Podcast: Outfoxed by proxies lost in translation

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architect woman in construction site using virtual reality goggles working on VR blueprints

We wander down some well-trodden tracks in this week’s podcast, but there are a few twists and turns to keep you on your toes.

We dissect the arguments in a long missive from Airbnb about why it’s not their fault that there’s a housing crisis. 

The basic flaw in their argument – we need to build more homes (true) – is that building homes takes years but banning short-term lets could put more than 60,000 houses and apartments back on the market overnight.

We look at the benighted Aurora building in Melbourne and claims that non-English speaking owners didn’t know what they were voting for when they signed proxy forms.

And that segues into a discussion about how to get anyone to read anything to do with strata, ever.  As usual, we have a couple of cunning plans.

And we explore new laser goggles which will apparently let builders spot defects even faster than David Chandler … but while the block’s still being built. That’s all in this week’s Flat Chat Wrap.


TRANSCRIPTION IN FULL

Jimmy  00:00

I’m back in Sydney.

Sue Williams  00:03

Fantastic! So we can actually do this podcast looking at each other, rather than being 12,000 kilometres away.

Jimmy  00:09

 And you can wince when I say something untoward, and I’ll know to edit it out. I didn’t know if we’d have anything to talk about, but we’ve got tonnes and tonnes to talk about. We’re going to talk about one of the aspects that’s been raised in relation to the Aurora building in Melbourne, which is that a lot of the overseas investors didn’t know what they were signing, when they signed proxy forms, because the proxy forms were in English. They were just told to sign (or I should say, ‘asked’ to sign). We’re going to talk about good old Airbnb, who sent me an incredibly long letter last week, explaining why they have no effect on the housing shortage, which comes as a surprise to me, and I’m sure, a lot of the people who are looking for houses. And then we’re going to talk about defects (another tried and tested topic), and some new technology that might help with identifying them, before they become a problem. I’m Jimmy Thomson, I write to the Flat Chat column for the Australian Financial Review.

Sue Williams  01:14

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

Jimmy  01:17

And this is the Flat Chat Wrap.

[MUSIC]

Jimmy

A couple of weeks ago, I carried a letter (or edits of a letter), in the column, and put the whole letter on the Flat Chat website, from a woman who is an Airbnb host. She said the problem for her is it’s too easy to go into hosting Airbnb, compared to being a residential rental landlord, because of the risks that being a residential landlord carries. And that’s sparked a bit of debate. And lo and behold, I get a letter from Airbnb; a long email, saying all these things, all these studies (that they’d obviously cut and pasted from a previous press release… You could tell, because the type face changed about a third of the way through), and this letter goes on to list all these surveys and studies that have been done. And they pick out the key phrases that suggest that Airbnb is not the only cause of the housing shortage in Australia and there are other more significant reasons for a housing shortage. Like, there’s not enough houses or homes being built. The general thrust of the thing is, to kind of to give the impression that Airbnb doesn’t have any effect on the housing shortage, which we logically know to be absolute nonsense.

Sue Williams  03:05

Yes and there are so many studies now, saying that it has a huge impact on the amount of houses and homes available for rent in certain suburbs. You know, popular suburbs, in Sydney and Melbourne and in beachside places like Byron Bay.

Jimmy  03:20

But because it tends to be really focused, it’s very easy to fudge the figures.

Sue Williams  03:25

Sure, because then they can say well, you know, maybe it has no effect on say, Camden in southwest Sydney, and that would bring down the figures for Bondi Beach, for example.

Jimmy  03:38

I mean, I think the last time I looked, there’s something like 50 or 60,000 homes in New South Wales alone, that are not available for residential rentals. 60,000 homes; how can they say or suggest that they have no effect? And it’s all this false equivalence they use… Oh, look, they haven’t built enough houses; they haven’t built all the flats they said they were going to build… That’s true. That doesn’t mean you don’t have an effect on the housing shortage. And they say oh, look at all the empty homes; we’re  helping to fill the empty homes. You’re helping to fill them with tourists; you’re not helping to fill them with people who need permanent homes.

