NSW government considering banning strata manager commissions to improve transparency and reduce costs
Consensus Summary
The NSW government is evaluating a proposal to ban commissions paid to strata managers, a move that could reshape apartment living costs and transparency across the state. The core issue revolves around the legal but controversial practice of strata managers earning commissions for arranging insurance, energy, and other contracts, which critics say creates conflicts of interest and inflates expenses for owners. At least two sources confirm that nearly a quarter of NSW residents live in strata properties, with Sydney expected to see half of its homes as strata dwellings by 2041, making the reforms potentially impactful for millions. The NSW Productivity Commissionâs report, led by Peter Achterstraat, estimates that phasing out commissions could save apartment owners over $300 million over 15 years through lower premiums and increased competition. While the government has not yet committed to the changes, it will carefully consider the recommendations, which include a three-year transition period and four reform pathways ranging from voluntary phase-outs to a full legislative ban. All sources agree that commissions distort decision-making and erode trust, but details vary on industry resistance and the urgency of reform. The Guardian emphasizes the financial stakes for younger buyers, while SMH highlights specific legal disputes and the financial scale of commissions, and ABC provides regional and owner corporation perspectives. Contradictions exist in the framing of industry resistance and the exact financial impact of commissions, but the consensus remains strong on the need for reform.
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Key details reported by multiple sources:
- Peter Achterstraat is the head of the NSW Productivity and Equality Commission and led the report recommending changes to strata manager commissions
- The NSW Productivity Commission report received over 550 submissions from apartment owners and industry stakeholders
- Nearly a quarter (25%) of NSW residents live in residential strata schemes, including apartments, townhouses, villas, and duplexes
- By 2041, around half of all homes in Sydney are expected to be strata dwellings
- Strata managers in NSW can legally receive commissions for new contracts, including insurance premiums and other services, creating a conflict of interest
- The NSW government has not yet committed to implementing the recommendations but will carefully consider them, according to Minister Anoulack Chanthivong
- Abolishing commissions could increase transparency, competition, and value for money for apartment owners, according to the Productivity Commission report
- The report estimates that phasing out commissions could generate over $300 million in benefits for NSW over 15 years through lower premiums and improved competition
- Strata managers are appointed by owners' corporations to manage daily operations of apartment buildings
- The NSW Productivity Commission recommended phasing out commissions in favor of a fee-for-service model
Points of Difference
Details reported by only one source:
- ABC Coffs Coast reporter Claire Simmonds and ABC News reporter Keana Naughton contributed specific regional and owner corporation perspectives on the issue
- ABC referenced a Four Corners segment (Rob Hill) discussing the broader implications of commission abolition on renters and competition
- ABC highlighted David Glover from the Owners Corporation Network Australia explicitly calling commissions 'hidden payments' that create incentives for expensive contracts
- ABC mentioned a specific case where a strata manager's insurance commissions grew from $8,000 to $27,000 annually despite no material change in work (later referenced in Guardian but attributed differently)
- The Guardian quoted Peter Achterstraat directly stating 'the only place people can afford to buy these days is in an apartment,' emphasizing urgency for reform
- The Guardian provided a detailed case study of a large inner-Sydney strata scheme where insurance commissions grew from $8,000 to $27,000 over four years with no material change in work
- The Guardian noted that some strata managers are already moving to a fee-for-service model, citing industry resistance to change
- The Guardian mentioned the Strata Community Association backing a move away from commissions but also highlighting industry resistance to reform
- The Guardian included a quote from a resident describing a repair quote from a company linked to their strata manager's conglomerate
- The SMH reported that a standard strata insurance policy can attract 20% commissions, with a $50,000 policy generating $10,000 in commissions
- The SMH detailed a specific case of Sydney apartment owner Lui Timbano suing his strata manager for exceeding commission limits, with insurance costs reduced by $7,000 via an independent broker
- The SMH quoted strata lawyer Allison Benson describing strata managers taking 'high offence' at the suggestion of banning commissions, calling it a 'ruinous' business model
- The SMH highlighted 'vertical integration' concerns where strata managers are tied to developers or service providers, creating conflicts of interest
- The SMH mentioned that commissions can account for 15 to 25% of some strata management firmsâ total revenue, representing their entire profit margin in some cases
Contradictions
Conflicting information between sources:
- ABC and SMH both mention a case where insurance commissions grew from $8,000 to $27,000 annually, but the Guardian attributes this to a 'large residential strata scheme in inner Sydney' without specifying the exact building or context
- The Guardian states that 'a large number of strata managers are already moving off commission and moving into the direct fee model,' while SMH implies resistance within parts of the industry
- ABC and SMH both report that strata managers can receive commissions for new contracts, but SMH emphasizes the financial scale (15-25% of revenue) more explicitly than ABC
- The Guardian quotes Achterstraat as saying 'the only place people can afford to buy these days is in an apartment,' while ABC does not include this urgency-driven framing
- SMH reports that some strata managers 'took high offence' at the suggestion of banning commissions, while ABC does not include this specific reaction from industry representatives
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