The real reason strata apartments don’t realise their asset growth potential.
Maintaining and appreciating the value of block of units is more than focusing on the physical building, a key factor is the group of owners and how they collectively act together. What many people fail to understand is that purchasing into a strata building isn’t the same as buying a Torres Title house. The group of owners must work together towards a common goal of protecting their asset. This requires certain rules and procedures that everyone must follow within a democratic framework. If the owners of a building understand this principle, this in itself can lead to greater understanding, managed expectations and harmonious group decision making. This enables decisions around maintenance and renovations to be made in the best interest of the building, and the greatest asset growth potential to be realised for all owners.
Not understanding this principle is what causes friction, dysfunctional Strata Committees, poor group decisions and ultimately the building and all owners suffer as a consequence. For example, a common cause of friction occurs when an owner wants to renovate and they feel like they’re having to jump through hoops in order to gain approval from the Strata Committee. There’s forms to fill out, time to wait, and often hefty costs associated with lawyers writing by-laws and extra strata meetings required. This is all at the cost of the owner wanting to do the renovation. It’s easy to feel miffed, frustrated and angry, taking it out on fellow owners (why would they be doing this to you? What do they care about something happening in your apartment anyway?). A more easily accessible target is the Strata Managing Agent (why are they making my simple renovation such a costly, complicated and expensive process).
What owners going through this process can fail to see is that the very rules they are having to (annoyingly) adhere to, are also there to protect them. Flip the coin, and thank goodness the Strata Committee didn’t allow Billy in Unit 9 to divide his loungeroom into six additional bedrooms which would have clogged up parking in the building and caused havoc.
Understanding the purpose and the collective good that the rules serve to protect your asset, can somewhat reduce frustration with adhering to the red tape when required. Taking the time to understanding the process and allowing for it in both time and budget also manages expectations. Anecdotal evidence suggests that there are more than 100 renovation applications every year in NSW, where the owner has an expectation that works can commence the next day. It’s pretty clear expectations will be let down for these owners in a big way.
There is a myriad of things that can cause disputes, leading to dysfunctional Strata Committees (noise disputes, parking disputes, rubbish disputes to name a few). However, the underlying cause is a lack of understanding of the fact that when you buy into a strata building, you are also buying into a community that makes collective democratic decisions in the best interest of the building. Sometimes this may work in your favour, but not always.
While it’s natural to want what’s in your own best interest (to do a renovation in your apartment in peace without external interference), there are also advantages to being part of a collective group that pools their resources (it’s cheaper to buy an apartment than a house). Opening your mind to these advantages is ultimately what will lead to the biggest asset growth potential for your apartment. Who knows, it may even lead to all sorts of other advantages, such as a friendly neighbour dropping by with some milk when you run out.