NSW government considering banning strata manager commissions to cut apartment costs

Consensus Summary

NSW’s Productivity and Equality Commission is pushing for a ban on commissions paid to strata managers, arguing the current system creates conflicts of interest, inflates costs, and erodes trust among apartment owners. The report, led by Commissioner Peter Achterstraat, estimates reforms could save owners $333 million over 15 years by reducing premiums and promoting competition. With over a million people living in strata properties and half of Sydney’s homes expected to be strata-titled by 2041, the issue is critical as apartments become the primary housing option for younger buyers. Commissions—often 15 to 25% of a manager’s revenue—are tied to services like insurance and energy contracts, incentivizing managers to prioritize their earnings over owner savings. While the Strata Community Association supports phasing out commissions, some managers resist change, fearing it will disrupt their business models. Cases like Sydney owner Lui Timbano’s dispute—where he paid $7,000 more annually for insurance than an independent broker quoted—illustrate the problem. The NSW government has not yet committed to a ban but will review the report’s four reform pathways, including voluntary phasing-out or legislative action. Opposition parties have signaled openness to considering a ban, though concerns remain about potential fee increases for managers. Experts argue transparency and competition will ultimately benefit owners, but the transition period and industry resistance could delay progress.