What should you and your committee be asking and what warning signs should you look out for when choosing a new strata manager?
What do you want from your strata manager?
This critical question is often overlooked, but if you intend to change managers you need to ask yourself why and what you will expect from your next manager. Will your new managing agent be able to deliver on those expectations? Are those expectations realistic?
You may tell your new managers that yours is a simple and low-fuss strata scheme that simply wishes to keep costs down, but if you then spend the next twelve months emailing and calling the manager every day, this can increase the fees charged to the Body Corporate.
If your scheme needs lots of attention that is fine. Just ensure that your next company are made aware of this to ensure they can properly manage the scheme and are realistically prepared to attend to your needs.
What are the costs?
The majority of strata management contracts will be structured to have a set of agreed services that include general secretarial services in the annual fees, and a range of extra services that are charged on a user pays basis.
Many strata companies will offer cheap annual fees but obtain additional revenue from providing extra services. Ensure you check your contract carefully and fully understand what is included and what is an additional extra cost.
On many occasions, owners may be unhappy that a certain service is not being provided when it is actually and additional service that can be provided if asked but is not included in the agreed services included in the base fee, or is not a service that the company can provide at all, such as providing legal advice.
Think about what your plan actually asks the manager to do and check this against the agreed services. If you require work outside of those services, you can reasonably expect to see additional costs.
How do we access our records?
Any owner in a body corporate should be able to access general records for the scheme such as details about the financials, minutes, insurance, and by-laws and they should be able to access the records quickly, easily and without cost through online portals.
While online portals help provide transparency, sometimes they cannot hold all documentation. Check how long it will take a manager to respond to information requests and if there are any fees for giving access to your records.
What’s the term of the agreement?
The majority of strata managing contracts are 1-3 years. Sometimes longer terms may be offered with incentives of lower fees or a cap on annual increases. Shorter terms give you the option to renegotiate or end the agreement if you are unsatisfied. Negotiate a length for the contract that works best for your scheme and that you feel most comfortable with.
Who’s actually the strata manager?
Find out who the appointed Strata Manager from your next company will be to provide the management services for your scheme. Have a chat with them and see if you think they will suit your body corporate. Do they have the knowledge and the experience needed?
A strong working relationship with the strata manager can make all the difference so it’s important to get the right fit.
Large company vs Small Company: Does it matter?
Larger strata management companies tend to be more structured with dedicated accounting and bookkeeping staff as well as compliance, maintenance, and insurance teams. While smaller firms may be able to offer more tailored and flexible services.
Make sure that there is sufficient size to ensure that there will be enough expertise and backup for when people are away or sick but small enough that you can contact someone who has direct responsibility.
What red flags should we look out for?
- Reviews: while they definitely won’t tell the whole story, online reviews from Google and other sources can give an idea of what to expect. A few bad reviews may not be significant, as strata managers can often be blamed for things that are outside of their control. But if there are a steady stream of complaints then that’s a warning sign to look out for.
- Staff turnover: It’s no good having a great strata manager if they are gone a few months later. Check how long staff stick around. A high turnover in staff may indicate the company is not being run as best it could.
- Overworked managers: How many buildings does your manager manage? Does anyone assist them? You may have a great manager but if they have too many buildings to manage and cannot give your scheme the attention it needs, this can be a major issue.
For more information, please read our article detailing how to switch Body Corporate Managers.