Strata maintenance funds need advance planning given weathering impacts: Rob Beck
GUEST OBSERVER
Following some of the most damaging weather Australia’s east coast has ever seen, the Victorian State Government is being urged to consider reforms which would see maintenance funds be made mandatory for owners corporation communities.
Maintenance funds help communities pay for emergency repairs whilst waiting for insurance claims to be processed; but without them, the wait can be perilous.
Thousands of apartment and unit communities were hit hard by recent weather, and with no laws in place to ensure that emergency maintenance funds are collected; many will struggle to cope with the fallout now and in the future.
We’re very concerned that Victorian owners corporation communities aren’t in a position to financially deal with the unpredictable nature of Australian weather.
We understand 20,000 claims have been lodged since the wild weather hit, and with the knowledge that many won’t be covered, the number of affected owners unable to afford repairs could very well reach into the thousands.
If reports of insurers not covering recent damage, under an “act of the sea” clause are correct, it really shines a light on the need for maintenance funds to be behind each community.
Living in Australia often means being exposed to wild weather events and communities need to go a step further than simply relying on their insurance policy to save the day.
Insurers commonly do not cover ‘acts of the sea’ so repairs following the raging waters that have ripped coastline communities apart will likely need to be funded in other ways.
Aside from the funds themselves however, the wait for claims to be processed amid major events like the ones just seen can hurt just as much, so having access to funds immediately is pretty crucial.
Beyond weather from above, bushfires are a year-in year-out threat to Victorian owners corporation communities and communities need to be held accountable on their financial preparedness as soon as possible.
It won’t be long until we’re discussing the devastating effect of bushfires on owners throughout the state and we’ve got a scheduled rollout for the State Government to consider in making these funds mandatory.
- By end of year 1, owners corporations with greater than 50 lots must implement a maintenance plan and set up the collection of funds.
- By end of year 2, for owners corporations with 10-50 lots must implement a maintenance plan and set up the collection of funds.
- By end of year 3, remaining owners corporations with 10 lots or less must implement a maintenance plan and set up the collection of funds.
Under this plan, the 1.5 million Victorians living in strata will in 3 years be able to consider minor hiccups following major weather events as a worst case scenario and we’re encouraging the State Government to consider the value of that.
In place of any progress on the legislative front, Mr Beck is urging Victorian owners corporation residents to raise their voice and speak to a professional owners corporation manager to get clarification on how their community should best go about setting up funds.
Owners corporation communities don’t have to wait for the regulatory say so to set up maintenance funds, they can start financing their future needs today.
The ugly truth is that there’s no guarantee there won’t be a major event this weekend that creates more chaos, so we hope State Government decision makers and owners corporation communities alike move quickly to see this issue overcome.
Rob Beck is general manager, Strata Community Australia (Vic) and can be contacted here.
Jonathan Chancellor
Jonathan Chancellor is one of Australia's most respected property journalists, having been at the top of the game since the early 1980s. Jonathan co-founded the property industry website Property Observer and has written for national and international publications.
