Like a wayward teenager who stayed out too late, Airbnb is creeping back into our lives, hoping to avoid our parental wrath, but finding a less than loving reception waiting for it.
As we discuss in this week’s podcast, the holiday/retirement town of Noosa, on Queensland’s Sunshine Coast, has had enough of badly behaved holiday renters’ shenanigans.
In a few weeks the shire council there will bring in a “rapid response” hotline on which neighbours can report disruptive behaviour – that’s the old-fashioned version of disruption when it was a bad thing – and a designated responder will be expected to attend and deal with the problem.
Also this week the University of NSW has issued the second stage of a comprehensive report that shows that wherever Airbnb and other holiday letting agencies are most active, residential rents go up and housing availability goes down.
Before you file that in the “well, d’uh!” folder, bear in mind that this is the kind of credible information that politicians are obliged to consider when they are devising their policies in the great juggle of housing affordability, rents, investments and income and jobs from tourism.
Perhaps in this pre-post-pandemic period, we should reflect on what happens in your favourite cafes when the waiters and baristas aren’t around; now because of covid, but in the future when they are driven out by Airbnb-inflated rents.
The forces closing in on Airbnb and holiday rentals generally will be the topic of this week’s Flat Chat column in the Australian Financial Review but you can hear a sneak preview here.
LISTEN HERE
Also in this week’s podcast we look at the 50-storey Sydney apartment block where the intercom hasn’t worked for more than four years, meaning residents can’t get deliveries and have to travel down in the lift to let visitors in.
In the podcast we ask, if overseas students can rig up a mobile phone to trigger the access button on their overcrowded flat’s intercom, how come the Park Regis owners corporation say commercial operators can’t be trusted to fix the system?
And, finally, prompted by this post to the Forum, we examine the standard strata management contract and flag the idea that it needs to be fairer and maybe even a standard mandatory document, like the residential rental lease.
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TRANSCRIPT IN FULL
Sue 00:00
Suddenly, there’s a lot happening, especially around Airbnb. Yes, it’s been a bit quiet for a while, hasn’t it?
Jimmy 00:05
Yes, I thought it had kind of settled, and because everybody went away, a lot of the Airbnb properties ceased to be and went back into the residential rental market… We’ll be talking about that. We’ll be talking about people saying that the standard strata management contract needs to be revised and we’re going to talk about the woman who lives in an apartment, where she has to go down 20-odd flights and lift, to let people in, because the Owners Corporation won’t fix the intercom system.
Sue 00:41
Well, they say they can’t, but the fact is, it’s been broken for about four years, I think now. It’s a pretty bad state of affairs.
Jimmy 00:49
I don’t believe that it is impossible to fix things like that; it’s just difficult and it’s one of these things that can find its way into a too-hard basket, but we’ll talk about that, in what is going to be a pretty full podcast. I’m Jimmy Thomson, I write the Flat Chat column for the Australian Financial Review.
Sue 01:11
And I’m Sue Williams and I write about property for the Domain.
Jimmy 01:14
And this is the Flat Chat Wrap.
[MUSIC]
Jimmy
Airbnb, you just can’t keep them out of the news. I think we discussed last week (briefly), their problems with riot police being called to an apartment block. In fact, a couple of apartment blocks (one of them in Ultimo), where 100 people were in a flat-wrecking party.
Sue 01:50
Oh, god, yes, it was horrendous. But yes, they are back in the news this week again, aren’t they?
Jimmy 01:55
Well, there was a new report from the University of New South Wales (used to be the Built Environment; it might still be the Built Environment). It’s their department (of basically), the urban future. Bill Randolph (whom we know well), and a student called William Thackway; now Thackway came out in June last year, with a study. He said he took Airbnb out of certain areas, and the rents went down, and the rental availability went up. He said it was the first time they’ve been able to prove definitively, that there’s a connection between Airbnb and rents and rental availability. Now they’ve come out with another report, but originally that report was looking at holiday areas of Sydney and comparing it with non-holiday areas of Sydney and now, they’ve included Byron Bay. They’ve come to the conclusion that where holiday bookings are stable, rents go up and availability goes down and where holiday rents are taken out of the equation, then rents go down and availability goes up.
Sue 03:08
So basically, they’re saying that Airbnb inflates rentals, and creates a situation where there are fewer vacancies and so really, it has a big impact on rental affordability for tenants.
