Understanding the OC Industry
There are many stakeholders within the ‘OC space’ who are there for varied reasons, be they as an owner, investor, service provider, regulator, developer or builder. Across this spectrum is the human predisposition for ‘self-interest’, which can give rise to many challenges for an OC.
Our personal experience when dealing and communicating with most service providers to Owners Corporations is that they all see opportunity, growth, diversification and profit from engaging with Owners Corporations.
What to know about the Industry Stakeholders
Banks align themselves with various OC Management Software programs and financial products. Most of what were once standalone software packages for OC managers have now been snapped up by a Bank. The theory here is that if a software package becomes the package of choice by OC managers, the doors will open to marketing or combining other services (by example, that $1m Long Term Maintenance Fund Investment with the same Bank).
This also extends out to when your OC Manager sells your OC Management Agreement as part of their portfolio. The new OC Manager change is seamless as you all use the same program and, on many occasions the same payment systems. It helps stakeholders to cross-sell and upsell to your OC.
We have seen Owners Corporations, Facility Management and Cleaning businesses that have been born out of the exponential increase in apartment complexes and demand for the gambit of services. Some of these businesses look at each other and see an opportunity in attempting to provide all of these services themselves.
You could read this in many ways – ‘Easier for the OC to deal with the same manager for all services’ or, ‘Let’s get a slice of that action also’. Changes to the OC Act in December 2021 now require an OC Manager to declare any ‘Conflict of Interest’. For example, if the Manager is involved with the provision of other services to the OC, they are required to declare the conflict.
Banking on OC Security
Every business supplier working with an OC customer knows and is secure that if they provide a service or goods to you as an OC, they will be paid (taking any fraudulent matter or incompetence aside). That’s because Owners Corporations are required to be stable entities and pay their bills with lots secured by Title. Your Property 101 should tell you that this is why a Bank lends to you on a Title, as they can get their money back if they have to. Hence such things as an Owners Corporation Management Agreement with your OC is, in effect, as good as a financially trade-able instrument. It’s real estate thinking in security.
As the industry has evolved, its regulators, in our personal view, can’t keep up with budget and resource challenges like many industries. This brings us back to the need for probity, integrity and objective support to lead the way.