The Capacity Gap

In 2026, Anna Hahm at Grace Lawyers published an analysis titled "What every NSW Strata Manager needs to know about the 2023-2026 Strata Law Reforms." It runs through the staged legislative changes rolled out across the period, explains who is affected and how, and closes with a short section on the strategic challenges the package leaves on a strata manager's desk. The phrase Hahm uses for the first of those challenges is the capacity gap.

The phrase is exact. This article picks it up and develops it for the operational reader — the strata management firm principal, senior portfolio manager, or operations lead trying to work out how to absorb a reform load that doesn't show any sign of slowing down.

The reform load by stage

If you're a strata manager, you've lived this rollout in real time. The next few paragraphs are a brief refresher for context; skip to the next section if you're caught up.

The reform package has rolled out in stages across 2025 and 2026. From 3 February 2025, new accountability obligations on strata managers took effect - disclosure, conduct and conflict-of-interest duties. From 1 July 2025, a further tranche extended the lot owner's limitation period for common-property claims against an Owners Corporation from two years to six (Section 106), alongside minor-renovation, sustainability and accessibility changes. From 27 October 2025 came financial-hardship measures, stronger enforcement powers for NSW Fair Trading, and expanded oversight and new duties for building managers. From 1 April 2026, the standard-form requirements took effect - including the new 10-year capital works fund plan standard form and updates to the strata information certificate. A further round of reform - including proposed changes to building-manager agreements - was introduced to Parliament in late 2025 and is expected to commence in stages.

The legal substance of each stage is well-covered elsewhere — Hahm's piece is one of the clearest reads. What gets less attention, and what this article is about, is what the cumulative package adds up to as a workload.

The analytical core: site work vs office work

Here is the part of the reform package worth sitting with.

Almost every new obligation the reforms have added requires a piece of work that has to happen on the building. Not in the office. Not on the phone. On site.

Some examples:

From 13 February 2026, a NSW reform makes maintenance to Australian Standard AS 1851-2012 mandatory for the essential fire safety measures in residential strata buildings - and it requires a documented servicing trail kept on the building: an on-site logbook showing exactly when each fire safety measure was inspected, what was found, and what action was taken. The contractor's filing cabinet six suburbs away no longer counts.

The Section 106(1) maintenance duty at the new six-year liability standard requires demonstrable evidence that the Owners Corporation has discharged its duty to keep common property in "good and serviceable repair" — and that evidence is essentially a documented history of walking the building and acting on what was seen. A clean inspection record is the OC's defence under a 2032-vintage claim about deferred maintenance carried out in 2026.

The new 10-year capital works fund plan standard form (Section 80 of the SSMA, standardised from 1 April 2026) is now technically non-compliant if it's built on the template estimates and old quantity surveyor figures that many existing plans rely on. The new form expects current condition data — which, in turn, expects somebody to have walked the building and looked at what's actually there.

The expanded regulation of building managers (from 27 October 2025) adds another layer where physical building presence matters - who is on site, under what scope of work, with what insurances. Fair Trading's stronger enforcement powers, introduced in the same tranche, add a reputational and compliance cost to maintenance failures that are visible from the street, like the falling cladding or weathered render that doesn't make it into a quarterly report.

The disclosure and conflict-of-interest obligations add administrative work that is office-based — but the administrative load they add comes on top of the site load, not instead of it.

The net effect: most of the new work the reform package has added scales with physical building presence, not with administrative throughput. Hiring an additional portfolio manager to absorb more buildings doesn't directly close the site-presence gap. It just stretches the gap across more schemes.

This is what Hahm means by capacity gap. Not capacity in the headcount sense. Capacity in the site-presence sense.

Three structural responses

The strata management firm holding the contracts has three structural options for closing the gap. Each one has real tradeoffs. The right answer depends on portfolio composition, geographic spread, and the firm's tolerance for fixed cost relative to variable cost.

Option A — Hire more in-house portfolio managers

The obvious response, and in many firms the default.

Where it works. Adds management capacity, lets the firm take on more schemes without diluting per-scheme attention, keeps everything under the firm's culture and processes. Long-term builds institutional knowledge.

Where the tradeoffs sit. Fully-loaded cost is meaningful — a competent NSW portfolio manager runs $80,000 to $120,000 per year plus on-costs, and the hiring lag is six to twelve months in the current market. Portfolio managers are office-based by training and role design — they're not site operators. Adding more of them increases administrative capacity but doesn't directly increase the firm's ability to walk buildings, document inspection trails on site, or be present when a contractor needs to be supervised. The capacity gap is site capacity; this option adds office capacity. There is also a fixed-cost rigidity — once hired, the headcount is on the payroll whether the workload sustains it or not.

