038. Why it is Vital for Strata Owners to Add Value to their Building – with Gordon Streight (relevant to all jurisdictions)

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This interview with Gordon Streight identifies that the legislation covers only the strata committee’s requirement to do the bare minimum to maintain the property. He quotes the only 6 words in the original act – Section 62, that states that they must “Maintain and repair the common property.” In the latest act – Section 106, it says effectively the same thing.

There is therefore no requirement under the Act for the strata committee to either consider or undertake any activity or initiatives that could be considered above the bare minimum (6 words), that would either improve or enhance the common property’s facilities, aesthetics or any other aspect to either improve the building’s liveability or value, reduce operational and/or maintenance costs nor contribute to lot owners (residents or investors) enjoyment of their property’s common areas or support the optimisation of their lot’s worth (in terms of investment/sales value).

So in answer to my initial question: there is no requirement or mandate for the Strata committee to consider or apply any steps to optimise the properties overall fiscal value by updating aspects of the common property for the benefit of all.

I can understand why the Act would not make this mandatory as some committees could get carried away with improvements at the expanse of investors and residents. It is therefore left to individuals to lobby fellow owners and gain majority acceptance of any alterations or improvements that may enhance property values.

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Hi John, thanks for your comment. You are exactly right – if an owners corporation wanted to do more than just “repair and maintain”, but in fact wanted to “improve or enhance”, section 108 of the current NSW Act requires a special resolution (not more than 25% voting against, calculated on a UE basis). So a proactive committee wanting to add value would need the majority on their side.

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