A young Australian couple have been forced out of their beloved apartment due to skyrocketing real estate agency fees, creating a new hurdle for first-time homebuyers.
Josh Stubing and Emily Abbey were 20 and 19 years old respectively when they bought their one-bedroom apartment in Sydney’s north-western suburb of Kellyville Ridge seven years ago, thinking it was their first foray into the housing market.
However, after initially paying $600 per quarter in HOA fees, they now have to pay $3,500 to fix defects and replace siding, which is now considered illegal.
“We’ve tried to keep up, but it’s costing us our heads and our mortgage,” Mr. Stubing said. realestate.com.au.
“It’s so unmanageable… We bought the house when we were so young and thought the homeowners association fees were just to keep the complex clean.”
Mr Stubing said the building has no amenities, so the couple had not expected the huge increase.
He said that in retrospect he felt the decision to buy the apartment was a bad one, as they had been made aware of the VvE costs by the estate agency, but did not realise that they could rise so dramatically.
A long list of flaws have been discovered in the complex, including the exterior cladding being banned in New South Wales due to fire safety risks.
Josh Stubing and Emily Abbey are being forced to sell their apartment after facing steep increases in homeowners’ association fees amid Australia’s already dire housing shortage.
Mr. Stubing said they are now trying to sell the unit because they were unable to pay the $20,000 special levy up front. The money will be recouped through the rent they charge for the unit.
However, the high real estate agent fees make it difficult to sell the apartment.
He said their monthly expenses are now so high that they might as well take out a loan on a $1 million house.
Mr. Stubing and Mrs. Abbey’s story is not unique. Anecdotal evidence shows that VvE fees have increased by an average of 15 to 20 percent over the past year, but in some cases, it was as much as 40 percent.
Samantha Reece, director of Australian Apartment Advocacy, said new owners needed to be better informed about the costs of homeowners’ associations, and her group has put together an education pack on these costs.
She said their research shows that about 60 percent of people who move to an apartment do so from a home, and as a result, they are often surprised by the HOA fees.
‘It doesn’t matter where you are in your life. Whether you’re a working couple, a single parent, a baby boomer or a retiree. If you have to pay $70,000 in six weeks, as happened recently in Melbourne, it’s a shock that can cripple you financially.’
She called on the government to make these costs more transparent for builders and project developers, so that they can deal with them more fairly.
VvE costs have increased by an average of 15 to 20 percent over the past year, but in some cases this was even 40 percent.
The New South Wales state government has proposed a series of changes to the strata legislation, which governs key decision-making in shared ownership blocks.
The reforms followed 965 complaints about VvE agents in the five years to 2023, with most complaints relating to codes of conduct, budgets, levies or finances.
Breaching current disclosure requirements regarding commissions would lead to tougher penalties, disclosure obligations regarding conflicts of interest would become stricter and agents would no longer be allowed to receive commission on insurance products if they cannot offer residents the best deal.
NSW Fair Trading is to have enhanced enforcement and compliance powers. The government is confident that these changes will mean residents no longer feel like they are being ripped off by their brokers.
“We want to change the perception that HOA managers easily take advantage of owners by significantly increasing the penalties for those who do wrong,” said Fair Trade Minister Anoulack Chanthivong.
‘The new laws are designed to take immediate action and restore confidence in strata housing and investment, which will encourage more people to consider apartments as a housing option.’
Apartments will play a major role in solving NSW’s housing crisis, with plans for higher density housing to counter recent urban sprawl.
The government has indicated it will bring the changes to parliament later this year after consulting with key stakeholders, including the Owners Corporation Network and the Strata Community Association, on draft legislation.