Sue Williams  04:19

And for maybe weekends or holiday periods; not the whole year around.

Jimmy  04:23

So, you know, I’ve written to them basically, and said you guys came in with this nonsense about sharing (they started off with people actually sharing a room in their apartments, or their houses)… And then you made this whole sharing thing, when in fact, all you were doing was renting. And I said “here’s my definition of sharing…”

Sue Williams  04:46

To be fair Jimmy, it probably started out as the sharing economy.

Jimmy  04:49

It did.

Sue Williams  04:50

You know, lots of people rented out a spare room in their houses to earn a bit of extra income, which was great. But very soon it became commercialised; monetized and people started buying places just to rent out on short-term platforms; not just Airbnb.

Jimmy  05:05

Even renting places… Taking them directly out of the rental market, renting a place and then making it Airbnb and not even telling the owners that they were doing it.

Sue Williams  05:17

Absolutely. So it became corrupted very, very quickly. And that’s the big problem, isn’t it?

Jimmy  05:24

The other big problem is the fundamental dishonesty of saying this is all about sharing, when it’s not, and then refusing to let academics or authorities look at their figures, because they say “oh, it’s a matter of privacy.” So we can never tell what the figures are, because they won’t let us see. And they are asking us to believe that they are honest in their dealings, when thus far they have failed to be honest. In one of the Trump trials the other day, there was a judge in America who said “you have to be honest, and not telling the facts; not revealing the full facts, is a form of lying.” So if that’s coming from judges in America, where Airbnb come from, you’ve got to take it seriously. So anyway, they have sent this thing and I’m tempted to put it on the website, so people can judge for themselves. In the meantime, closer to home… There’s a bit of a stoush down in Randwick?

Sue Williams  06:26

Well, I think councils across New South Wales are considering that it’s a huge problem and many of them are now calling on the New Labor Government to cap the amount of time properties can be rented on platforms like Airbnb, to help increase housing supply. There was a report in The Daily Telegraph on Monday. And although we often can’t get meaningful data from Airbnb, we can get data from other sources. This story quotes Council data, showing 4.4% of all housing in the north of the LGA of Randwick (which takes including Coogee, Clovelly Randwick and Kensington), are solely holiday lets. That’s 4.4% of all housing, which means there will be a thousand fewer rentals in the area, and that’s a huge number.

Jimmy  07:14

It’s quite a small area.

Sue Williams  07:16

Yes. And it sounds quite insignificant; 4.4%, but when you think a thousand fewer homes to let, it’s incredible. And ‘Inside Airbnb,’ (who look at Airbnb data), they say there were 15,763 listings of entire homes on Airbnb, for metropolitan Sydney in March. 15,763!

Jimmy  07:41

So that’s 15,000; nearly 16,000 homes, that are not available for people to rent?

Sue Williams  07:48

 That’s right.

Jimmy  07:50

I mean, even if that’s not going to solve the whole of the housing crisis, it’s going to help, if you get them back into residential rental, surely?

Sue Williams  08:02

It’s really going to ease the crisis you’d think, even momentarily, for those people who just can’t afford a place to rent where they would like to. I mean, it’s interesting… It’s a great story in The Telegraph… We’ve got the Randwick Mayor, Dylan Parker, who says he can’t even afford to live in his constituency in Randwick; he has to rent in Maroubra. I mean, I guess he’s not in the same category as police officers and nurses and those kinds of really important people (like politicians).

Jimmy  08:39

It damages his standing as the Mayor, if he doesn’t even live in his constituency.

Sue Williams  08:47

I mean, we’re hearing so many really sad stories about people trying to rent homes; going to every inspection and there’s a huge queue of people. God, it must be so hard.

Jimmy  09:00

And people voluntarily out-bidding and offering more money.

Sue Williams  09:04

Sure, and people forced to couch-surf at friends places…

Jimmy  09:07

 Or sleep in cars.

Sue Williams  09:09

Yes, absolutely.

Jimmy  09:10

Maybe that’ll be the next Airbnb thing; share a car.

