ICA Advocates for Strata Law Reforms in Victoria

In a submission to the Expert Panel Review of the Owners Corporations Act 2006, the ICA emphasised that building defects in residential apartments are costing Australians an estimated $1.3 billion annually. These defects, coupled with poor governance practices, are making many strata buildings high-risk liabilities, thereby driving up insurance costs and, in some cases, rendering properties uninsurable.

The ICA's recommendations focus on several key areas:

• Enhanced Governance and Education: Improving transparency and accountability within owners corporations through targeted education for committee members to better manage financial and insurance matters.
• Licensing of Strata Managers: Implementing evidence-based licensing schemes to ensure strata managers meet professional standards without imposing unnecessary costs.
• Disclosure of Insurance Commissions: Mandating full disclosure of any payments to strata managers that could influence insurance product selection, with a thorough assessment of market impacts before considering a ban on commissions.
• Facilitating Building Renewal: Lowering the threshold for collective sales of strata properties to enable the renewal of older buildings, thereby reducing risks associated with aging infrastructure.
• Strengthening Compliance Mechanisms: Introducing public complaints registers and other enforcement tools to hold owners corporations accountable for defects and maintenance issues.

These proposed reforms aim to address the root causes of rising insurance premiums by promoting better governance and proactive maintenance within the strata sector. The ICA underscores the importance of collaborative efforts among government bodies, insurers, brokers, and other stakeholders to implement these changes effectively. By doing so, the goal is to enhance the affordability and availability of insurance for strata communities, ensuring the long-term sustainability of this vital housing sector.