ICA Advocates for Reforms to Victoria's Strata Legislation

In its submission to the Expert Panel Review of the Owners Corporations Act 2006, the ICA pointed out that building defects in residential apartments are costing Australians an estimated $1.3 billion annually. These defects, coupled with deferred maintenance and poor governance, are transforming insurable buildings into high-risk liabilities, leading to higher insurance costs or difficulties in securing coverage.

The ICA's recommendations focus on several key areas:

• Strengthening governance within owners corporations by improving transparency and accountability, and providing targeted education for committee members to better handle complex financial and insurance matters.
• Carefully reviewing proposed licensing schemes for strata managers to ensure any new requirements are evidence-based, avoiding unnecessary costs or unintended consequences.
• Ensuring full disclosure of payments to strata managers that could influence insurance product selection, with a thorough assessment of market impacts before considering a ban on commissions.
• Lowering the threshold for collective sales of strata properties to facilitate the renewal of older buildings, and introducing stronger enforcement mechanisms to hold owners corporations accountable for defects.

ICA Deputy CEO Kylie Macfarlane emphasised the importance of these reforms, stating that as the number of residents in multi-unit buildings grows, managing the expenses linked to strata properties is becoming a more significant issue. Effective reforms backed by proper compliance and enforcement are essential to de-risk strata complexes and deliver better outcomes for all stakeholders.

By addressing these governance issues, the ICA aims to improve the affordability and availability of insurance for strata properties, ensuring that residents are adequately protected and that the strata sector remains sustainable and resilient.