An estimated three million people live in strata titled homes in Australia. The state of New South Wales (NSW) has the largest number of strata titled properties of all states and territories in the country and approximately 1.2 million people live in strata titled homes in the state. In the Sydney metropolitan area, almost a quarter of the population live in strata titled homes.
This means that for the first time in Australia’s history large numbers of property owners find themselves in a legally binding relationship with their neighbours for the communal upkeep and maintenance of their property. The governance structures that mediate this community- based property ownership represent a new form of civic relationship.
With the development of increasing numbers of strata schemes, owners corporations, through their executive committees and the managing agents and other property professionals who support the sector, have become increasingly important in ensuring the maintenance and upkeep of significant parts of our cities. In effect, owners corporations act as a fourth tier of government that is democratically elected, with lawmaking, taxation and enforcement powers.
But despite the growing prevalence of strata title in our lives, relatively little is known about how well the strata system works in practice to meet the needs of those people who own and live in strata properties. The Governing the Compact City project1 provides the first comprehensive assessment of how the strata title system is operating in regard to governance and management from the point of view of those who own, live in, and manage strata homes.
While it is focused on NSW, the report’s findings have implications for the entire Australian strata market which is based on essentially the same governance and management arrangements.
The research project
The project had three major aims:
1. To explore the role, capacity and effectiveness of owners corporations as agencies of property governance and management in contemporary urban Australia.
2. To explore the capacity and effectiveness of strata managing agents as mediators of outcomes for residents and owners in the sector, and their role and function within the overall structure of management and governance.
3. To assess how well residential strata works from strata owners’ points of view.
The research project focused on residential strata properties with three or more lots in NSW. The research was undertaken between 2009 and 2012 and included surveys2 and interviews with strata owners, executive committee members and strata managing agents in NSW, as well as analysis of the NSW strata database and NSW strata schemes management legislation and interviews with peak body representatives around Australia. In total, the research consulted 1,550 individuals including 1,020 strata owners, 413 executive committee members, 106 strata managing agents and 11 peak body representatives.
This Executive Summary outlines the main findings of the research project and outlines five key challenges for further reform to improve the governance and management of a major form of housing provision in the 21st Century.