It has been a very busy past few months and year for us at Owners Corporation Victoria.
We have had many conversations with industry contacts, our trusted management companies, and the Committees that we work with.
In many cases, we have also guided these Committees through challenges and helped them achieve better outcomes for their buildings. From these experiences, we have noted several recurring factors that have contributed to more Committees wanting to change their Owners Corporation (OC) management companies.
Key Takeaways:
- Committees are increasingly reassessing their OC management contracts, finding that developer-appointed or long-term deals don’t always provide the best value for owners.
- Mismanagement like unapproved contracts, poor responsiveness, and high staff turnover often costs OCs time, money, and trust in their managers.
- Switching to new OC management has delivered real wins, from thousands in savings to stronger governance, clearer reporting, and better long-term support.
Factors why Committees want to change OC management
From our experience, Committees usually share similar reasons for reassessing their management arrangements. The most common factors include:
- Committees looking at the long list of annual expenses in their financial reports and concluding that large contracts (including the OC management company) should be reviewed and benchmarked for the benefit of the OC and all Owners at regular intervals.
- Committees seeing firsthand that with new developments the service providers and contracts entered into by the developer don’t necessary equate to what’s best for the OC in terms of quality, scope, or competitiveness.
- Committees realising that the OCM is important to their building when it comes to advice/guidance on important issues i.e. cladding or other issues.
How we helped Committees change management companies
Below is a snapshot and overview of some buildings that we have assisted in changing OC management companies, along with the results we have delivered.
Building in Carlton – 425 occupiable lots, 2 OCs
The previous OCM unscrupulously signed a contract, allegedly on behalf of the OC, to replace the building’s intercom system with a small IT company with no experience in this area. This was undertaken on the OCM’s own accord, no scope or tender process was undertaken and the contract was entered into without approval of the Committee or OC.
The OCM’s actions actually resulted in the OC having to engage legal representation to contest and clarify that OC in fact did not have any obligations to follow through with the procurement contract.
The Committee, being cautious and with our assistance, put in place predefined spending limit tiers for the new OCM, which we’d imagine would increase over time as trust is fostered with the new OCM.
Building in South Melbourne – 145 occupiable lots, 1 OC
A very prevalent problem across Melbourne is that in a new development, all the contracts were signed and set up by the developer before owners even moved in. The Committee, having attended two or three AGMs, became concerned with the high and regular turnover of OCM staff and started to ask questions.
The Committee engaged us to scope and run the tender process for new owners corporation management companies. We had numerous Zoom meetings with the Committee (as we were under various restrictions at the time) and also managed to undertake a building tour.
After many interviews with shortlisted management companies, the Committee decided on their new OCM. We were then able to negotiate a $6,525 reduction in the management fee with no annual increase for the OC.
Building in Southbank – 167 occupiable lots, 1 OC
The developer appointed an OC management company that was not actioning things, not responding to the Committee, and whose assigned managers kept leaving the company. The Committee entrusted us to guide them on the process for changing management companies. After scoping, tendering, and interviewing, the Committee ultimately appointed a company that was $10,168 less expensive than the one the developer had appointed.
Building in Melbourne’s CBD – 359 occupiable lots, 4 OCs
The OC/building was managed by the same company for a decade and a half. In recent years, the Committee had felt that things could have been improved, namely around financial reporting aspects of the OC. The Committee engaged us to assist with the tendering and potentially changing OC management companies in November 2021.
In April 2022, after months of discussions and interviews, the Committee commenced working with their new owners corporation management company.
How long does it take to change owners corporation management companies?
The timeline is not fixed, as it largely depends on how quickly the Committee wishes to move through the process.
In many ways, the pace is set by the Committee itself. However, for larger buildings, it is generally best to plan and act months in advance to ensure a smooth and well-organised transition.
Want to change your OC manager?
If your Committee is considering changing your Owners Corporation management company, we can help guide you through the process from start to finish.
Visit Owners Corporation Victoria to learn more about our services and how we support Committees in making the transition smoother and more beneficial for all owners.
