High property taxes have forced a young Australian couple out of their prized apartment, creating another hurdle to home ownership for beginners.
Josh Stubing and Emily Abbey were 20 and 19 respectively when they bought their one-bedroom unit in the north-west Sydney suburb of Kellyville Ridge seven years ago, thinking it was their first step on the path to property ownership.
However, after initially paying quarterly strata fees of $600, they are now being charged a whopping $3500 to repair defects and replace cladding that is now deemed illegal.
“We’ve been trying to keep up with this, but it’s driving us into the ground with the mortgage expense as well,” Stubing said. realestate.com.au.
“It’s so difficult to deal with… We bought when we were very young and thought the property taxes were just about keeping the complex clean.”
Mr. Stubing said the building has no amenities, so the couple never saw the huge increase coming.
He said he felt the decision to buy the unit was a bad one in retrospect because the real estate agent informed them about the strata fees but they didn’t realise they could increase so drastically.
A long list of defects have been discovered at the complex, including the fact that its exterior cladding has been banned in New South Wales due to fire risks.
Josh Stubing and Emily Abbey are being forced to sell their unit after suffering steep increases in strata fees amid Australia’s already crippling housing shortage.
Mr. Stubing said they are now trying to sell the unit after failing to pay a $20,000 special tax up front; the money will be recouped from the rent they are charging for the unit.
However, high ownership costs make the unit difficult to sell.
He said their monthly expenses are now so high that they might as well take out a loan for a house worth a million dollars.
Mr Stubing and Ms Abbey’s story is not unique; there is anecdotal evidence to suggest that strata fees have risen by 15 to 20 per cent on average over the past year, but in some cases as much as 40 per cent.
Samantha Reece, director of Australian Apartment Advocacy, said new homeowners needed to be better informed about strata fees and her group has put together an educational kit on them.
She said her research shows that about 60 per cent of people moving into an apartment are doing so from a house, so strata costs often take them by surprise.
‘No matter what stage of your life spectrum you are at – whether you are a professional couple, a single parent, a baby boomer or a retiree – being forced to pay $70,000 in six weeks – as happened recently in Melbourne – is a shock that could cripple you financially.’
She called on the government to make such costs more transparent to builders and developers so that they are more honest.
Strata rates have increased by 15 to 20 percent on average over the past year, but in some cases have risen as high as 40 percent.
The New South Wales state government has proposed a series of changes to strata laws, which govern key decision-making in shared ownership blocks.
The reforms followed 965 complaints about strata officers in the five years to 2023, most of which revolved around rules of conduct or budgets, levies or finances.
Failure to comply with existing disclosure requirements around commissions would be punished with a harsher penalty, conflict of interest disclosure obligations would be stricter and agents would be prohibited from earning commissions on insurance products if they do not find the best deal for residents.
NSW Fair Trading will be given greater enforcement and compliance powers, and the government believes the changes will ensure residents no longer have to feel as though they are being ripped off by their agents.
“We want to change the perception that strata management agents are quick and easy to take advantage of property owners by significantly increasing the consequences for those who do the wrong thing,” said Fair Trading Minister Anoulack Chanthivong.
‘The new laws are designed to take immediate steps to help restore confidence in living and investing in strata schemes, ensuring more people consider apartment living as a housing option.’
Apartment living will play a major role in solving NSW’s housing crisis, with higher-density housing plans to curb recent urban sprawl.
The government said it will submit its changes to parliament later this year, after consulting with key stakeholders such as the Landlord Corporations Network and the Strata Communities Association on draft legislation.