Wellman Strata Blog - Active advice from the experts in strata management

State of the Strata Market - Hunter region and Newcastle

Having now serviced the Newcastle and Hunter regions for close to two years, Wellman Strata holds a first-hand view of its associated strata market . After close analysis, we consider the Newcastle and Hunter Regions to be one of the strongest performing property markets and, it is supported by what we would consider to be a new owner group who are results driven and eager to collaborate with all relevant stake holders.

We enjoy working in this market for a number of reasons, the primary of which are:

  • enthusiastic owners and strata committees that appreciate our management advice, energy and ideas;
  • a property boom, the scale of which the region has never seen before (which isn’t showing signs of slowing)
  • a strong opportunity for delivering an overall improvement to the standard service model historically experienced.

 

MVIMG_20180208_120352

SoHo Apartments Islington by GWH Build - managed by Wellman Strata

 

Why a good strata manager is essential to your asset

A good strata manager is the backbone of a great building, choosing the wrong one without the necessary experience will be detrimental to the longevity of the scheme.

A strata manager will assist the owners corporation in the day-to-day administration of the strata scheme including accounting, meeting procedures, levy and finance collection, insurance placement and claims, maintenance and major projects that are endorsed by the owner group from time-to-time. A good strata manager will ensure that the sound-running of the scheme is put into effect and, assist the strata committee and registered owners in their decision making and, how future requirements are reviewed and forecasted. They are there to help in the event of an emergency and will be someone to talk to about the trials and tribulations of strata living.

At Wellman Strata, we now have a history of working with and servicing our Newcastle clients and, in a relatively brief time, we have helped those clients achieve a great deal including sign off of major projects, resolving disputes, energy efficiency upgrades and better forecasting for the future i.e. ‘future proofing’ etc.

As such, we have identified some key areas that should be the focus of any owner seeking improvement in the administration of their strata scheme:

 

Operation/Governance

First and foremost, it has become apparent that the day-to-day operation of strata schemes has been less than ideal from a management and governance perspective. It is evident to us that there have not been clearly defined guidelines as to who should be doing what i.e. the role of the committee versus that of the strata manager or, the building manager (if there is one). Moreover, strata managers have seemingly failed to properly educate their respective clients (committees) on how they could work more effectively. When people properly understand their roles and responsibilities (and are doing their job) there’s less misunderstanding, more trust (and with that can come a better level of authority) and greater cohesion amongst the parties.

For each scheme we have taken on in Newcastle, Wellman Strata has taken the time to understand what issues exist and what can be done to help committees and owners generally to operate more effectively, whether that be having routine meetings, centralising lines of communication or running education sessions. This has worked well and the feedback from our clients is that they have less to worry about and feel better advised.

Wellman Strata do not just act as a mailbox for the owners corporation – with any matters affecting a scheme we will (if requested) ensure that we give active advice. We provide the correct advice (or seek it from others if required) to ensure that committees and owners can make well-informed decisions.

A committee with all the right intentions without the right advice will be prevented from achieving its objective.

 

MVIMG_20171126_152134

The stunning Bogey Hole in Newcastle - thought to be the oldest surviving European construction in the city

 

Contractors

Newcastle is blessed with a wealth of great contractors and other such service providers including plumbers, cleaners, builders, electricians, security technicians, lawyers, etc. We have now worked with many of these providers and in most cases, have a range of good companies to whom we can refer work at schemes when required. Whilst not many contractors are strata specialists (as they might be in Sydney), they are generally responsive and from what we have seen, represent value for money.

What we have notice, however, is that Newcastle is lacking in highly specialised building diagnostic professionals (which fall into many such categories such as general building, hydraulic, fire and life safety, ventilation, and acoustic consultants etc). Whilst there are companies that operate in these areas, we have found there is a limited pool of providers to choose from and many of the companies in the Newcastle area are kept very busy. Fortunately, we have been able to easily source building diagnostic companies from Sydney for the buildings we manage. They like working in Newcastle and the Hunter as much as we do!

What Newcastle would benefit from is a range of quality facilities services providers (specifically building and facilities management providers). It is arguable that the majority of schemes in Newcastle are smaller and don’t require the services of a building manager, there is also a counter argument to suggest that engaging the likes of these companies adds to the overall preservation and management of the asset (there are schemes as small as 5 lots with engaged building managers). Having said that, however, it goes without saying that larger and more prestige strata schemes should engage these companies as a prerequisite to the overriding objective of an owners corporation to maintain its building. An expert building/facilities manager will maintain asset registers, will ensure preventative maintenance is carried out regularly, will undertake to manage repair and maintenance tasks and, will report regularly to the Strata Manager and the elected Strata Committee giving complete insight to the inner workings of the building.

This is distinct from the role of a strata manager (when there is a building manager in place), who acts primarily as an administrator, interpreter and gate-keeper for the strata committee (which ultimately should be there for decision-making, rather than needing to drive anything as they are paying a strata manager and a building manager to do so).

Wellman Strata does not take a ‘one-size-fits-all’ approach to any strata or community scheme under management.