Sue Williams  09:13

Oh Jimmy, don’t!

Jimmy  09:17

One of the things these Airbnb people said to me was, look, you know, the real cause of the housing shortage is that not enough homes are being built. I would say to Airbnb, okay, piss off back to America for a couple of years, until we get these houses built, and then come back and start renting with your sharing and caring nonsense. Yes, they’re right; the main cause is not enough homes are being built, but they are part of the problem. And they are definitely not (as they would like us to think), part of the solution.

Sue Williams  09:55

No, that’s right. And it’s kind of hard, because we want more investors in housing, because then there would be more homes to rent. But, you know, if somebody buys a home and thinks okay, I can get a much better deal; I can get a better income from renting on a short-term platform than a residential rent, then it’s kind of hard to say to them “well, you shouldn’t be doing that.” If that option wasn’t there, or the government made it less financially worthwhile for them; perhaps offering them an inducement to put their home back on a residential long-term let, then maybe the choice would be much easier.

Jimmy  10:35

I mean, one of the things that came out of this discussion we had recently (from the woman in Tasmania and her letter),is that a lot of landlords feel that the law is skewed in favour of tenants, and that if you go to a tribunal with a tenant, the tenant is always going to get the benefit of the doubt. I think what the problem with this is, there’s a lot of anecdotal horror stories about people trashing the properties and you know, bringing in pets and not getting permission for the pets, and then the pets wreck stuff, they poo all over the place. I mean, these things do happen. I think the problem is there’s not enough definitive data on how many good tenants there are, and how many genuinely bad tenants (or should I say how few genuinely bad tenants there are). As I said, in my coverage of the letter, there are blacklists (for want of a better word), of bad tenants. There aren’t any for bad landlords; there’s no where you can go and you say “oh, I’m renting through this agency…”

Sue Williams  11:51

There’s been a couple of apps that have started up and they’re trying to do that kind of thing, but it’s really difficult, obviously, with our legal system. To say somebody’s a bad landlord; I mean, that’s potentially very defamatory and so it really limits their ability to inform tenants.

Jimmy  12:08

And I think the way the law stands… I mean, it’s different in different states; your landlord, just because you might win a case at a tribunal or win a rebate on your rent, or something, will put you on a bad tenant list. And it’s up to you to find out that you’re on it, why you’re on it, and to get yourself off it. In a time like this, when you’re struggling just to get to the front of the queue in housing; any black mark against your name is going to mean that you’re going to be sleeping in your car, basically. So yeah, it’s an unequal system, but I don’t think our friends at Airbnb are helping one jot, and they’re certainly not helping by spewing out cherry-picked information from dubious sources. After this, we’re going to be looking at another problem which is in search of solutions. And that’s not just the Aurora building in Melbourne, but the whole question of, what do owners think they’re voting for, when they hand over their proxy? That’s after this.

[MUSIC]

Jimmy

And we’re back. Okay, this section is a bit of a preview of my column for this week’s Fin Review. It’s related to the Aurora building in Melbourne. It’s a huge building; it’s got actually got about four or five strata schemes within the building. And the Chair of the owners corporation has been accused of mismanagement (which she’s denied), and of proxy harvesting, which she has denied. But basically, the whole building is in upheaval. I think there’s four or five cases against it in the log jam that is otherwise known as VCAT, the Victorian Tribunal. There are a couple of legal actions for payment from management companies, that were summarily dismissed and they’re up for millions of dollars. So it’s a bit of a mess. And then there’s a very good report (I’ll put the link on the website)… The ABC News did a report, where one of the owners says well, there’s 25% of the owners that live overseas and they don’t speak English (a lot of them) and don’t read English (a lot of them). So when they get sent a proxy form with a request to please sign this and send it back, they do, because culturally, they’re probably inclined just to do what the authorities, as they see them, want them to do. And so this has added to the whole proxy farming allegations. The other thing is, that people living overseas; even people living interstate, don’t understand what strata laws in Victoria are. And it’s been suggested that they translate into the languages of the predominant cultural groups in the building, which seems fair and reasonable to me. Except, it’s hard enough to get people who read English to read all the information about living in strata schemes. People don’t read the minutes of their committee meetings. They don’t read the agendas. They don’t read the minutes of their AGMs, unless there’s something that really affects them directly. So how does one get people to read anything to do with strata?

