Why strata buildings with a high rent ratio are more difficult to manage

Whenever we take over a strata property, one of the first questions that we ask is “what is your rental ratio?”

Now that Strata Owners no longer have the option of restricting rentals in their buildings due to typical Government interference, we see certain buildings with up to 80% rental population.

The buildings are much more difficult to manage than owner occupied buildings, and here’s why:

Multiple stakeholders

As the Strata Agent, instead of dealing directly with the owner, you are now dealing with a tenant, and a potential rental management company. Multiple layers can make communication extremely difficult between all the relevant parties. Instead of dealing with perhaps 150 owners in a 100 unit building, you may now be dealing with up to 250 or even 300 in certain cases.

Tenant apathy

Not to paint all tenants with the same brush, but generally speaking they don’t care nearly as much about the state of the building as an owner. Owners know that any damage to common property is ultimately coming out of their collective pocket by way of monthly strata fees or special levies. Tenants know this, and therefore usually care far less about the common properties of their building. They can also feel like paying rent entitles them to do what they want  

Communication difficulties

It can be difficult communicating with tenants, particularly when the owner fails to submit a FORM K or even notify the Management company about a new tenant moving in. Overseas owners, which are very common, can be even more of a problem to deal with, and unless they have a local rental agent, they aren’t usually doing a great job of managing their property, and many of the day to day requests land with the building manager, Council, or the Strata Manager.

Less accountability

Problematic tenants can easily abuse the system and break strata bylaws with no real consequences, since any fines for contravening bylaws ultimately get billed to the owner ledger, not the tenant. Most tenants are great, but a few bad apples can certainly spoil the bunch!

Less volunteers to choose from

Buildings with high rental populations, where the owners don’t live onsite, or maybe not even in the Country, tend to have a smaller group of volunteers for Council. This is not always the case, but is a very common situation. Most owners take an “out of sight, out of mind” approach to getting involved, which can be very burdensome on those living in the building.

More fob and enterphone requests

With more tenants comes more turnover, and with more turnover, comes more requests for keys, fobs, and enterphone programming. This all leads to potential security risks to the building, not to mention higher admin costs.

More wear and tear on the building from move ins and outs

Tenants tend to be more transient than owners, which can lead to more move ins and outs. This is especially true in this current rental market where vacancy rates have increased exponentially, leading to more tenants moving around to get the best deal.

As you can clearly see from the examples above, managing tenant heavy strata buildings can be exponentially more work than one with a low rental ratio. This will lead to more time spent for Council, likely the need for a building manager, and more time required from your Strata Management company.

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