Anyone in New Zealand can set up in business managing the money of apartment owners without a licence, a qualification or any registration, and the industry’s own association now says that has to change.
The Strata Community Association of New Zealand, which represents roughly half the country’s strata managers, has warned that parts of the sector are a “wild west” where a single operator can end up holding sole access to millions of dollars of owners’ funds. The warning was published by LawNews and republished by interest.co.nz on 19 September, in the second part of a series on unit title law by LawNews deputy editor Neil Sands.
It is not a small corner of the property market. There were 15,678 buildings using the strata title ownership model in New Zealand according to 2024 figures, and the number keeps climbing as councils and central government push medium and high density housing into the main centres. Every one of those buildings has a body corporate, and most body corporate committees are made up of ordinary owners who took the job because nobody else would. They hire a strata management firm to do the work, which means advising on the levies owners pay each year and building the long term maintenance fund that eventually pays for a new roof or a repaint.
That is a lot of trust to place in a business that faces no entry test at all.
“At the moment anyone, literally anyone, can just start up trade as a body corporate [strata] manager,” association vice-president Doug Wilson told LawNews. “There’s no licencing, no registration, no requirements at all, so anyone can just start up in that business. But bodies corporate must strictly comply with the Unit Titles Act and the Unit Titles Regulations, so those two things don’t sit together very well.”
Wilson said there was no way for owners to check whether a new manager understood the law they were being paid to apply. “There’s no mechanism to establish if a new body corporate manager or management company even knows anything about the Unit Titles Act and the Unit Titles Regulations. We have anecdotal reports from clients with some new managers that they have very, very poor knowledge of the legislation.”
His concern is concentrated at the small end of the market rather than the large firms. Big managers tend to run trust accounts with multiple signatories and periodic audits, he said, so client money sitting with them is comparatively safe. The risk sits with the newcomers.
“When you look at your smaller one-man bands and new companies, it really is a wild west situation, where they can just set up shop, open up any old bank account with any bank, and away they go,” Wilson said. “You know, clients’ money gets transferred, and then this company, well this person really, has full access to it.”
The sums are not trivial. Wilson described a scenario where a friend of a committee member takes on the job informally because they have some accounting background, and ends up with sole access to everything the owners have put aside. “If it’s a large body corporate, or if it’s a body corporate undertaking a remedial project, that can be millions of dollars.”
The contrast with the rest of the property industry is stark. A real estate agency handling a deposit must be licensed, must run an audited trust account and answers to the Real Estate Authority. Earlier this month the authority announced that the Real Estate Agents Disciplinary Tribunal had found Auckland agency One Up Realty guilty of misconduct and fined it $18,000, in a decision released in August, because it went six years without appointing a trust account auditor while receiving funds from 275 transactions. No money was found to be missing. The point is that the system noticed.
Body corporate managers have no equivalent watchdog. Property lawyer Joanna Pidgeon, the incoming convenor of The Law Association’s Property Law Committee, said the complaints path that does exist is close to useless for an individual owner.
Pidgeon told LawNews there were operators who did not perform as well as one would hope and who may operate in a non-compliant manner. “It’s very difficult for individual owners to bring a claim, because only the body corporate can bring a complaint against them,” she said. “But what they can do is lodge a complaint with MBIE, and if they get enough complaints about an operator, maybe they might step up.”
This is not a new observation. Pidgeon sat on a Law Association working group that reviewed the Unit Titles Act in 2016 and found “often sloppy administration and accounting by external [strata] managers”. Its report noted that annual spending by a larger body corporate can exceed $1,000,000 on top of significant long term investments, that records were often poorly kept, and that “in the past there have been defalcations and also extreme difficulties in getting access to records on a change in body corporate managers”. The working group concluded the arrangement was “out of step with the greatly increased supervision applied to persons in an equivalent role in the real estate sales industry and in the financial markets”.
Some of that was picked up in the Unit Titles Amendment Act that took effect from 2022, which introduced a code of conduct for body corporate managers, required them to disclose conflicts of interest to the committee, made committees keep an interests register, and gave the regulator power to demand records. What it did not do was create a licence, a register or a disciplinary body. Pidgeon said her working group found no political appetite for going that far.
Wilson called that a missed opportunity, and the association is now pushing for a licensing model borrowed from New South Wales, where the licence sits with the firm rather than every staff member.
“We’re not wanting to bog the industry down, but we want to ensure professional standards,” he said. “So what we see as the right fit is not every single person employed and working as a body corporate manager needing to have a licence. Instead, it could be something similar to real estate offices, where each company would need to hold a licence, so someone in the company would have to be licenced, not necessarily every single person working as a manager in the company.”
Until something changes, the burden falls on the volunteers running each building. Pidgeon’s advice to committees is to treat hiring a manager the way you would treat hiring an accountant.
“Are they a member of a professional organisation? What are their skills and training? Ask for a reference check. Find out from their other customers whether they’re happy with them or not. You’re putting a lot of trust in a manager, so it’s important for people to do their homework, ask around, and get recommendations.”
Explore the data. Body corporate levies are one of the reasons an apartment is not always the cheap option it looks like. See how house prices and the years of household income it takes to buy have moved across 18 New Zealand cities since 2001 in our interactive house price tool.
The wider point for buyers is that a body corporate levy is a business expense they have almost no control over, set on the advice of a firm they did not choose and cannot easily sack. As more New Zealanders move into apartments and townhouses, the number of households exposed to that arrangement grows every year.
Do you own a unit title property, and has your body corporate manager been worth the money? Tell us in the comments below.
This article was written by AI, briefed to report the facts, hopefully without some of the bias people bring to the job 🙂
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