Beating the drum for strata votes

This week we offer you a podcast with all the bells and whistles – more accurately, it’s drums and gongs, as we take a brief detour to listen in on the community group that hilariously drowned out Sue’s latest talk on her books.

On more serious issues,  this week’s Podcast covers three contentious areas of apartment living and the first two concern apartment blocks that have been rendered uninhabitable – although for very different reasons.

First up, we look at a block in Queensland  which has suffered terminal damage from floods in the past few years  but owners can’t access funds available through a buy-back scheme because of archaic Body Corporate laws.

Then we look at the pre-NSW election political bidding war surrounding the Mascot Towers building in Sydney, in which Labor is offering to provide loans and guarantees to fix the apartments while the Liberals, slamming that plan, have launched an inquiry into what is needed to fix the block.

Are the two plans mutually exclusive?  We don’t think so.  In fact, we’re calling for a radical approach that would achieve the best possible fix in the shortest possible time. Or will it all be forgotten as soon as the last vote is counted?

And finally we plug into another pre-election sales pitch – this time to get strata residents easier access to electric vehicle charging … and why some apartment blocks just don’t want to know.

And Jimmy's environmentally responsible reason for not buying an electric car even though he really wants one. That’s all in this week’s Flat Chat Wrap. 

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Flat Chat is all about apartment living, especially in Australia.
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Recorded by Jimmy Thomson & Sue Williams; Transcribed by Otter.ai.
Find out more about Sue Williams and Jimmy Thomson on their websites.

Transcript

 Jimmy  00:00

Well, you had an interesting event the other night?

Sue  00:04

"Interesting" isn't the word I'd use, really! Well, it was bizarre.

Jimmy  00:09

So you were at a book club? 

Sue  00:12

I was speaking to the Burwood Historical Society. They asked me over to talk about my book, Elizabeth & Elizabeth. So, we were talking about early colonial Australia. We were at the community centre in Burwood and unfortunately, the room next to us was booked by a Chinese Drumming Association.

Jimmy  00:30

Drumming and gongs.

Sue  00:33

And the noise was absolutely deafening. I didn't have a microphone and so basically, rather than a talk, I did a shout to the members. It was awful.

Jimmy  00:46

Just to give everybody a sense of what you were competing with, here's what it sounded like. (sound of loud drums is heard). I'm glad to hear the show must go on, Sue!

Sue  01:11

I gamely just yelled my talk and people strained to hear me. I think they kind of thought I was quite game for continuing really, but oh well, I'd gone there. It was kind of funny really, particularly afterwards.

Jimmy  01:28

That's showbusiness! We'd better get on with our main business, which is the Flat Chat Wrap. I'm Jimmy Thomson, I write the Flat Chat  column for the Australian Financial Review.

Sue  01:40

And I'm Sue Williams and I write about property for Domain. 

Jimmy  01:42

And this is the Flat Chat Wrap. 

[MUSIC]

Jimmy

Well, after our story last week, where we were talking about caretaker management contracts and how they're pre-sold, a story came up. It's actually from the Strata Community Australia in Queensland (which is the strata managers' professional body), about a building in Ipswich called Mi Hi Grove (which is like Wi Fi, but it's Mi Hi. I don't know what that comes from). Anyway, these poor people, they've been hit by floods three times. the last two big floods, I think 2011, 2030 and then the recent ones. The building is uninhabitable. 

Sue  02:38

Oh no! So they've all moved out? 

Jimmy  02:39

They've all had to move out. The Queensland Government has a buyback project for homes that have been rendered uninhabitable by floods and natural disasters. They can't buy this building back, because 80% of the owners want to sell. Obviously, they want to get the money and get out, but Queensland doesn't have a collective sales arrangement in its laws.

Sue  03:05

And the collective sales means that you can have just 75% of owners vote to extinguish their strata title, can't you? 

Jimmy  03:12

That's right. 

Sue  03:14

And the other 25% has to go along with the majority then. That was introduced a few years ago, wasn't it? 

Jimmy  03:20

2016, I think. 

Sue  03:22

It was changed from 100% in New South Wales. Queensland is still 100%; You have to get all the owners to agree to something.

Jimmy  03:29

Everywhere else is 100%; it's only New South Wales. It's difficult; in this case, 80% of the owners want to sell the building back to the government, for obvious reasons. 20% are either saying no, for their own reasons, or they can't be contacted, because they're overseas investors. 

Sue  03:52

Oh, no! 

Jimmy  03:54

So they can't get the 100% vote.

Sue  03:56

And what about the other 5%?

Jimmy  03:58

What other 5%? I said 80%. Welcome to our weekly maths class! So basically, they can't get the numbers and then, as Laura Bos (who's the general manager of SCA Queensland), says, even if they could get 100% agreement to sell, they would then have to buy out the stupid pre -sold management contract. 

