Industry Issues

Industry news pulls together some of the most interesting and important stories in the strata industry over the past few months.

Short-term Letting

Strata dense areas across Australia and New Zealand are experiencing considerable increases in the cost of rent, which is being compounded by record low long-term rental options.

A significant contributor to the housing affordability crisis is the recent proliferation of short-term accommodation apps like AirBnB and Stayz. These are impacting the supply of long-term rental properties and potentially driving up prices as shown in recent reports by The Courier-Mail that in nine Brisbane suburbs, the availability of properties on Airbnb is greater than the availability of properties on the private longterm rental market.

Lots within strata complexes are attractive options for those seeking to engage in the letting of their properties in the short term, due to their lower capital and overhead costs, their location in high density areas and the amenities they contain such as pools and gyms. Not only does short-term accommodation impact rental seekers, but also those that reside within strata complexes via issues associated with security, parking and noise disturbances.

The issues associated with the provision of short-term rental accommodation are complex and have emerged in a relatively short period of time. Management practice adjustments, planning reviews, short-term letting registration, and legislative changes are potential remedies that each state and territory needs to address to adequately cope with these challenges.

Insurance

Insurance products are being heavily impacted by a hardening insurance market, which is in turn passing on increasing costs to consumers, among them strata communities.

In a softer market, insurance companies have a greater appetite for risk, and will compete with each other through lowering the cost of premiums to attract customers. In a harder market, the availability of insurance declines, particularly in high-risk areas like Northern Australia that are prone to experiencing extreme weather events. The lack of competition and low supply of insurance offerings means that insurance premiums are increased. This is particularly impactful on strata insurance consumers, as strata insurance, unlike other forms of insurance, is compulsory.

SCA supports implementing reforms to taxes and levies as an effective means to reduce the impact of increasing strata insurance premiums, as well as government initiatives like the Northern Australia Reinsurance Pool, increased mitigation and resilience spending, and targeted measures aimed at those most acutely affected.

Cost of Living

Strata communities, like all Australians and New Zealanders, are being significantly impacted by the current cost-of-living crisis, underway both domestically and internationally alike.

Strata living does however create economies of scale, such as shared facilities and reduced need for private transportation options, which paired with lower cost to entry is making strata living an even more attractive proposition in a cost of living context.