NSW strata managers: Commission ban needed now

New South Wales Productivity Commissioner Peter Achterstraat is advocating for an swift ban on exorbitant commissions for strata managers. This call comes as apartments are projected to constitute half of all Sydney homes by 2041, with over a million people currently residing in strata in NSW. Achterstraat's report, commissioned by the NSW Minister for Fair Trading, identifies significant conflicts of interest and poor practices stemming from strata managers receiving commissions on insurance premiums and other services.

One case study revealed a strata manager receiving 15% insurance commissions, amounting to a yearly increase from $8,000 to $27,000 without a change in workload. This prompted the strata committee to engage a direct insurance broker, resulting in a 30% premium reduction. Achterstraat proposes an upfront, fee-for-service model, which would position NSW as a national leader in banning such commissions and potentially generate over $300 million in state benefits over 15 years.

While the peak body for the strata industry in NSW supports a move away from commissions, some industry members resist the change, arguing commissions compensate for extensive work. The report acknowledges potential fee increases but expects these to be offset by reduced premiums and other cost savings. Achterstraat recommends a three-year phase-out to facilitate industry transition and suggests options ranging from voluntary phase-outs to an outright legislative ban. The NSW government is currently reviewing these recommendations.