Sue  04:28

Oh, my God! 

Jimmy  04:28

The caretaker manager's got a contract with a building and it says that they've got to pay X amount of money every year for their services and if they extinguish the strata, then they're left with a contract that's worth nothing. So, they have to be compensated.

Sue  04:45

Wow! And do we know how long that management contract is? 

Jimmy  04:48

No idea.

Sue  04:48

 But it could conceivably be up to 25 years, which is a hell of a lot of money.

Jimmy  04:53

Absolutely. So it's just one obstacle after another. Apparently, the mayor of Brisbane is pushing hard to get the laws on collective sales, or forced sales, or whatever you want to call it, brought into line with New South Wales, because there's all these old properties in Brisbane, and around that area and down the Gold Coast, which, just in the last 25 years, we've seen how the technology of building has changed. You can put bigger, cleaner, safer, healthier buildings, with more apartments in them on the same footprint as some of these old brick buildings. But the developers can't get in to do this, because all it takes is one person in the building to say "well, I'm not selling."

Sue  05:41

Jeez, what a terrible dilemma!

Jimmy  05:45

I remember years ago, somebody approached me and said "would you be the figurehead of the Strata party in New South Wales?" 

Sue  05:54

Oh, for the election? 

Jimmy  05:55

And I said "okay, well, policies; how do you feel about collective sales, or forced sales?" and they said "I'm 100% against it." I said "well, I'm 100% for it." And that was it; that was the end of my political career. But it's a very emotive question, because people on the one hand, will say, if somebody wants to live in the house, that they've lived in all their lives and raised their children in (or their flat, I should say, not, their house), why should anybody be able to force them out? And the other argument is, if you've got the vast majority of people in a building, who want to sell why should one or two people, be able to deny them their right to do what they want with their property? I think 75% was too -lower threshold. I would have put it at 80%, which I think is the threshold in Singapore. But even so, it allows for the renewal of buildings that are past their use-by-date.

Sue  06:55

I think it's a great idea, because when it was 100%... I mean, a lot of people who were barracking for the number to stay at 100% were kind of saying you can't chuck, an elderly woman out of the home that she's enjoyed forever. But the problem is, it's often not an elderly woman who wants to stay in that place; it's often one person who thinks "oh, I could make extra money, if I say to this developer 'look, you're going to have to pay me double and then I'll agree, and then you can actually take the whole building." You know, unfortunately, human nature being what it is, there's always someone around, who try and do that kind of thing. So we can stereotype it as an elderly person, who is helpless and just wants to hang on to her memories, or his memories. But in fact, it's often somebody who thinks they might be able to make a quick buck, out of a difficult situation.

Jimmy  07:54

I mean, there are so many checks and balances in the New South Wales rules. First of all, you've got to get the agreement of the majority, to form a committee to look into the collective sale. The committee has to report back with options,such as here are a couple of developers who want to do X and the other one wants to do X. The owners then have a meeting to consider these and then there's a three month cooling -off period. Then, the owners come back together and if they get the 75% vote (in terms of unit entitlements), they then have to get letters of agreement from 75% of the lot owners. So it's a unit entitlement thing and it's a lot-owner thing. Ultimately, they have to take that whole case to the Land and Environment Court and get it approved.

Sue  08:42

So there's lots of checks and balances there?

Jimmy  08:44

Even right up to the end, anybody can come in and say "I don't want to do this. I'm not getting a fair deal. I'm not being compensated enough for the disruption to my life. Even if you're just calculating it all on unit entitlements, that's not fair on me, because I'm suffering more than anyone else;" that kind of thing. The Land and Environment Court can adjust or reject. You were telling me that the owners corporation has to pay the legal bills of the person who's challenging the collective sale?

Sue  09:18

That's right.

Jimmy  09:19

So you know, there's a lot of barriers in there, to stop people being bullied out of their homes.

Sue  09:26

And when you think it's really quite hard to get 75% of unit owners to agree on anything, anyway (if anybody's ever been to a strata AGM). It's really, really difficult. I'm just doing a story at the moment about people wanting to sell airspace on their buildings. many of the buildings who think it will be great to sell airspace; either burrowing into the roof space, or allowing another apartment to be built on top that they can sell and then they can spend that money on upgrading their building... It's really hard and most of them fall over on the fact that they just can't get 75% of owners to agree. 

Jimmy  10:05

And they've got no chance if they have to (in other states), get 100%. It goes back to the mentality of 'my home is my castle. I have this flat; this is inviolate, nobody can touch it, nobody can tell me what to do with it...

Sue  10:19

Instead of apartment living is all about community living. 

