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The Strata Community Association has moved to quell concerns linking strata living to rising bankruptcy rates, while urging owners to strengthen long-term financial planning.
Recent research published by Financial Counselling Australia (FCA) found that 12 per cent of bankruptcies in Australia were linked to financial challenges within strata communities, a figure that has increased by 33 per cent over six years.
However, the Strata Community Association (SCA) said the raw data showed strata-related bankruptcies remained rare, with just 699 cases recorded across Australia’s 2.9 million strata lots.
“Figures released by FCA suggest that there are 699 bankruptcy cases out of a total 2.9 million strata lots nationwide, which house more than four million Australian owners and residents,” SCA Australasia chief executive Alisha Fisher said.
“To put these numbers in greater perspective, the reported bankruptcy cases in strata have now reached a high of just 0.022 per cent of the broader population.”
Fisher said the findings nevertheless underscored the importance of rigorous financial planning, particularly as building defects continue to rise across the sector.
“Prospective owners need to take the time to review expected building defect rectification, capital works funds, forecast maintenance requirements and long-term financial planning,” she said.
“Buying into a strata community is not just about the apartment or townhouse itself; it is also about the collective financial health of the building.”
The SCA outlined its support for hardship provisions that allow owners to pay levies in arrears under genuine financial distress to ameliorate these financial risks.
“SCA supports measures implemented across various state and territory jurisdictions that allow payment in arrears when an owner experiences genuine financial hardship, and we have consistently called for national progress on enhanced financial transparency and accountability across strata titled communities,” she said.
“However, governments of all political perspectives are also clear that strata communities must be properly funded and structured to support long-term capital works planning for building repairs and maintenance.”
SCA research in 2023 found 53 per cent of strata buildings had serious defects, up from 39 per cent in 2021.
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