Jimmy 03:22
And the majority of people who hear this are going “yeah well, obviously,” but it’s something that Airbnb have denied vehemently, for years. I mean, they’ve got a statement in the Sydney Morning Herald story, saying this is a complex situation of a number of factors, which is true, but some of it is pretty obvious.
Sue 03:43
I think sometimes anecdotally, you know about these things, and it makes perfect sense, but then it has to go to academia, to actually prove it definitively and it sounds like this is what they’ve done, this time.
Jimmy 03:55
And since Airbnb resolutely refuse to let anyone see their actual figures, it’s very difficult for academics to prove one thing, or another. Again, Airbnb use their catch-all defence of ‘it’s a matter of privacy.’ Well, maybe it is, but it’s also a matter of public policy and they are getting in the way of proper decisions being made.
Sue 04:19
There seems to be a couple of moves around now, to regulate them even more, isn’t there?
Jimmy 04:23
Bill Randolph has called for further regulation. He thinks that now is the time to bring in new regulations, before all the foreign tourists come back, so that the whole industry can be ready, but with a different look and a different approach that doesn’t just basically hand over our housing stock, to holiday renters.
Sue 04:46
Because we do have new regulations, which should just come in, but he’s saying that that’s not enough; we need more.
Jimmy 04:51
I think so. I’ve been trying to find the actual report that was quoted in the Sydney Morning Herald story (and there’ll be links to that on the Flat Chat website), but I can’t find the report, so I’m not sure exactly what he said… I have to go by what he told the Sydney Morning Herald, but it’s saying there should be further regulation. In the middle of December, we had the new Code of Conduct come in and that will be strengthened, I think, in June. They’re going to add in the bit about fire regulations, so that you’ll have to have fire extinguishers, and you’ll have to have maps on the doors, showing people how to get out, especially in apartments. So, that’s all evolving. They’ve already brought in the Registry, so you can’t have an Airbnb rental in New South Wales, unless you’re on the Registry, and then you get a Registry number and that goes on your listing. So, they’re kind of gradually, tightening up.
Sue 05:48
And I think you asked Fair Trading a number of questions, about the principal place of residence, when that was being used for Airbnb, didn’t you?
Jimmy 05:55
Yes, because one of the things in Sydney; in Greater Sydney… Apartment blocks can pass bylaws, saying they don’t want to have Airbnb, or other holiday rentals. We keep calling it Airbnb, but it’s a bit like…
Sue 06:10
Short-term holiday platforms.
Jimmy 06:13
And in Greater Sydney, apartment blocks can pass by laws to say “we don’t want short term lets,” however, what they’re calling ‘principal place of residence’ or ‘hosted lets’ don’t count, so they can still go on. Even if your building doesn’t allow short-term letting of empty apartments, you can still let a room to a visitor. Now previously, the definition was, if it was your principal place of residence and people were saying “well, that’s great, because I stay in my apartment five nights a week, but I can let it out on weekends, because it’s obviously my principal place of residence.” Now, Fair Trading (I asked them about this before Christmas and now it has appeared on their website), and it says ‘this only applies if you are there.’
Sue 07:00
Like, for seven days a week? Yes, the ‘hosted letting’ only applies, if you are in the apartment, at the same time. So, you have to sleep there at the same time as your visitors? Yes, which means you cannot let an empty apartment. Because, we’ve seen this in the past, where people have said “I’m sharing.” I call it sham-sharing. “I’m sharing my house and I’m doing it one room at a time, so do you want to come and share a room in my apartment, or my house?” You go “oh yeah, so, I’m just one room.” But then, you get there and you find that all the other rooms are also being done on that basis and the person who owns or leases the apartment or the house, is nowhere to be seen. This is saying no, you’ve got to be there. I’m expecting a big rush of sales of wireless surveillance cameras, so that Owners Corporations will be able to put a camera on the door of an apartment… Focus it on the door of an apartment and say “you’ve had guests here, but you weren’t here.” Can they do that; are they allowed to?
Jimmy 08:08
The front door of an apartment is common property.
Sue 08:11
Oh, I see, but does that not affect people’s privacy? Do they have a natural right to privacy? As long as you’re not looking into the apartment. If you’re just looking at the door, it’s okay?
Jimmy 08:21
Yes.
Sue 08:22
That’s interesting!