Jimmy  10:23

And that's the phase that we're going through at the moment; people finding out what it's like to live in apartments. Anyway, these poor people in Ipswich are stuck with this building. The government wants to give them money to compensate. 80% of them want to get out and they can't do it, because the law doesn't allow it. 

Sue  10:43

How terrible.

Jimmy  10:44

When we come back, we're going to talk about things that are happening with the election on the horizon, and how suddenly, Mascot Towers is back into the limelight. It's become a focus for a lot of political attention. That's after this. 

[MUSIC]

Jimmy

Mascot Towers... It's coming up to four years since the Mascot Towers residents discovered cracking in the basement of their building and going up through the walls and were told to get out, before it all fell down on their heads. The government at the time (which is the same government as we have now), subsidised their rents, so that they could go and live somewhere until the whole thing was resolved. And that's where they've been. I mean, there's been various court cases. They took the adjoining developers to court to try and prove that the digging the foundations of their building next door had caused the cracking in Mascot Towers. That was settled out of court, I think, and there's never been a figure put on how much compensation the owners got, but it wasn't enough. Around about this time last year, the short-lived Fair Trading Minister Eleni Petinos announced that the rent subsidies would end in June last year, and then in May last year, announced that no, that was never going to happen; they're still going to get their rent subsidised. Okay, so basically you've got something like 130 families and/or investors, who are sitting waiting. This building's just sitting there. Apparently, the rooms still have furniture in them.

Sue  12:28

So they're all just in limbo, really, waiting to see what's going to happen. 

Jimmy  12:33

The Labor Party has come up with an idea. They're saying that if they're elected, they will give the owners low-cost loans, so they can borrow the money to fix up the building. They believe that if they do a buy-back, the owners will only get 20% of the value of their apartments. So they're saying well, we'd rather guarantee low-cost loans, so that you can put the money back into the building, fix it up and move back in; get your home's back and hold onto the value that you've already put into the block.  It does and now, our friend Victor Dominello, has said this is ridiculous, because these people are already burdened with debt, and they don't need any more debt piled on them and any way, the Labor Party doesn't know how much it will take to fix the problem, which is fair enough too, actually. So currently, Courtney Houssos, who is the Shadow Fair Trading Minister, is the one who's put up the idea of the low-cost loans to fix the building. The alternative that the soon-to- depart Mr. Dominello has put up is, he's created a commission for the Building Commissioner, David Chandler, who's going to investigate what is required to fix the building, how much it's going to cost and how it could be done.

Sue  13:10

That sounds reasonable. Well, that's good. But why are we only waiting now, just before the election, for something like this to happen?

Jimmy  14:10

Because there's an election happening and they've been quietly forgotten.

Sue  14:14

But isn't that shocking? You know, it takes an election to shine a light on such a terrible, tragic story, and for action to start happening.

Jimmy  14:24

There is potential solutions there.

Sue  14:26

And that they possibly agree on, because if David Chandler puts a finger on it, and then the Labor Party comes in (if it comes into power), they could just action that

Jimmy  14:36

This is what I'm going to be seeing in my column in the Fin Review this weekend, which is, these are two good ideas which are not mutually exclusive. Let David Chandler do his work, and we all trust him; we know he'll do it properly. And then when it's been worked out, what's required, let's put in the low-cost loan and guaranteed loans, so that the work can be done. And the thing about Mr. Chandler is, after the election, he will still be there. Mr. Dominello will definitely not be there, because he's retiring from politics. Courtney Houssos  may be the Fair Trading Minister, if Labor wins the election. If not, then somebody else will be in there and it will be a new Fair Trading Minister. So I'm saying, let's have a nonpartisan; a bipartisan agreement on this. Get your heads together and say "whoever wins, we're going to fix this problem in this way. We're going to get David Chandler to work out how to fix it and then we will guarantee the loans required to make that happen."

Sue  15:45

That would be the humane and reasonable... 

Jimmy  15:48

And non-political thing to do. Which is why it will never happen.

Sue  15:54

But no, isn't it terrible; elections throw up so many good ideas and you think well, you know, have these ideas been dormant for all these years, and they've just been waiting for the election to bloom?

Jimmy  16:05

Then they're quietly forgotten again.

Sue  16:08

 Well, yes, unless they're actioned. 

