As Owners Corporations (OCs) become more complex, so do the decisions Committees are expected to make.
Challenges that once seemed manageable can become harder to navigate as buildings grow in size, stakeholders become more involved and financial and operational risks become more significant.
In these situations, Committees often need more than someone to coordinate maintenance and organise meetings.
They need clear guidance, reliable information and confidence that the building is being managed with a long-term view in mind.
A mixed-use development in Cheltenham faced many of these challenges, eventually prompting the Committee to take a closer look at whether its management arrangement was still fit for purpose.
- Management reviews rarely stem from a single issue. They often begin when communication, reporting and support no longer meet a building’s needs.
- Financial transparency is about more than costs. It gives Committees the visibility needed to make informed decisions and maintain effective oversight.
- As buildings become more complex, management expectations evolve. Committees often need strategic guidance and specialist expertise, not just administration.
What makes a mixed-use development more difficult to manage?
Not all strata building types operate under the same conditions.
While many residential buildings focus primarily on maintenance, compliance and financial administration, mixed-use developments often introduce additional layers of complexity that require greater oversight and coordination.
That was the situation at a mixed-use development in Cheltenham.
The development comprised approximately 51 lots and included a mix of residential, commercial and serviced apartment operations.
It also featured the Park Hotel and was structured across four separate OCs.
The ownership and occupancy structure added another layer of complexity:
- Quest leased approximately 36 lots within the development
- the developer retained ownership of 13 lots
- multiple stakeholder groups had competing priorities and interests
Beyond the day-to-day responsibilities of managing the building, the Committee was overseeing:
- annual levies of approximately $192,000
- maintenance fund levies of around $99,000
- active VCAT proceedings relating to building defects
- water ingress and consequential damage claims
- discussions around defect rectification funding and future repair strategies
Adding to the challenge, these issues were unfolding simultaneously while the Committee balanced the interests of owners, commercial operators, consultants and the developer.
For a building of this scale, the challenge wasn’t simply keeping up with day-to-day administration.
It was making informed decisions in an environment where stakeholder management, financial oversight and long-term planning were becoming increasingly important.
What are the early signs a management arrangement isn’t working?
Management reviews rarely begin because of a single issue.
More often, they start when a series of concerns begin to affect a Committee’s ability to effectively oversee the building.
The Cheltenham Committee was experiencing exactly these challenges.
Over time, members raised concerns about several aspects of the building’s management, including:
- AGMs being held late
- poor AGM preparation and information
- outdated financial statements
- unresolved maintenance issues
- inconsistent reporting
- frequent changes in management personnel
Individually, these issues may not always justify reviewing a management arrangement.
However, when they occur repeatedly, they can begin to affect a Committee’s ability to rely on the information it receives and effectively oversee decisions being made on behalf of the OC.
For the Cheltenham Committee, the concerns eventually extended beyond day-to-day service delivery.
Members wanted greater visibility into:
- how decisions were being managed
- how financial information was being reported
- whether the building was receiving the level of support its complexity required
As those questions became harder to answer, the focus shifted from individual issues to a broader assessment of whether the existing management arrangement was still fit for purpose.
Why does financial transparency matter in owners corporation management?
Financial transparency is not only about knowing how much money is being spent.
For Committees, it provides the information needed to assess budgets, understand expenditure, approve invoices and plan for future obligations with assurance.
When reporting is unclear, even routine decisions can become harder to justify.
Questions around fees, allocations and bookkeeping can quickly turn into broader concerns about how the OC is being managed.
This became a key issue for the Cheltenham Committee.
Members raised concerns that management costs had increased from approximately $7,800 annually to more than $30,000 per year. They also questioned charges for non-scheduled items, bookkeeping processes and the allocation of certain administration expenses.
For the Committee, the concern was not simply that costs had increased.
It was that they did not have the visibility needed to clearly understand how funds were being managed and whether reporting accurately reflected the building’s position.
That lack of clarity made financial transparency a governance issue, not just an accounting concern.
What does effective strata management look like in a complex building?
By the time the Cheltenham Committee began exploring alternative management arrangements, the conversation had moved well beyond fees.
The building was dealing with multiple OCs, active defect-related proceedings, developer involvement and competing stakeholder interests.
As a result, the Committee’s focus shifted towards identifying the capabilities needed to support the building’s long-term success.
Among the priorities identified were:
- proactive communication and faster response times
- regular reporting and monthly updates
- greater financial transparency and clearer oversight
- stable staffing and succession planning
- experience managing mixed-use developments
- expertise dealing with defect rectification projects and builder disputes
- stronger governance support and accountability
The Committee also wanted greater visibility into:
- key financial information including balance sheets
- budget-to-actual reporting
- levy collection performance
- accounts payable and invoice approvals
Interestingly, the Committee’s wish list wasn’t centred on lower fees. It was centred on better information and access to expertise that matched the complexity of the building.
How do you choose the right strata manager for a complex building?
Once the Cheltenham Committee had clearly defined its priorities, the next challenge was identifying a management partner capable of meeting them.
Rather than focusing solely on fees, the Committee wanted to understand which option was best equipped to support the building’s long-term needs.
Looking beyond price
We helped the Committee evaluate its options through a structured review process that considered:
- communication standards
- governance capability
- financial reporting practices
- mixed-use experience
- defect and dispute management expertise
- long-term strategic support
This gave the Committee a clearer basis for comparison and ensured the decision was aligned with the realities of managing a complex mixed-use development.
The outcome
Following the review, the Committee selected a new strata manager under a two-year agreement commencing in August 2023.
The accepted appointment included:
- annual management fees of $17,166.60 including GST
- annual disbursement fees of $3,323.93 including GST
This represented a total annual fee package of $20,490.53 per annum.
While this was materially lower than the management costs the Committee reported experiencing at the time, the review was never solely about reducing fees.
The Committee recognised that the building’s requirements had evolved.
Managing four OCs, active defect proceedings, multiple stakeholder groups and significant financial responsibilities required a level of support that extended beyond routine administration.
Rather than searching for the lowest-cost option, the focus was on identifying a management partner with the capability and structure needed to support the building’s long-term needs.
By taking a structured approach to the review process, the Committee was able to make a decision based on transparency and long-term fit rather than price alone.
The bigger lesson for complex owners corporations
One of the most interesting aspects of the Cheltenham review was that it did not begin with a search for a cheaper strata manager.
It began with a Committee questioning whether its existing management arrangement was still suited to the needs of the building.
As the review progressed, it became clear that these concerns were connected to a broader issue. The building had evolved, and the Committee needed a management approach that could evolve with it.
For Committees managing increasingly complex developments, that may be the most valuable takeaway.
The question is not always whether your current strata manager is doing a poor job.
Sometimes the better question is whether the level of support, expertise and strategic guidance being provided still matches the needs of the building today.
Is your building getting the level of support it needs?
If your building is experiencing similar challenges, reviewing your current management arrangement can provide valuable clarity about what’s working, what isn’t and what options are available moving forward.
At Strata Management Consultants, we work with Committees of all shapes and sizes to help them understand whether their current management arrangement is still meeting the needs of their building.
Get in touch with our team to discuss your situation and the next steps available to your OC.