Jimmy 08:23
I remember years ago, there was a company that wanted to survey the people who were using their bathrooms, but obviously, for reasons of privacy, they didn’t want to have cameras showing people in the bathroom. But, that’s what they wanted to know; who’s in the bathroom. They put the camera at ground level, so they are only filming people’s feet, but they were able to identify the people, from their feet; from their shoes and their socks and things like that. Obviously, the government has decided no, we don’t want people playing fast and loose with the rules here. The rules are there for a reason and the reason is, yeah, it’s great if you live in an area, and you’re going to bring somebody in from another country or another state and you’re going to take them to your favourite cafes and your favourite bars and you’re going to tell them which bus to get to wherever they want to go. That’s terrific, but not if you’re saying “yes, this is my principal place of residence,” but you’re not there, while the guest is there, which I think is okay. I don’t really have a problem with that.
Sue 09:26
No, not at all.
Jimmy 09:28
It just goes to the fundamental dishonesty of Airbnb from the day they started, which was this thing about sharing, when in fact, it very quickly turned into a commercial enterprise, but they would never accept or recognise that as being the case. There’s another thing happening up in Noosa. This is interesting, because Queensland strata was fundamentally created on the basis of holiday letting. The first apartments in Queensland were all about people coming from interstate to live in apartments near the sea; near the beaches and things. They’ve come at residential strata from a different angle from the rest of us, but you have a town like Noosa, which is pretty much dependent on tourism, but, it’s also a very popular retirement town. People go up there to the Sunshine Coast. It’s great, you know, a beautiful place. The temperature is okay, most of the year…
Sue 10:29
Oh, it’s a beautiful place. I mean, it’s gorgeous; in a natural environment. It’s got the forest, it’s got the beach…
Jimmy 10:36
Lagoon and stuff like that.
Sue 10:38
And there’s fantastic bars and restaurants and cafes there as well, and shops…Great boutiques.
Jimmy 10:44
So they’ve got the dilemma of, they want tourists to come, but they don’t want tourists to come and make life miserable for the permanent residents. As of February 1st, there is a new programme that they have brought in (Noosa Shire Council), if you are in Noosa Shire, and you want to run short-term letting, you’ve got to register it with the council. One of the conditions for the permission is that you identify someone who lives within 30 minutes of the property, who is able to get to the property if there’s a complaint about your tenants. This is what is going to happen in Noosa… You’ve got a number, it’s a council hotline, 24 hours a day. You’ve got to display that, either on the door of your property, or on a notice board, where all the other residents of the building can see it and they can call up the council hotline. The council hotline then calls up the manager (or agent or whatever it is that has been appointed), at two o’clock in the morning and says “there’s a riot in your apartment, in this block; do something about it.” The hotline people trace what has happened. They just don’t phone up and say “go and fix this,” they then follow up and say “what happened? Did it get fixed? Was the noise stopped? Were the tenants thrown out?” It brings that responsibility back to the host. If you cannot let your apartment to well-behaved people, then you’ll lose your right to host.
Sue 12:19
It seems like a really good idea, because otherwise, Noosa is in danger of going the same way as Byron Bay and in Byron Bay, they’ve had so many problems with Airbnb.
Jimmy 12:28
Well, I wonder if the laws that came in, that allow all this stuff with short-term letting in New South Wales; those laws brought in at the last minute… Because they were just about to make it open-slather. The same time, those laws said ‘planning laws that prevent short-term rentals are struck off; they don’t count anymore.’ I wonder if that stops local councils from saying “we want to have a Noosa plan…We want a rapid response plan. We’ll set up the hotline, but if you want to run Airbnb, or Stayz or whatever, in your apartment block or in your street, you have to register the name of a responsible person who lives within 30 minutes of that property, who can come and deal with it.”
Sue 13:18
Great, so we have to see if that move has any imitators elsewhere, really.
Jimmy 13:23
Well, I’m not even sure if the laws in Victoria and New South Wales would allow councils to do that, but I do know that there are councils in Sydney (and Melbourne City Council led the battle to stop Airbnb taking over Docklands, unsuccessfully, but they tried to keep them out). They might look at that and say “well, this is a service for our community, that we should implement.”
Sue 13:54
Interesting to watch and see what develops.
Jimmy 13:56
So, there’s a lot of things happening around Airbnb. They’re back on the agenda, probably in ways that they would rather not be, but you know, they’ve had a pretty easy run, for the past couple of years. It’s about time, and now is the time to do it. You know, when the hordes of overseas tourists aren’t here, let’s get things sorted out; tidy it all up. We do know that the tourism helps the economy and Airbnb seems to have contributed to tourism, but it shouldn’t be at the expense of residential tenants.
