We know that apartments are growing in popularity but did you know that in a little under 20 years over half of Sydney’s population will be living in units. With so much close quarters living there are going to be a growing number of disputes. Michael Teys has written a book on what strata laws will be like in the future and how they will impact how we live in this environment. We discuss that with him.
Kevin: Well, as we know, apartments are becoming more and more important on the landscape. They’re the new houses of the future for a growing number of Australians. Housing affordability, aging, environmental issues, immigration, and shrinking household formation patterns are driving this shift. Apartments are now the dominant form of new housing in many of our capital cities, and in fact, in under 20 years, over half of Sydney’s population will live in apartments. In other cities, the trend will be the same.
Therefore, I’m fascinated to talk to you now about a new book that’s just been launched called “Growing Up,” written by our good friend, Michael Teys. Michael is a strata title lawyer and founder of Block Strata, and they manage strata title owners, corporations and body corporate.
Michael, welcome and congratulations on the book.
Michael: Thank you very much, Kevin.
Kevin: I thought it’d be handy just to talk about the management of units, and we know that that’s through the strata system. Interested to read in the book that it was actually started about 50 years ago.
Michael: Yes, the first strata title property was in Sydney in 1961. The buildings of that generation are now 50 years old and like all of us, Kevin, who are in our middle years, need a bit of love and attention.
Kevin: Yes, we do. Why was the strata system originally set up?
Michael: It came about because banks wanted to lend money to people individually, but at that point in time, flats were held in a company title structure, so there was some difficulty of the bank having security over a person’s right to occupy an apartment. They came up with this rather ingenious system of giving people a title deed to air space, and Australia was a pioneer of this. It’s, of course, a concept that is now spread worldwide.
Kevin: Yes, I was going to ask you that, whether it is, in fact, something around the world. Interesting you mentioned there company-owned or company title. There are still a few blocks around… Well, I certainly know in Brisbane there are, but what about in other parts of Australia? Are there many?
Michael: Yes. Look, there are about a thousand company title buildings in Sydney alone, so it’s still a significant part of the market. In fact, my company is managing some of the company title buildings and people are generally quite happy in that arrangement. Although, of course, if you do convert them to strata title, there’s a significant uplift in value.
Kevin: What is the basic difference between company-owned and strata titling?
Michael: The powers of a company under the Corporations Act are far wider than the strata title legislation. Strata title legislation tends to respect the rights of the individual. It’s actually quite difficult to get things done on a collective basis, which is one of the reasons why I wrote the book.
But company title is run as a company. There’s a board of directors, and they have rights to allow you to use the space in certain ways, so it can be quite subjective to the personalities of the people running the company, whereas a strata title, you have much more well defined rights and responsibilities.
Kevin: What goes into making up a successful strata management environment around a block?
Michael: First and foremost, you need the willing participation of one or two strong, sensible people. In most buildings – it doesn’t tend to matter whether it’s a six pack or whether it’s a much larger building – there are one or two people who become dominant. If you’re lucky enough to be in a building where that person or persons are sensible and are there for the right reasons, then you’re very lucky and your building is likely to be run well. If you’re in a building where the dominant person is a megalomaniac…
Kevin: A control freak.
Michael: …Or somebody who is lacking some fulfillment in other aspects of their lives, then you can be in real trouble.
Kevin: What’s the difference then between a block that’s predominantly owner-occupied as opposed to one where you have a predominance of tenants?
Michael: A predominantly owner-occupied block is going to be full of people but are more concerned about the way their property is being managed. It can be a difficult block to manage because you’ll get different personality attributes that will come to the surface, and managing strata is primarily about managing people.
Property is property, but people are difficult, and in the strata title environment, some weird and wonderful things can happen. People who go quite sensibly about their work and their day become a little unhinged sometimes when they become involved in strata, so it is about managing people and getting the best out of people, getting people to realize that this is a community. It’s a micro community, and if you like, it’s the fourth level of government. It’s the government that determines when and how we use the property that is immediately around us.
Kevin: Well, up until now of course, 50 years on, the strata system seems to be working very, very well all around Australia. What’s it going to be like into the future? What are the challenges there for some of these committees? What are they going to be facing?
Michael: The big challenge, of course, is ongoing repair and maintenance and the pressure that will come inevitably on the older blocks to be renewed, to be redeveloped or to be refurbished substantially.
Repair and maintenance is something that needs to be done on an ongoing basis. The natural inclination of investors is to spend when they have to, not when they should, and so I think the movement towards a more proactive repair and maintenance routine is important.
There are some cultural issues that are arising in relation to the different attitudes to property and to property management as a consequence of overseas investment that are difficult at the moment, and those are the things strata management are battling with. That’s a challenge for the future.
I think regenerating and renewing the landscape by putting together feasible plans for the redevelopment of the developed blocks and for the redevelopment of blocks that have been abused in the past, have not been properly cared for, and are now in need of a great upkeep.
Kevin: My guest has been Michael Teys. The book is called “Growing Up.” It’s a very thought-provoking and entertaining book about ownership of strata property and living in high-rise and high-density apartments and townhouses. If you find that you’re in that situation and you want to get a bit of an understanding about how maybe you could be a lot happier in your living environment, the book is called “Growing Up” – I suggest you get it – by Michael Teys.
Michael, thank you so much for your time.
Michael: Thank you very much, Kevin.