Victoria to ban kickbacks for ‘dodgy’ strata managers

The reforms would ban strata managers from taking commissions or payments that could influence their spending on a property, from insurance to repairs and more.

In addition to strata managers, broker commissions will also be examined to ensure that managers weren’t being paid “through the back door”.

Labor said the reforms were designed to benefit property owners, not strata managers' pockets.

With one in five Victorians living in an apartment, unit, or townhouse, Labor said removing these kickbacks would ensure decisions benefited owners rather than the strata manager.

Minister for consumer affairs Tim Richardson said the reforms would strengthen owners' position and clarify decision-making across more than 500,000 strata-managed properties statewide.

“If you’re paying strata fees, you deserve a manager who works for you - not one pocketing a kickback,” Richardson said.

For owners, the policy will ensure a fairer say at AGMs, with at least 21 days' notice required, a penalty for breaching the proxy voting limit, and two to four weeks to vote outside meetings.

“We’re banning kickbacks and putting a cop on the beat, so dodgy managers get caught.”

“Victorians living in strata communities deserve to have a government on their side,” Michaelson said.

The new laws would also establish a dedicated Owners Corporation Taskforce within Consumer Affairs Victoria, with powers to monitor and enforce the new rules.

Victoria's move follows its northern neighbour, with NSW passing its own suite of reforms to boost transparency, including the power to terminate a building manager's contract if they breach their duties, such as failing to disclose commissions.

Earlier this year, NSW strata giant Netstrata faced criminal proceedings for allegedly failing to disclose benefits and conflicts of interest.

NSW watchdog alleged that the business and its licensee, Stephen John Brell, failed to adequately disclose payments and other advantages and provided false or misleading information.

Under the state’s new transparency reform, NSW Fair Trading will have expanded powers to publish compliance actions against an owners corporation, allowing prospective buyers to see if there were any outstanding repair or maintenance issues before purchasing.

Real Estate Institute of Victoria CEO Toby Balasz said that any material change to revenue sources for businesses should involve significant consultation with those in the industry.

“There are transparency benefits to the government’s proposal, but we’re concerned that if industry isn’t consulted on the details or rollout, it could lead to volatile fee changes and Victorians living in strata properties paying higher fees in a cost of living crisis.”