who you’ve got leading that.

So I think it’s more than just looking at fees and things, look at the value add, look at health

[00:39:13] Peter Fletcher: experience. How do you do that in some of these older buildings, like those 70s and 80s or 60s and 70s buildings, say through King George and Leonard Street here, all through Maylands? There’s any number of them there, the multi story, multi, like hundreds of units in the and they feel really horrible and they need, well, I think in some cases they’d need millions spent on them to bring them up and bring them out of the gold rooms.

And

[00:39:40] Nikki D’Agostino: in that kind of aspect, Pete, I think, sometime demographic and affordability is a big thing. Is it going to be worthwhile for those people that have paid sub 300 for a unit to live in as a first home buyer to then invest millions of dollars to refurb the building?

Are you going to attract a different type of owner into that building by doing something? Do the people that own or invest in that building have the financial ability? Could there be some sort of government grant program where aspirational owners can put their architectural plans together in view and then maybe apply for a grant from local governments or governments to help

[00:40:22] Peter Fletcher: facilitate?

Is there a funding facility that would do this? Let’s say we were the strata managers for a hundred, lot development, one of those 60s or 70s, and we wanted to spend, let’s say, 2 million on it, which is 20, 000 a lot. So. Well, I hope my numbers are right there. Yeah, that’s right.

[00:40:45] Nikki D’Agostino: Look, I think it’d be nice to see some sort of funding and grants offered.

Not that I’m aware of, but there is the opportunity for loans. So you can get investment loans to do such things. So there are such things as strata loans. So if you needed major works or big things coming up, you could get a loan and then You know, there would be essentially a special level levy, which was the loan repayment levy for the duration of that.

[00:41:09] Peter Fletcher: I’m

[00:41:09] Nikki D’Agostino: thinking

[00:41:10] Peter Fletcher: that you go, you spend 20 grand a lot, spend 2 million on some of these older complexes and you end up with, this really resort kind of feel and you’ve got like, you do the job properly. I reckon it’d add more than 20 grand per lot to the resale value. Clever

[00:41:29] Nikki D’Agostino: local governments could get involved and if you take some of their say they’ve got some sort of infrastructure strategies in place and policies and their view of what it looks like and funding strata companies that are looking to add activation and do things that social impact all the things that it would tick boxes for the local government’s agenda to be offering grants and funding.

Potentially be a good thought, other government agencies wanting to do the same and looking at, be strategic. Is there a return on that investment by adding more lots that can potentially be sold to add funds to the strata company to be able to do this? There’s definitely, I’d love to talk to anyone interested, that’s for sure, because there’s definitely ways and views to make these things happen.

And you just need to have the right people on your team pioneering

[00:42:24] Peter Fletcher: that. Nikki, we could go on forever. We could. Talking about this. There’s so much we haven’t talked about but we’ve got other things to do this has been awesome.

[00:42:36] Nikki D’Agostino: Yeah. Thanks, Piers. I always love coming on the show and it’s a pleasure to be back on board and working with you and look forward to the official launch of Resistrata.

[00:42:48] Peter Fletcher: I love having you back on board, Nick. It’s like, and as partners, I think it’s going to be awesome. Yeah. It’s going to be think we’re going to do some really good things because I think we share some similar values and similar aspirations. So, yeah, looking forward to it. Yes. Well, for having me again today.

And until next time, this has been Peter Fletcher for the WA Property Q& A Podcast. And that wraps up another episode of the WA Property Q& A. We hope you found our discussion valuable and gained some valuable insights into the world of property buying in Western Australia. Remember, while we strive to provide useful information, it’s crucial to consult with the appropriate professionals before making any investment decisions.

Don’t forget to tune in next week for another exciting episode where we continue to unravel the mysteries of the WA property market. If you have any questions or topic suggestions, feel free to reach out to us. Until then, happy property hunting and remember to seek the right advice for your personal circumstances.

Thank you for listening.