Sue 14:29
Yes, absolutely.
Jimmy 14:33
After this, we are going to talk about the building where the intercom is… how many stories is that building? It’s about 30 stories tall, isn’t it?
Sue 14:44
I think it’s about 50 storeys.
Jimmy 14:45
50 storeys tall and the intercom hasn’t worked for four years, for a lot of the apartments.
[MUSIC]
Jimmy
Sue, you did the story for the Sydney Morning Herald. What is it all about; a building? What’s it called?
Sue 15:06
Yes, it’s called the Park Regis. It’s in the Sydney CBD and it’s really well known, because it was a 60s building. When it was built, it was the tallest residential tower in the southern hemisphere. I guess 50 stories is still quite tall. It’s got a hotel on the first 13 to 16 stories, I think, and then the stories above are all apartments. It’s always been considered a really good building, because it’s quite solid. It’s quite stylish. You know, in the old days, lots of stars used to go and live there and they used to have concierge in top hats and tails. A bygone era, I guess! Well, it certainly is now, because it’s really hard to even get into the building, because their entry system in the lobby, hasn’t worked for four to five years now.
Jimmy 15:55
Now, that’s not for everybody; it’s just for some people?
Sue 15:58
Well no, it’s for everybody. The hotel has a separate lobby, so the hotel guests can get up and come in; no problem for them, but for all residents, nobody can buzz them to tell them they’re there. Deliveries come and they can’t buzz; they either leave them outside, or they might wait to see if somebody comes out and then they can drop them in the lobby, or they phone the person who made the order for the delivery. But as you can imagine, with so many parcels coming in these days, it’s really, really difficult for the residents to actually get their deliveries. I talked to a woman there, who had had COVID and of course, she was ordering supermarket supplies and things and they couldn’t be delivered to her. She had to ask the hotel, if they would mind if she had the deliveries come to them and then, would they bring them up, into her apartment level? She’s on the 26th floor. The first time she did it, they said “no, look, we’re far too busy. We can’t do it,” and she said “well look, if you like, I can come down, but I may well infect all your guests, with my COVID. So maybe, you really should reconsider this and bring it back up to me.” So, then they brought it up to her. Her gripe was that the Owners Corporation hadn’t fixed it. When I talked to the Chair of the Owners Corporation, he basically said it’s really, really hard, because it’s an old 60s building; old 60s wiring. He’d had discussions with a couple of companies and they’d said they couldn’t guarantee that if they fixed the intercom, it wouldn’t mess with the lifts and the lifts for the hotel guests, as well. This resident was saying “well really, those problems should be overcome,” and she’d gone and got a couple of quotes and you kind of think, well, yes, it may well be a problem. Subsequently, I had an email from somebody else who lived in an old building, as well and they had a similar problem and she said it was complex to resolve, but it was possible. It just takes a bit of time and it obviously, takes a bit of money.
Jimmy 18:03
The problem here, to me, is this is a common property issue. If you go back even before the Strata Management Act, there’s a Strata Development Act and there are bits of that, that seemed to suggest that it is part of the duty of the strata scheme, to allow access to the apartments. That’s one of the fundamental principles of strata; you set it up in a way that everybody who lives there, can get to their apartment.
Sue 18:35
Well, obviously that doesn’t hinder that, because the residents can get to their apartments (because they’ve got fobs, that they can get in), but it’s just that visitors can’t get there. As this woman was saying, she was having a dinner party and she’d invited six people. She’s up in her apartment cooking… One of them phones her up on her mobile and says “I’m downstairs; I’m outside your front door.” So she gets the lift down 26 levels, lets them in, travels back up in the lift with them and starts cooking again. Then, the next person phones her and says “oh, I’ve just arrived.” I mean, how can you live like that? It’s really difficult. I mean, we may say it’s a ‘first-world problem,’ but geeze, it’s a problem, nonetheless.
Jimmy 19:14
It’s a 1960s building, and it sounds like they’re trying to fix it with a 1960’s solution. They shouldn’t even be looking at wiring. I mean, there are wireless and repeaters and all the rest of it… There are so many wireless access systems on the market. It would cost money, but it would future-proof the building and it would fix it. I don’t think the Owners Corporation has a choice in this. I think legally, they have to fix this. It’s common property and I believe they’ve tried to pass a bylaw, that says all the responsibility for the intercoms go back to the individual apartments.
