Strata managers would be banned from taking kickbacks from insurance companies under overdue Labor reforms to tighten the reins on the broken sector.
Victorian Labor will this weekend reveal an election promise to prohibit the hidden commissions, which strata managers pocket from insurance companies they present to apartment owners – to date, perfectly legally.
While insurance premiums often represent the single largest expense for most building budgets, a distorted industry business model has allowed strata firms to subsidise low management fees with kickbacks that remain invisible to most owners paying the bills.
A NSW government-commissioned review earlier this year recommended banning the kickbacks, as doing so would “improve competition and service quality, increase trust, and lower costs”, as well as benefit the economy. The Victorian government commissioned its own independent expert panel review, which recommended a ban on kickbacks in late 2025.
However, the Victorian government dragged its feet on enforcing a ban, instead ordering a further market impact analysis and claiming fears of service fee rises.
Consumer Affairs Minister Tim Richardson said the proposed reforms would prohibit strata managers from taking commissions and payments for building insurance, repairs and “much more”.
The hidden costs drive up strata fees for the one in five Victorians who own or live in an apartment, unit or townhouse, he says. More than 500,000 properties are strata-managed in Victoria.
Brokers’ commissions would also be examined under Labor’s pledge.
“If you’re paying strata fees, you deserve a manager who works for you – not one pocketing a kickback,” Richardson said.
Strata managers have been legally required to disclose whether they receive commissions since 2021. But Dr Nicole Johnston, a socio-legal researcher and former lawyer who authored a recent report with NSW Fair Trading, previously told this masthead that disclosure did not remove the inherent conflict. “Information can be disclosed yet incomprehensible, overwhelming, misleading, and simply not useful,” she said.
A 2025 survey from owners advocacy group Australian Apartment Advocacy – which receives sponsorship from “preferred suppliers” in the industry – showed 59 per cent of Victorian owners said they did not know if their strata manager received a commission. Only 34 per cent were certain their manager did not take kickbacks, which can run into the thousands of dollars.
Advocacy group Strata Owners Alliance welcomed the proposed ban on kickbacks, saying insurance commissions had been a scourge on the strata sector for far too long.
The registered charity, which refuses all industry sponsorship, has repeatedly demanded an outright legislative ban, and said one needed to be enforced within six months of the November state election result.
“All sides of politics need to get behind banning these perverse and ethically indefensible but unfortunately currently legal kickbacks,” alliance co-founder Adam Promnitz said.
Under the proposed changes, Labor would set up a dedicated owners corporations taskforce within Consumer Affairs Victoria to police the new strata rules. Until now, the industry has been largely self-regulated.
Advocates have called for an independent strata commissioner to match NSW. Instead, Victoria’s expert panel review proposed a new unit set up within the government agency.
“We’re … putting a cop on the beat, so dodgy managers get caught,” Richardson said.
Data released last month under freedom of information laws revealed Consumer Affairs had not pursued a single civil or criminal prosecution against an owners’ corporation in 10 years.
In that period, between July 2016 and June 2026, it issued just four infringement notices, most recently in 2019-20, and 12 official warnings.
It received more than 3500 complaints against owners’ corporations over that time.
In the past three years, the regulator referred 26 of those complaints concerning owners’ corporations or their registered managers to its internal intelligence team for assessment. Not one of those referrals led to further action.
“The taskforce is a good start,” Promnitz said. “However, owners want to see actual enforcement, meaningful consequences for misconduct and a regulator willing to bring the cowboys under control.”
The notice period for owners’ corporation general meetings would also be extended from 14 to 21 days under Labor’s proposed changes, with a voting period of up to four weeks ahead of meetings.
Promnitz warned that legislators should be careful to ensure changes to meeting and voting requirements made owners’ corporations’ jobs “easier, not harder”, particularly as most were small and volunteer-run.
There would also be penalties for breaking rules around limits on casting proxy votes under the proposed changes.
The Victorian government unveiled a long-anticipated blueprint to overhaul the state’s strata sector earlier this year.
Laws that followed lowered the threshold to enforce basic owners’ corporation rules from 75 per cent of all building owners down to 50 per cent, and gave unit owners struggling to pay their owners’ corporation fees a standardised right to a payment plan, among other changes.
With Rachael Dexter and Adam Carey
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