Sue Williams  15:57

It’s very hard, isn’t it? I guess it’s always an issue, trying to get people to read memos. I was watching an old Office episode the other night, where Steve Carell is leaving as the boss of Dunder Mifflin, and he’s being replaced by a new boss. And they say “the problem is, nobody reads memos here,” and Steve Carell says “I came up with the perfect solution… I put ‘urgent’ on memos,” and he said “I thought that would make people read the memos.” And he said “and even better, I put ‘Urgent A’, so people would know to really read that memo. ‘Urgent B,’ so they would know to read that memo, and ‘Urgent C,’ so they would know never to even bother to read it.” So you know, it’s always been an issue.

Jimmy  16:38

People just don’t want to read what they don’t want to read. I was just thinking the other day, I’m going to have to stop reading about American politics, because it just makes me angry and upset, and there’s really nothing I can do about it. I think a lot of people have that attitude, when it comes to reading about their own homes, surprisingly enough. I know one of our correspondents on the website, said that he’s turned up at meetings where something has been decided and they go to the next AGM, and somebody turns up and says “this is an outrage; why didn’t we know about this?” And he said “well, we had three committee meetings about it, and we put it in the agenda, and we put it in the minutes.” The person has come back and said “yeah, but you didn’t tell us to read them in the minutes.” It’s that thing of, you’ve got to tell us when things that are important to us are in the minutes, which is ridiculous. But that’s a fact of life and it doesn’t matter what language they’re in, people tend not to want to read stuff like that; they’ve got enough going on in their lives. I don’t know what the answer to that is. It did occur to me that (and I’ve suggested this)… I was actually going to do it as an April Fool thing (but I was away), that we should have compulsory voting in strata.  How do you police that though? I mean, how can you levy fines on people when they don’t vote? You levy fines on them.

Sue Williams  18:12

You add it to their levies?

Jimmy  18:14

Yes. You didn’t vote; you didn’t send a proxy. I don’t know if that would solve anything, but it might make people more aware. My other suggestion was you could have a quiz with a luxurious prize at every AGM. Like a trivia night; turn the AGM into a trivia night. You know, what is our rule on smoking on your balcony?

Sue Williams  18:39

That would be fun, wouldn’t it?

Jimmy  18:41

Or, you could have a multiple choice thing on your computer. When you turn up at the real estate agent to get your keys for your new rental, or your new apartment that you’ve purchased, they sit you down at a computer and it comes up with three questions. It could be ‘what is a strata manager? Is he a.?’

Sue Williams  19:01

Like a driving licence.

Jimmy  19:03

Yes, and if you can get the three or four basic things right, they say “here you go. Here’s your keys. If you’re don’t get them, right, come back tomorrow. Here’s some literature you should read and come back tomorrow and we’ll do the test again.” I cannot see that happening in a million years.

Sue Williams  19:20

I like the Trivial Pursuit idea, though. I think they could add an extra dimension to strata meetings. I remember I was on a plane once and it this plane was going from Townsville to Birdsville, and it stopped maybe eight times at little towns on the way. And every time we took off, the the air hostess had to give the same speech about where the exits were and stuff. And so obviously, everybody got very bored, nobody was taking any notice. And then she started saying “okay, I’m going to have a quiz now… Can anybody tell me where the nearest exits are?” And that we had put up our hand and we had to answer, and then if we won, she would throw us bars of chocolate. To be honest, it was a fantastic way. I learned more in that, than ever before. Because I think normally, you don’t really listen to it. I mean, you look like you listen, but it doesn’t actually sink in. I actually learnt where the yellow jackets were going to be and how to work the whistle. I really wanted a chocolate bar and everybody on the plane was totally engaged. So I think Trivial Pursuit at strata meetings could be the way to go, Jimmy.

