Although most strata schemes are managed by a professional company, current legislation allows for Owners Corporations to be “self-managed by the lot owners”. This is done on a voluntary basis, either through a committee or by an individual proprietor who acts as manager.

While bypassing a professional management company might be a cost-saving opportunity for Owners Corporations, this alternative might not work for everyone. Self-managed Owners Corporations largely depend on the willingness of its members to contribute and assume responsibility for their obligations.

When do self-managed Owners Corporations work the best?

Self-managed properties are typically small, with less than 10 lots and none of  the extra services typically found in high rise buildings or mixed use developments such as gyms, pools and concierges. Ideally, all neighbours know each other and maintain cordial relationships, allowing them to coordinate efficiently and sustain the upkeep of their property.

In addition, self-managed Owners Corporations might be better suited for properties with a higher percentage of owners occupying the lots rather than renting them out,as they might be more willing to look after their investment and it makes fee collection easier.

What are the benefits?

  • Lower levies: By saving on the costs of hiring a professional Strata Manager, Owners Corporation levies can be considerably reduced.
  • More control: Self-managed OCs arrange, communicate and discuss all aspects related to the management of their scheme.

What are the risks?

  • More chance of disputes: In a self-managed Owners Corporation personal interests might get in the way of making good decisions and lead to conflict. Professional Managers, on the other hand, are independent and impartial. They can advise on the best ways to approach an issue and achieve a quick consensus amongst owners.
  • Lack of industry knowledge: Self-managing an Owners Corporation is a lot of work and there is a steep learning curve before it can be done effectively. Professional Strata Managers are experts at what they do and have the knowledge, experience and contacts to solve issues efficiently and can even save money in the process.
  • Failing compliance: Owners Corporations face complex and constantly-changing legal responsibilities covering aspects such as financial management, record keeping, reporting or insurance. It can be hard to keep up with the necessary requirements and one can easily be liable for not meeting legal standards. Professional managers are well acquainted with current legislation and can properly advice Owners Corporation’s in these matters.
  • Inadequate record keeping: Lot owners can sell their property at any time and this can be a problem if they happen to be participating in the managing of the Owners Corporation. Important information and records can be lost in the process, and the new owners might not want to be part of the management. Hiring a professional company may avoid this, as even if the appointed manager leaves, the records are still kept and the next person can swiftly start working.

In conclusion, self-management is a possible option for some Strata schemes but both the benefits and the risks should be carefully evaluated before reaching a decision. Remember that a poorly managed strata scheme devalues a property and may generate more expenses in emergency repairs or maintenance. So if you go the self-managed way be sure you are up for it and properly informed.