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The surging cost of strata insurance – which has risen by up to 500 per cent in the last year in areas like Port Douglas – has prompted the federal government to launch an investigation into the issue.
"As I've looked more closely at insurance issues in Queensland, I've become aware the affordability of residential strata insurance has become an increasingly serious issue now that many people are renewing their strata title insurance policies,” assistant treasurer Bill Shorten said recently.
“In particular I've been concerned about the news coming out of cities and towns like Cairns, Townsville,and others in the region, where anecdotal evidence suggests residential strata insurance is becoming an increasing issue.”
His comments relate to a House of Representatives Standing Committee on Social Policy and Legal Affairs inquiry that will consider issues around residential strata insurance, particularly in Northern Australia.
David Cotton, co-principal, Raine & Horne Port Douglas, said as a consequence of the prohibitive costs, many landlords and owners in northern Queensland are struggling to secure strata insurance for titled units, which is creating undue stress, particularly given the region’s recent history with floods and cyclones.
“The inquiry represents a great opportunity for this issue to be heard in Canberra and we will be urging all apartment, villa and townhouse owners and landlords to make a submission to the inquiry to ensure the politicians make the right decision,” he said.
Phil Holloway, principal/licensee at Century 21 Port Douglas, told Real Estate Business that he believed a combination of natural disasters, both in Australia and abroad, had pushed insurance premiums skywards in areas like cyclone-prone North Queensland.
He said in some cases strata body corporates were being hit with 500 per cent increases in insurance costs, and there was little difference in price among the few insurers operating in town.
And as strata insurance is compulsory for body corporates, they have nowhere to turn. “You can’t defend yourself,” he said.
This latest incident is just another setback for a town that has recently been hurt by natural disasters – including cyclone Yasi in February this year - and a sharp decline in tourist numbers.
“Port Douglas, like most tourist towns [in Australia], is bleeding,” he said.
“I’ve had more mortgagee sales than we’ve ever seen in the past,” the 25-year industry veteran said. Price declines have been as much as 50 per cent he said, and with the strong local dollar continuing to push more Australian tourists abroad, the future remains bleak.
For more information about the inquiry, the public hearings and/or for making a submission, you can visit www.aph.gov.au/strata or email to [email protected]