Sue 19:55
That’s right. They put that up to an AGM and I think it was passed, but I mean, I find it quite hard to believe that an Owners Corporation can vote to not have any responsibility for a piece of common property anymore.
Jimmy 20:08
I find it very hard to believe that 75% of the owners (if they were properly informed), would be told that they have to fix the intercom themselves, but I think you’re right… I don’t think it’s a valid bylaw. I think it should have been booted out. I think the Chairman should have declared it invalid, because at so many levels, it just goes against all the principles of strata law. I mean, if I was advising the owners in that building, I would say “get rid of your committee, or you’re not going to get anywhere.” If need be, get a statutory appointment of a strata manager, who will come in… I mean, four years without intercom, in a building that’s 50 stories high? That’s preposterous; absolutely preposterous!
Sue 20:55
It’s a shame, because it’s a great building; it really is a good building. But where are all these owners? Where are all the other owners? If it’s 50 stories high, that’s 50 floors of owners (or 40, if you don’t count the hotel…) Maybe, the owners want to save a bit of money. Maybe, they don’t get many deliveries, but then they’d have to… You know, I can’t believe anybody in this day and age, doesn’t get deliveries. But you know, maybe a lot of the apartments are rented? Yes, I’m sure they are, but that would have a very high turnover of tenants, you’d imagine, because tenants; you don’t want that inconvenience, do you?
Jimmy 21:31
It’s the principle that irks me; that such a fundamental part of common property, the committee pushes through a non-solution, which is ‘don’t fix it, don’t pay for it,’ or ‘pay for it yourself, if you want it fixed.’ Of course, that’s impossible, because no single person could repair that themselves, without everybody else being involved. The thing that they can’t guarantee that it wouldn’t interfere with the running of the hotel’s lifts or whatever… Make sure that it doesn’t interfere! Don’t sit there and say “oh, we can’t guarantee this.” Don’t let perfect, be an enemy of good!
Sue 22:14
That sounds very profound.
Jimmy 22:17
It will be interesting to see what happens there, because I think now that this has become public (thanks to you), I think a lot of the owners in that building will be going ‘how much is the value of our apartments being diminished by this short-term thinking and lack of observing strata law?’
Sue 22:39
It’s hard to guess though, isn’t it? I mean, at the moment, we’re watching this fantastic TV show called ‘Murder in the Building.’
Jimmy 22:47
‘Only Murders in the Building.’
Sue 22:49
It’s about an apartment building…
Jimmy 22:50
It’s about a podcast…
Sue 22:52
Yes, in an apartment building. Which channel is it on?
Jimmy 22:56
It is on Disney.
Sue 22:57
And it’s Steve Martin and…
Jimmy 23:00
Martin Sheen? No, not Martin Sheen, Martin Short!
Sue 23:02
Martin Short and Selena Gomez and it’s pretty fascinating, isn’t it? It’s about a building where there’s been a couple of deaths; sudden deaths. A little group of residents put together a podcast and they try and solve what’s happened and they go to an AGM and the podcast has named the building, so everybody knows about the murders (the alleged murders), so they think people are going to be really pleased with them, that they’ve solved (potentially), who the murderer is, so they think everybody in the building’s going to be really happy. Instead, everybody votes to kick them out of their apartments, because they don’t want the infamy, mated with murders.
Jimmy 23:51
There’s a psychiatrist there, who says his clients have been…
Sue 23:56
Too nervous to come to the building. You kind of never quite know, with an AGM and you never quite know with residents in a building, how they’re going to feel about something. That’s why I think that it may be a case of getting a statutory manager. Maybe so yes. Well, I think the next phase for the owners who I’ve spoken to; they’re planning to go to NCAT. They’ve had a mediation, but now they’re planning to go to NCAT, if nothing else happens, so we’ll keep an eye on it.
Jimmy 24:26
Yes, we will let people know how it goes. Watch the values of the properties soar, when people can actually allow… It just strikes me; one of the funny things in recent years about overcrowded flats… You’d get a flat and maybe, you’d be given two fobs and then, a dozen overseas students would move into the flat and they’d be sleeping in cupboards and things. To begin with, they’d have a system, where when anybody left the flat, they would go and leave the key in a secret place. Anybody who wanted to come in, if there was nobody there to buzz them in, then they could get in that way, but then they discovered that what they were doing, was the students in the flat had wired the intercom to a mobile phone, like you would do with a bomb. So, you just came to the flat and you dialled the phone number, and it went ‘buzz’, and it opened the door and registered the lift, so you could get up.
