Is Victorian strata really a too-hard basket case?

COMMENT
Is Victorian strata really in a state of chaos?  And if that’s the case, how does that manifest itself, why is it so, and what can be done about it?­­

If, as we suspect, the crisis at the Aurora Tower is just the tip of the iceberg, then that represents a pretty confronting challenge faced by Victoria’s strata owners, residents, investors and renters.

The blame for this lies squarely at the feet of the Victorian government. From the day they told Airbnb  and its spin-offs and clones to “come on down” and enjoy virtually limitless access to residential apartments, it was clear that the ruling party doesn’t give a stuff about people who live in strata.

Victoria’s short-term letting laws are among the loosest in Australia, if not the developed world.  The result is some modern residential apartment blocks have been turned into virtual hotels with between one-third and a half of apartments in some of the city’s more prominent blocks given over to holiday and weekend lets.

Efforts by some luxury developers to keep holiday rentals out of their high-end blocks, by demanding no-Airbnb caveats on sales contracts, seem likely to be undermined if any owner invokes new laws that forbid conditions about the management of apartments being placed on the sales.

Under siege

Meanwhile, the only recourse left to benighted apartment residents whose homes are under siege from overseas and interstate tourists, as well as marauding football fans, is to claim repeated and frequent serious disruptions to their lives.

How frequent and how serious does it need to be before action is taken?  That question seems largely irrelevant when the state’s tribunal system is collapsing under its own weight.

Consumer Advice Victoria (CAV) is apparently no longer offering advice to strata residents and the Tribunal (VCAT) is reportedly setting hearing dates for 2025.

Why is this failure of the dispute resolution system occurring? Again it’s partly due to a lack of foresight by the government which, in its admirable efforts to improve the lot of renters, has put severe strain on the tribunal and strata advice systems, such as they are.

Record numbers of disputes between renters and landlords are flooding the VCAT tribunal system, as the former contest no-fault evictions and the latter try to recoup rental income lost during Covid lockdowns and rental restrictions.

The rent rises and availability shortages are only exacerbated by landlords pulling their properties out of the residential rental market to service demands from increasing numbers of tourists, free to travel in these post-covid times.

Backlog of disputes

Meanwhile we hear that strata residents and owners are being told that VCAT is no longer offering advice on strata issues while its officers clear the backlog of rental disputes. 

In any case, it would scarcely matter if they were, with VCAT now reportedly issuing hearing dates for two years hence.

Is Victoria any worse off that other states with large numbers of strata schemes? Judging by the Aurora debacle, it surely is. 

If this was happening in NSW or Queensland, there would already be a statutorily appointed strata manager in place to take over from the strata committee until such times as the building sorted itself out.

Too-hard basket

Aurora residents have at least two matters sitting in VCAT’s too-hard basket, either of which would have triggered intervention on other states. They have apparently been advised to wait until their AGM in May when all their issues will miraculously be resolved – presumably, provided the people causing the problems aren’t re-elected

Complaints to the premier’s office, Consumer Advice Victoria (the controlling body for strata there) and the media, all got zero response.  The police said it was a civil matter; it’s certainly not criminal, but where else could residents turn?

And it’s not just the Aurora.  We heard earlier this year about apartment blocks that were revealed to be rotting from the inside when their flammable cladding was removed for remediation.  Some were so bad that the firms installing the new cladding said  it couldn’t be done because the structures were in such a bad state.

And we heard from an older block that’s being allowed to deteriorate, with essential repairs neglected, because a cabal of owners running the strata committee don’t want to spend money.

Irony of ironies, they have just informed investors that they will not be holding an AGM any time soon because of trouble-makers in the building who want to get themselves elected on to the committee.

Fundamentals of democracy

Such a blatant and arrogant disdain for strata democracy and legal obligations would see a statutory manager appointed immediately, even in Victoria, if only there was a tribunal in a position to make such a ruling.

Approaches by resident owners to the Premier, the Fair Trading minister, CAV and the media were again were met with deafening silence.  I can vouch for the latter – contacting a colleague on the Age about the issue, I didn’t even receive the courtesy of a response.

The big picture problem for Victoria is that strata is complicated and has many moving parts. 

Not only that, it has been neglected for decades, exacerbating any problems, and complaints have been fobbed off as the whinges of moaners who shouldn’t have bought into strata in the first place if they wanted a decent lifestyle, security and peace of mind.

Some of the very fundamentals of democracy do not exist in Victorian strata.  Owners can only attend strata committee meetings, even if only as observers, if the committee invites them.

The chair has a casting vote (unlike NSW and Queensland), putting a lot of power in the hands of one person if they choose to use it for their own purposes, especially if the minutes of their meetings are just a rerun of the agenda with “passed” or “failed” next to the items.

It’s almost as if the legislation was designed to allow the self-interested, dishonest and profit-obsessed to run the show to suit themselves.

One answer

NSW and Queensland strata systems are not perfect by any means, but at least we can see how decisions are made and have the ability to challenge them and get a response in a reasonable time.

In the short term, Victoria needs to introduce a fast-track strata dispute system that can clear out dysfunctional committees and replace them with trained professionals.

Then the politicians need to look at the damage they have done to strata and find a long-term fix. And (Aurora reporting aside) the media needs to get its finger out and stop treating strata issues as if they are the internecine disputes of a bizarre cult.

Victorians who read Flat Chat are already telling us that everything is fine there, and get our own house in order before we even look over the fence that theirs.

A word to the wise: just because you can’t see the problem or it doesn’t affect you, or your politicians don’t care, or the media doesn’t understand, doesn’t mean the problem doesn’t exist.