NSW government considering banning strata manager commissions to cut apartment costs
Consensus Summary
The NSW government is evaluating a proposal to ban commissions paid to strata managers, a contentious practice that has driven up apartment living costs by creating conflicts of interest. A report by the NSW Productivity and Equality Commission found these commissionsâoften 15 to 25% of insurance premiums or moreâdistort decision-making, inflate expenses, and erode trust between owners and managers. With over a million NSW residents living in strata properties and half of Sydneyâs homes expected to be strata-titled by 2041, the reforms could save owners $333 million over 15 years through lower premiums and increased competition. While apartment owners and industry peak bodies like the Strata Community Association support phasing out commissions, some strata managers resist the change, arguing it threatens their business models. The government has not yet committed to action but will review the recommendations, with opposition parties expressing cautious support for further scrutiny. Cases like a Sydney apartment owner paying $7,000 more annually for insurance due to hidden commissions highlight the urgency of reform, though industry pushback and structural issues like vertical integration remain challenges.
â Verified by 2+ sources
Key details reported by multiple sources:
- NSW Productivity Commissioner Peter Achterstraatâs report recommends banning commissions for strata managers, citing conflicts of interest and inflated costs
- The report estimates scrapping commissions could save apartment owners $333 million over 15 years in NSW
- Over 550 submissions were received during consultation on the report, with strong support from apartment owners for reform
- Strata managers in NSW can receive commissions of up to 20% on insurance policies, with a $50,000 policy generating a $10,000 commission split between brokers and managers
- The NSW government has not yet committed to implementing the recommendations but will âcarefully considerâ them
- Nearly 1 million people live in strata properties across NSW, with half of Greater Sydneyâs homes expected to be strata-titled by 2041
- The Strata Community Association NSW has announced members will phase out insurance commissions as part of transparency reforms
- Apartment owner Lui Timbano alleges his strata manager exceeded agreed commission limits, paying $28,000 annually for insurance that an independent broker quoted at $21,000
Points of Difference
Details reported by only one source:
- Strata lawyer Allison Benson noted some strata managers took âhigh offenceâ at the suggestion of banning commissions, insisting it would ruin their business model
- The report highlights âvertical integrationâ where strata management companies are owned by or linked to service providers they recommend, with existing disclosure rules deemed insufficient
- Developers often select strata managers before apartments are sold, creating conflicts of interest if issues like building defects arise later
- Tom Carr (NSW Treasury director) stated a standard strata insurance policy can attract 20% commissions, with 15-25% of some firmsâ revenue coming from commissions in some cases
- Peter Achterstraat warned the issue should be solved âsooner rather than laterâ due to rising strata ownership as the only affordable housing option for younger buyers
- A case study in the report showed a strata managerâs insurance commissions grew from $8,000 to $27,000 annually over four years despite no change in work required
- A resident submission described a repair quoted by a maintenance company linked to the strata managerâs conglomerate, raising concerns about vertical integration
- The opposition spokesperson for fair trading, Tim James, said any ban should have a âcompelling and comprehensive basisâ
- David Glover (Owners Corporation Network Australia) called commissions âhidden paymentsâ that make it difficult for owners to compare strata managersâ value
- The ABC included visuals of strata managersâ roles and conflicts of interest from *Four Corners* and *ABC News* reports
Contradictions
Conflicting information between sources:
- The Guardian emphasizes urgency with Achterstraat calling for reforms âsooner rather than later,â while the SMH frames the governmentâs response as cautious with âcareful considerationâ
- The ABC highlights that strata managersâ commissions can amount to their entire profit margin (implied in source-specific), but the SMH specifies 15-25% of revenue in some casesâno direct contradiction but differing emphasis
- The Guardianâs case study shows commissions growing from $8,000 to $27,000 annually, while the SMH cites a $10,000 commission on a $50,000 policy as an exampleâboth are specific but not directly conflicting figures
- The SMH reports a strata owner (Lui Timbano) paying $28,000 for insurance, but the Guardianâs case study focuses on a different building with a $27,000 commissionâboth are valid but unrelated examples
- The Guardian notes the oppositionâs Tim James would consider reforms âincluding a potential ban,â while the SMH does not mention opposition views beyond Chanthivongâs cautious stance
Source Articles
Commissions for strata managers should be banned âsooner rather than laterâ, NSW productivity commissioner says
Peter Achterstraat says protections are essential as apartments increasingly become âthe only place people can afford to buyâ Follow our Australia news live blog for latest updates Get our breaking ne...
Commissions for strata managers could be banned under proposed model
The head of the NSW Productivity Commission says abolishing commissions for strata managers will increase fairness and transparency for apartment owners....
This idea would save apartment owners $333m. Strata managers took âhigh offenceâ
A system of payments that has inflated the cost of apartment living is facing an overhaul, as the NSW government considers a historic ban....