The Increasing Complexity of Strata Management Part 1 – Climate Change Regulations

The Increasing Complexity of Strata Management: Navigating Climate Change Regulations

This will be the first of several blog posts on the evolving landscape of strata management in British Columbia. As the industry changes, strata corporations and management companies face new challenges that are driving up costs and reshaping the way we do business. Whether it’s the increasing complexity of the job relating to evolving regulatory frameworks, a shortage of skilled professionals, or the growing number of strata corporations, these factors are making it necessary for us—and others in the industry—to be more knowledgeable, experienced, and professional with our service offerings. This places a necessary upward pressure on pricing, which we’ve written about in the past. Strata councils themselves, often made up of volunteers, are also feeling the strain as they are asked to take on more responsibilities in this increasingly complex environment.

In this post, we’ll focus on one of the leading factors contributing to these changes: climate change-related regulatory compliance.

Climate Change and Strata Management: A New Era of Regulations

British Columbia is at the forefront of the fight against climate change, which has led to the introduction of stricter regulations for residential buildings. Strata corporations are increasingly required to meet new standards designed to reduce environmental impact, including mandatory energy audits (Electrical Planning Reports), the implementation of green building practices, and detailed reporting on greenhouse gas (GHG) emissions. One specific example is the City of Vancouver’s regime for reporting energy and GHG emissions, which mandates that residential buildings report their emissions annually or face penalties.

While these regulations are crucial for protecting our environment and building a more sustainable future, they also add significant complexity to strata management, requiring our staff to develop expertise in multiple disciplines. For councils and management companies, this means dedicating more time and resources to compliance, staying updated on evolving regulations, and often bringing in external experts. But these efforts are not just about ticking boxes—they’re about contributing to a larger mission of environmental sustainability.

The Cost of Compliance

One of the most demanding new requirements is carbon footprint reporting. Strata councils in Vancouver (and likely elsewhere soon) must now track various aspects of their building’s operations, from energy use to water consumption, to calculate total GHG emissions. This process requires meticulous data collection and accurate reporting, often necessitating the involvement of specialized professionals.  It is also time consuming and labour intensive.  For example, reporting water consumption requires manual reviews of invoices sent throughout the year and inputting that data into a complex “Energy Star” portfolio manager.  This is time consuming and just one example (of many) of new regulations our clients are required to comply with, and which we assist with.

In a case study, a large strata complex in Vancouver recently underwent a comprehensive energy audit to meet these new regulations. The strata council invested in expert guidance to ensure their carbon footprint report was thorough and accurate, which came at a cost to them. However, this was seen as necessary not only to comply with the law but also to genuinely make an effort to reduce their environmental impact.

This kind of compliance is resource-intensive and contributes to the increasing costs of strata management. As a result, management fees are rising across the province, reflecting the added labor, expertise, and time required to meet these new demands.

Why Management Fees Are Increasing

Strata management is no longer just about maintaining properties; it’s becoming a role that increasingly demands specialized knowledge and skills far beyond most laypersons. As the scope of the job expands to include tasks like environmental compliance, the need for continuous training and development for strata managers grows. It also means each strata manager must spend more time with their individual clients, which requires portfolio sizes to be reduced so that Strata Managers have that time available. This is essential to ensure that managers are equipped to navigate today’s regulatory environment effectively.

But this increased complexity comes with a cost. Management fees are going up, not just due to inflation (though this is a significant factor) but because of the expanded responsibilities that strata managers now shoulder. These fees reflect the investment in the necessary expertise and the growing demands placed on management companies.

This also means that strata management firms, including ours, are becoming more selective about the clients we take on. With limited resources and a growing number of strata corporations in need of specialized services, we have to ensure that we partner with clients who are committed to meeting these new challenges head-on and who appreciate the expertise we bring to these difficult conversations.

The Broader Impact: Selectivity and Sustainability

The added complexity and cost of climate change compliance is just the beginning. In future posts, we’ll explore other factors driving changes in the industry, including:

• Employee Management: As employment laws evolve, strata corporations are increasingly encountering challenges with their employees, ranging from issues related to “aging in place” to workplace conflicts. Strata councils, often composed of laypersons, now require greater assistance in managing staff. This need coincides with the development of more stringent employment protections, adding complexity to employee management within strata environments.
• The Shortage of Qualified Strata Managers: The demand for experienced strata managers is far outstripping supply, leading to higher salaries and more competition among firms.
• Technological Advances: New technologies for property management are emerging, requiring ongoing investment in training and systems.
• Navigating Large Insurance Claims: With the rise in severe weather events and other incidents, statistics demonstrate that strata corporations are facing an increasing number of large insurance claims. The complexity of these claims, often involving multiple parties and extensive documentation, requires significant time and expertise to navigate effectively.

These challenges are reshaping the strata management industry, leading to higher costs and forcing management companies to be more selective about the clients they work with. This selectivity isn’t just about managing resources effectively—it’s about ensuring that we can provide the high level of service and expertise that today’s regulatory environment demands and that we have built our reputation on.

Embracing the Complexity

The increasing complexity of strata management, driven by factors such as new climate-related regulations, is a significant challenge for everyone involved, including strata councils who are often asked to take on more than they anticipated. But it’s also an opportunity to contribute to critical causes—environmental sustainability and community harmony. By investing in the necessary skills, resources, and partnerships, strata councils and management companies can play a vital role in protecting our planet and ensuring a sustainable future.

As we continue this series, we’ll explore the other factors contributing to the changes in strata management and why they’re leading to higher fees and greater selectivity in client partnerships. Stay tuned for our next post, where we’ll dive into the complexities of managing employees versus contractors and what that means for strata corporations.