Australia's Strata Crisis

It’s estimated some 4 million Australians now live in strata including apartments, townhouses and units.

That’s 1 in 6 Australians! Plus that number is growing fast.

Yet despite the scale of strata living, there are shockingly few protections ensuring that defects, leaks, water ingress, unsafe balconies, combustible cladding are fixed responsibly.

OCs are left to file proceedings and many Respondents are joined in Victoria given the operation of the proportionate liability regime.

So, what’s Going Wrong and why is litigation so complicated?

The litany of faults is huge, waterproofing failures, leaky balconies, unsafe cladding and the list goes on.

OCs are dragging builders to VCAT to force remedial work damages but this is slow and expensive. Not to mention the legal challenges at VCAT with jurisdictional issues.

Further, expert evidence can be costly and if a party gets it wrong there can be costs orders and relying on expert reports that may not be right sees some contractors and consultants dragged in unnecessarily.

And don’t assume the indemnity insurance just works…especially when cladding limitation periods are up to 15 years and 10 years otherwise there can be denied claims too.

the SYSTEM ain’t working folks!

Consider the cladding issue. Cladding Safety Victoria flagged buildings with serious fire risk.

But who ends up bearing the cost? In many cases, residents.

Victoria has taken a step with the Building Legislation Amendment (Buyer Protections) Act 2025 (Vic) passed in June 2025. Whilst I question some of the changes some major reforms include:

• A new developer bond scheme for multi-storey residential buildings.

• Expanded powers for the Building & Plumbing Commission to issue rectification orders for serious defects up to 10 years.

There is talk of latent defect insurance take up on the horizon, watch this space as we continue to update the situation in Victoria.

But get this: with known defects right now and time limitations many residents can’t just wait until 2026. Even then, a developer repairing under an RO, how will that work?

Strata housing is no longer a minor sector, it’s central to housing supply and affordability in Australia.

When so many Australians (especially younger, lower and middle income households) are ‘choosing’ strata we need to get this right.

The costs both financial and emotional will only escalate as more live in strata in Victoria and if the system is not effective.

The new legislation in respect of the bond in Victoria is welcome. But this needs to be carefully implemented and latent defect insurance which exists in NSW needs to be a part of the regulatory discussion too.

Further, laws and regulations to require maintenance are also relevant.

This article is a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

Tagged as:

• property disputes