Overseas Ownership as a Strata Feature

There's suddenly a lot of interest in the future of strata title in New South Wales as the government starts consultation about making major reforms to the laws affecting high density real estate ... which is great.  But, it's likely that the comments they'll receive will be too narrowly focused on individual problems that stakeholders have experienced in the past.


That's fine (and necessary since those problems can and should be fixed) and I'll leave everyone with complaints about the way strata laws and operations work to make those submissions.  But, just fixing up problems experienced by minorities is not making significant change or re-engineering things in strata for the future.


I'd like to focus on fundamental issues that are often ignored but have a huge impact.


One of those is overseas ownership in Australian strata buildings.


It's often forgotten (or not known) that until foreign investment in Australian real estate was opened up in 1975, the growth in Australian strata title ownership was steady but not exceptional.  However, after 1975 we saw huge growth in strata title building and apartment numbers; caused as much by foreign investment as it was by domestic demand.  The late 1970s, 1980s and 1990s experienced growth in strata numbers exceeding 25% per year.


The influence of overseas ownership in strata continues today with many developers and developers relying on offshore sales for the economic viability of projects. In a recent article in Property Observer called Asian buyers vital to Australian property market Morry Schwartz makes the point that Asian buyer are looking to invest in stable economies outside Asia (like Australia) so they need accommodating.  He focuses on developers and sales agents and highlight the Asian real estate listing site juawi.com.


He's right about that and his point equally applies to the operation and management of Australia strata corporations.  Since they need to have mechanisms to better provide for and deal with foreign ownership so that Australian strata property is more attractive for investment and Australian strata corporation operate better with overseas owners.


So, what kind of changes are necessary for foreign owners of Australian strata apartments?

• More information that is globally relevant and understandable needs to be provided:  from simplified ownership and title details to reporting on decisions, issues and finances
• The overseas domicile of strata owners needs to be facilitated by allowing international notification mechanisms, foreign levy recovery process, international payment mechanisms, and timing adjustments for notices and events to cope with different time zones
• Multi-lingual communication facilities should be provided (both ways) so that strata owners, committees and managers can liaise better
• More flexible and innovative meeting and interaction mechanisms need to be developed (using new and emerging technologies) to allow easier owner participation regardless of where they're located
• Better mechanisms are needed to deal with the increased likelihood of tenants occupying overseas owned strata apartments (and therefore reduced levels of owner occupiers in strata buildings)
• Matching the various taxation status(es) of overseas owners to the taxation status of strata corporations

  There's a whole lot more that could be done by strata committees, strata managers, property managers and other strata service providers to suit the special needs of overseas owners.  But that doesn't need strata law changes ... just good business sense and awareness.


So, the future of Australian strata will involve more overseas owners (and increasingly from Asia) so if we're serious about changing things to accommodate the future of strata let's make it more overseas owner friendly.




Francesco ...