This option suits firms whose growth is rate-limited by management headcount rather than by site presence — typically large-portfolio, geographically concentrated firms with strong existing site-coverage arrangements.

Option B — Per-visit contractor outsourcing

Engaging compliance contractors, condition surveyors, or building inspectors on a per-visit basis when specific events trigger the need — pre-AFSS walks, pre-CWF-review condition surveys, post-incident reports.

Where it works. Variable cost — the firm only pays for the work performed. No long-term commitment. Lets the firm scale on-site work up and down without changing fixed payroll. Specialist providers bring deep technical expertise on the specific scope they cover.

Where the tradeoffs sit. Each per-visit engagement involves a contractor learning the building fresh — there is no accumulating continuity. The contractor walks in cold, walks the building, writes the report, leaves. The same contractor returning six months later may or may not be the same individual; the same firm two years later may not be in business. Per-visit pricing is also typically higher than a blended arrangement that spreads visit costs across a regular cadence. Coordination overhead lands on the strata manager's desk for every engagement — scope definition, access arrangements, reporting templates, payment processing. And there is no relationship-based escalation — if a contractor sees something concerning between scheduled visits, there is no standing arrangement for them to call the strata manager about it.

This option suits firms with portfolios scattered geographically, where no single local partner can cover the spread, or whose buildings are large enough that specialist per-visit engagement is the only viable scope.

Option C — Engage a local on-the-ground partner per scheme

Establishing a per-scheme arrangement with an operator whose entire job is the physical building — typically a boutique building maintenance firm in a defined geographic area, working either through a direct OC engagement or as a supplier under the strata management firm's umbrella.

Where it works. Continuity — the same operator walks the building over time, learns its patterns, notices what has changed since the last visit, builds a relationship with the OC's office-bearers. Typically flat-fee, which reduces per-visit pricing friction and makes the cost predictable. Supports the documented servicing trail AS 1851 and Section 106 require, because the operator is writing the entries that go into it. Compatible with both engagement structures — direct OC engagement (the OC contracts the operator independently) or supplier-to-firm (the strata management firm contracts the operator under its own templates and reporting standards). The on-site presence creates relationship-based escalation — if the operator sees a hazard or a concern, the firm hears about it directly.

Where the tradeoffs sit. This option is geographically bound. Boutique on-the-ground operators by definition cover a defined area — typically a few LGAs. A firm whose portfolio spans several geographically distinct areas will need a different partner per area, or no partner at all in some. The partner must hold the appropriate insurances (public liability, professional indemnity for advice-bearing work) and OHS practices for site work. The partner adds a stakeholder to the building relationship, which the OC may experience as a positive (an additional informed contact) or as a friction (one more party in the email chain) depending on the dynamics of that specific committee. Quality varies across operators, and the firm has to do diligence on each one.

This option suits firms whose portfolios concentrate geographically — particularly North Shore boutique-walk-up portfolios — and whose schemes would benefit from the continuity an in-area operator provides. It does not suit every scheme; the partner-model works best on buildings in the 10–40 lot range where the on-site work is meaningful in scope but doesn't justify a full-time building manager.

A note on Option C, in practice

Finer Property Services is one such partner, operating on Sydney's North Shore — Mosman, North Sydney, Willoughby, Lane Cove, and Ku-ring-gai. We work either directly with the Owners Corporation or as a supplier under a strata management firm's templates and reporting standards. Our focus is 10–40 lot boutique walk-ups, predominantly from the 1960s through the 1990s — the building profile most likely to generate the kind of site-presence work the reform package is adding to your desk.

The capacity gap as a strategic question

Hahm's framing was right, and it deserves more attention than the closing-section treatment it received there. The 2023–2026 reform package isn't a single event a strata management firm absorbs and moves past — it's a cumulative load that has changed the shape of the work, not just its volume. And the reform program isn't finished. A further round - including more transparency requirements and proposed changes to building-manager regulation - was introduced to Parliament in late 2025 and is expected to commence in stages, and the trajectory of subsequent reform is clearly upward, not flat.

Each firm's structural response to the capacity gap is a strategic decision, not a tactical one. Hiring, contracting per visit, or engaging a local on-the-ground partner all have real applications; the right answer depends on the portfolio, the geography, and the firm's existing model. What the reform package no longer permits is the implicit default of absorbing site-work expansion through office-based headcount.

The strata management firms that adapt earliest — that recognise the gap as a structural rather than seasonal phenomenon and design a response per portfolio — will spend less of the next three years catching up to reforms that have already landed.

Disclaimer: This guide provides general information about NSW strata legislation and the operational implications of the 2023–2026 reform package. It is not legal or financial advice. For specific legal questions about your firm's obligations, consult a strata lawyer. For specific operational decisions, weigh the structural options against your own portfolio composition and resourcing.