Wellman Strata will take to the time to understand and assess your respective needs so to properly advise you of what those needs are (when tendering or taking over management), whether it is a review of service providers or, what savings can potentially be made (money and time) if steps 1, 2 or 3 are taken and, what should be the priorities of an owners corporation to work towards. We use our immense experience from working with hundreds of different strata and community schemes to advise what works and what is likely to not work.

 

Sustainability

Whilst energy efficiency and sustainability has been a hot topic for us for many years and one of our best ‘value-adds’, we have found that many of the existing schemes we now work within Newcastle/surrounds are still able to make basic efficiency improvements to save energy (and money). Generally, there is a quick return on investment (ROI) for any such works undertaken. Given that strata schemes are required to hold reserves of cash (provided they’re keeping up with their Capital Works Forecast) and the minimal interest payable on term deposits, investing in efficiency is one of the best things strata and community schemes can do to save money now and into the future. It is one of the few ways to potentially reduce levies (or ideally spend the money on improving the building!) without reducing service.

The ‘low hanging fruit’ of the efficiency world (payback in some cases as short as 18 months, so a 70% pa ROI) is:

• Timers/sensors (adjusting hours of operation) – lights/fans/pumps

• Variable Speed Drives – Fans/pumps

• Lighting – LED technology is cheap and there is now a LED to replace near every kind of fluorescent and halogen light out there. These also have a much longer lifespan, leading to lower maintenance costs.

Beyond the above options, solar is now becoming more feasible and where the payback period was once around 7 years, we are seeing this become as short as 4-5 years. Many buildings in Newcastle have large, flat roofs which receive excellent sunlight and are thus excellent options for solar. We expect solar to be matched with battery technology in years to come so that buildings never have to draw from the grid in peak times. It’s also noted that most roofs of larger buildings are not big enough to install enough solar panels to power individual lots – the common property needs (lighting, lifts, etc) exceed what the system can produce.

Wellman Strata has recently arranged the installation of solar to two strata schemes we manage in the Honeysuckle area and the results have been fantastic. Payback is expected quicker than scheduled – circa 4-5 years, so a 20-25% ROI. After 5 years the system is paid for and, requires very little maintenance (has no moving parts) with a useful life of up to 25 years.

 

4

Wellman Strata receiving training on LED products from Pro Energy

 

Another area for saving is gas heating of pools. A heat pump is much more efficient than a gas heater and may have an ROI of fewer than 3 years.

Unlike Sydney (under Sydney Water) where there is a single shared water meter for all units and the common property (prior to recent changes to metering requirements for new buildings) and water is paid by the owners corporation, in Newcastle there is a single meter for the common property and owners are charged by Hunter Water based on their unit entitlement.

In our opinion, the above scenario gives a greater reason to push for individual metering of apartments and the common area. Individual metering ensures that occupants pay their fair share of use, based on the number of people living at the property and effort is made to reduce water use and fix leaks (running toilets and leaking taps are massive users of excess water). We are currently investigating having individual metering installed at several buildings.

We aren’t the experts in energy efficiency but we have the experience following years of implementation and, we work with the foremost experts in this field. Ethan Burns at Sustainability Now is our go-to expert for anything related to strata sustainability (http://sustainabilitynow.com.au/).

 

Complex Schemes

Large and complex schemes operate under the same legislation with smaller schemes, however, there are parts of the Act relevant only to large schemes and some of which will be subject to additional management statements.

We would consider that the larger and more complex schemes will require greater knowledge, financial administration and attention – all schemes require precision from their managers. There are legislative burdens placed on large schemes which need to be complied with. More complex still are the individual management statements (generally these are Strata Management Statements “SMS”), under which Building Management Committees (“BMC”) arise and are managed in accordance with. BMC/stratum subdivision is typical in Sydney and other cities for large staged developments and mixed-use developments.

Newcastle has a number of larger and BMC entities and it is our experience that some of these have not been managed in accordance with the provisions of the Act and registered statements. This is of concern as often the budgets for these schemes total many hundreds of thousands of dollars. Added to this is that when disputes arise at these schemes, they can prove difficult and expensive to resolve – in the case of a BMC if issues cannot be resolved by members, the Supreme Court is the first stop in the court system.

As a specialist large scheme strata manager, our management portfolio comprises many large, valuable and complex strata and BMC schemes. We understand the special requirements of large and complex scheme management and the importance of our role in assisting and, where appropriate advising the committee on the stewardship required of these large assets.

Wellman Strata already manages many large and complex schemes in the Newcastle area, and by all accounts has done so successfully since commencing management. We have helped resolve long-standing issues, provided sound advice when required, ensured compliance with acts and statements and provided training and transparency to the committees and individuals charged with running these schemes. We would be happy to supply client testimonials to these facts upon enquiry.

We aim to be the number one choice in the Newcastle and Hunter regions for the skilled management of strata schemes, large and small.

 

MVIMG_20171126_135650

The Supercars came to Newcastle - what an amazing backdrop!

Filed Under: Strata Legislation, Strata Living, News

About Wellman Strata

Wellman Strata is a specialist strata management and consultancy agency servicing residential, commercial and industrial properties across NSW. We pride ourselves in getting to know the needs of each client and community, so we can provide proactive, relevant support and expertise that gives each resident and owner the peace of mind from knowing their building is in safe hands.