Jimmy  16:10

Somebody was talking about the perennial plan to have a fast train line down the east coast... Basically, Brisbane, Newcastle, Sydney, Canberra and Melbourne. A fast train, like the Japanese have (and have had for about a quarter of a century). Somebody was saying "look, this is the 11th time that this has come up as a proposal. It took 14 times for the second Sydney Airport to be built; to actually be agreed on, because it was proposed every election."   They're saying that this is quite hopeful; we're getting to the point now where they're actually going to have to stop suggesting it and actually do it. But that's politics for you. You dug out something from the newspaper, about electric vehicle charging? I mean, the thing is, it's a complicated proposal, because right now, anybody can stick a metre on a common property power point in their garage, stick a metre on it, use the common property electricity off -peak and say "here's the metre; this shows you how much I owe you." Very simple, because there's only two or three electric cars in most buildings. There's a lot of electric cars on their way.

Sue  17:04

Matt Kean is proposing that strata laws will be reformed, to make it easier for people who don't have access to off-street parking to charge their cars. He says the reforms will make it possible for people living in apartment buildings to have charges, without necessarily pushing the costs onto all residents. Which is kind of interesting, because you know, we're having lots of apartment buildings now, which are getting ready for EV's and they're installing the the infrastructure necessary, but all residents have to pay for that; all owners have to pay for that. But then, sometimes people with EV's have to pay extra, to access that infrastructure. So I guess he's just making the whole thing much easier, and much more simple for people to do. And some of the buildings won't even allow people to plug into the common electricity and pay for it. They say "we can't do it; it's too complicated."

Jimmy  18:20

"We don't have the software to deal with it. We don't have a line in our spreadsheet to deal with it," which is ridiculous. But what then happens is, once some people see other electric cars in their building, they think "oh, yeah, I've been meaning to do that," and then it becomes a burden on the electricity supply. Now, it's not a burden after seven o'clock in the evening. Before that; from about five to seven, that is apparently when most electricity is used in most buildings...

Sue  18:20

Cooking dinner and lifts going up and down; all that stuff. 

Jimmy  18:55

There are systems that will say 'right, between these hours, we're taking the electricity supply away from the the EV charging, and we're putting it into the building use and then it will come back on, when we can do that off-peak.' This is significant for apartments, because apparently, apartment owners, or residents; tenants, are more likely to change their cars. They change more often and they have also shown that they're early adopters of new technology. Because as we know, all apartment owners and residents are smarter than everybody else. So it's interesting that they're bringing in legislation to make it easier. I mean, they've already got a thing in the New South Wales strata laws, that any changes to common property that are sustainable, only require a 50% vote. They don't require a 75% special resolution. So this is the next phase on that, specifically targeted at EV charging, but it might not make very much difference, because the legislation that's there at the moment is actually quite good.

Sue  20:08

They're saying they will only introduce this, if they win the election.

Jimmy  20:11

Yes, again. So I have worked out why we will not be getting an electric car. 

Sue  20:19

Why is that? 

Jimmy  20:20

Because, the reason we were getting an electric car, is just so that we're not contributing to global warming. But that only works if you buy your electric car and drive your old car to a wrecker's yard and have it crushed into little cube of metal, because then you're actually making a benefit. Whereas, if we sell the car and buy an electric car, then somebody who drives the car a lot more than we do (because we hardly drive our car anywhere), will take the car and be driving it all over the place and then it will be a net-loss on the environment. So I'm sorry, that's why you're not getting an electric car.

Sue  21:00

Wow! Well, may I suggest, that we get rid of our car, and you get an E scooter like my E scooter? And then we'd be even less of a burden on the environment?

Jimmy  21:11

No, because you'd still have some hoon driving around in ourr little sporty Audi S1.

Sue  21:18

That's true. And then you've got a hoon driving round on an E scooter as well. I've only hit one person so far, but you might hit many more, because you go much faster than I do. 

Jimmy  21:26

And I don't care about people. And on that note, thank you for bringing all those things to our attention. It will be interesting to see if Queensland... I think Queensland is in such a mess with strata. You spoke to somebody the other day, and they said "oh, we've got these inquiries going on and they're going to change the legislation there." But there's so many vested interests there, that don't want the legislation changed in any significant way.

Sue  21:54

That's right. And that government inquiry into strato has been going on for about four years now. So you know, will it ever end, and produce a report that people will act on?

Jimmy  22:04

Well, exactly. And because nobody cares about people who live in strata (apart from the people who live in strata), then it will not happen anytime soon. Unless of course, there's an election in Queensland, in which case it will suddenly become really important. Alright Sue, thanks again for giving up part of your Sunday. And thank you for listening. We'll talk to you again soon. 

[MUSIC]

Jimmy

Thanks for listening to the Flat Chat Wrap podcast. You'll find links to the stories and other references on our website flatchat.com.au And if you haven't already done so, you can subscribe to this podcast completely free, on Apple podcasts, Google podcasts, Spotify, Stitcher, or your favourite pod-catcher. Just search for Flat Chat Wrap with a W, click on subscribe, and you'll get this podcast every week, without even trying. Thanks again. Talk to you again next week.