Jimmy  19:27

I was thinking about the safety videos that they have on Vietnam Airlines now, which are really kind of cute and funny. There are people in traditional costumes, dancing in strange movements, like, you’re not allowed to smoke. You know, a smoking movement and then crossed arms. I’ve spent a lot of time on Vietnam Airlines in the past two months. So how do you get people to read things? I don’t know. Tell them the building’s falling down… Probably, that would get them to read things. And talking about buildings falling down… We’re going to look at some defects and some solutions for defects, after this.

[MUSIC]

Jimmy

And we’re back. Sue, you have found something interesting about defects; detecting defects?

Sue Williams  21:29

Obviously, we’re still getting defects in buildings everywhere; commercial buildings and residential buildings. There was a report last week about a big new building in Cronulla and the new owners of The Penthouse were alleging bad defects in their place, with terrible pictures of mould and damp and stuff. So it’s just a terrible thing. But, there is hope, because there is apparently new eye-tracking technology, that’s being developed by Australian engineers to identify building defects very early on in the process. Like during construction, which could obviously save owners a huge amount of heartache, and developers and builders millions of dollars in rectifying them later.

Jimmy  22:15

Absolutely. Because as we know, it costs 10 times as much to fix a problem after the building’s complete, as it does to fix it while it’s being built.

Sue Williams  22:24

So this technology is part of 3D headsets, and construction workers put on the headsets and they can look through the building. And apparently, they can cut down on an estimated 60% of building costs related to fixing mistakes. So they can can look and they can see maybe, what’s wrong. They do normal checklists (or they’re meant to), but this gives them a much better view of everything that’s on their checklists.

Jimmy  22:52

I just got a terrible vision of a builder with a virtual reality headset on, just wandering off the edge of a building.

Sue Williams  23:02

Well, presumably, it’s not quite like that.

Jimmy  23:04

It would probably be a bit safer. I also noticed in LinkedIn, David Chandler has published a list of the value added from having an iCIRT rating, based on the average cost of an apartment, and the star rating, and the value. Now, in the middle of this; he’s a terrible man for his acronyms and his initials, David Chandler. It’s obviously the sign of a very busy person. And there’s something in there that kind of relates, but basically it says, for a $750,000 apartment that’s got a four-and-a -half star iCRT rating, the added value is $7,500. It cannot be that; there’s something missing in there. I mean really, would you go to all that trouble to be able to charge $7,500 more, for one apartment? Anybody who subscribes to David’s feed in LinkedIn, who’s seen that and understands it, please let us know. And I’ll try to explain it to people. But I think as a concept, it’s a great idea. Nothing focuses people’s minds in strata quite like money. And if you can say, this is the value you’re getting out of our four-and-a-half star iCIRT rating, then it gives something people can hang onto and they can get a sense of what they’re paying for. Which is good. And that’s it basically. I mean, maybe money is the answer to getting people to read their stuff.

Sue Williams  25:01

Maybe you can get a discount on your levies.

Jimmy  25:05

Or, they hide a code, like an Easter egg, in the online version. If you click on the code, you get a discount. I mean, do you remember that really popular book, Stephen Hawking’s “Brief History of Time?’ There was an author who went around putting notes in copies of the books in bookshops. About two-thirds of the way through, there was a little slip of paper. It said ‘if you read this, email me on this address. I will send you 100 pounds.’ He he did about 10 of them, or 100 of them; didn’t get a single response. Nobody got that far through the book. On that note, thank you for hosting me; thank you for helping me while I was travelling overseas, and thank you for your invaluable contribution.

Sue Williams  26:05

Pleasure, Jimmy.

Jimmy  26:05

And it’s so nice to see you smiling at me, across the table. And thank you all 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.

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    Jimmy-T
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      We wander down some well-trodden tracks in this week’s podcast, but there are a few twists and turns to keep you on your toes. We dissect the argument
      [See the full post at: Podcast: Outfoxed by proxies lost in translation]

      The opinions offered in these Forum posts and replies are not intended to be taken as legal advice. Readers with serious issues should consult experienced strata lawyers.
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