Sue 25:34
Very clever students!
Jimmy 25:35
If the students can do this with a mobile phone and a couple of bits of wire… I mean, really?
Sue 25:43
Good point!
Jimmy 25:44
Come on! We’re in the 21st century, you know! Your 50-year-old wiring does not require a 50-year-old solution. After this, we are going to talk about strata management contracts. Ooh, exciting! No, it really is, because you wouldn’t believe what your Owners Corporation has signed away, regarding your rights in your strata management contract (therefore, most people, in most states in this country). That’s after this.
[MUSIC]
Sue 26:22
That was quite an introduction, Jimmy. So what rights have I lost?
Jimmy 26:26
Okay. In the standard strata management contract, as issued by Strata Community Association Australasia (they keep changing their name; they just get bigger and bigger)… It’s item 6.2. ‘seeks to exclude the agent from all liability, except for willful breach of this agreement, gross negligence, dishonesty or fraud.’
Sue 26:52
So, they can be incompetent and not be responsible?
Jimmy 26:56
Exactly and basically, the contract says, unless they have deliberately and grossly misbehaved (and the word ‘gross’ doesn’t appear anywhere in the strata act), then they cannot be held liable for anything that they do that’s wrong. It also limits their liability to how much they got paid in the year that the offence occurred. They could do $100,000 worth of damage, but if you’ve only paid them $5,000, then you get the $5,000 back and it indemnifies them, only for the first two years after the offence, or the mistake or whatever has occurred… After that, they can’t be held responsible.
Sue 27:43
So, if you discover it a few years on, when everything breaks down, and you realise that there have been ‘Mickey Mouse’ solutions to things, that’s it; they’re away Scot-free?
Jimmy 27:53
Let’s think about that… What could these ‘Mickey Mouse’ solutions possibly be? Well, let’s say for instance, you’re in a new apartment; you’ve hired a new strata manager and the new strata manager has said “let me look after all the defects, because I know this excellent defects company.” I think “great,” because I don’t know anything about defects. So, off they go. Three years later, the defects company comes back, or, even worse, six years later, the defects company comes back and says “oh, yeah, we weren’t really experts in that. We were more experts in intercoms for 60-year-old buildings.” Then you say to the strata manager “why did you appoint these people?” They went “yeah, we thought they’d be okay. But hey, we’ve charged you $10,000 and you can have that back and by the way, you’ve lost your claim for $2 million worth of defects, because it’s out of time.”
Sue 28:52
And sadly, your building is falling down, but, nevermind!
Jimmy 28:55
Nevermind, but we’re okay, because we’re indemnified. Slightly exaggerated situation!
Sue 29:04
But that’s amazing. You know, you wouldn’t really sign a contract with any normal provider, would you, with that kind of clause in?
Jimmy 29:13
No. Somebody has written to us and said that the basic indemnity clause is standard in most contracts, in that they’re not indemnified against fraud, or negligence or stuff like that; like, they still have to wear it, but it’s the word ‘gross’ in there. Where is that defined in law? What is ‘gross negligence?’ It would almost have to be deliberately, culpably choosing not to check something; that would be gross negligence, whereas just forgetting to fill in a form, is that gross negligence? But, that form could be something like ‘we’ve got Airbnb in our building, because you forgot to register the bylaw.’ Is that gross negligence? Probably not. Does it have a ‘fundamental and profound effect on the building?’ It certainly does. Somebody has written to the Flat Chat website, to the forum and raised this, and of course, it’s not the first time this has been raised. I believe that the Owners Corporation Network has been wrestling with trying to come up with their own strata management agreement and they keep bumping up against this thing. Remember, years ago, people would go in and say “I want the strata management agreement, but I’m taking out this clause.” ISTMs would say “no, that’s our copyright and you either sign the whole agreement, or you don’t get anything.” And are there any other kind of clauses like that as well? Go on the forum and have a look, because it’s all detailed there. The initial post on the forum has all the different areas where it’s legalistic to a certain extent, but it’s all that stuff about liability being limited. Now, somebody has suggested, why don’t we have a standard strata management agreement, like we do a mandatory residential rental agreement? You sign a lease, basically (apart from the money amounts), the standard residential lease in New South Wales and Victoria is set by law; that’s the lease that you have to sign and the reason you have that is because the power imbalance between landlords and tenants is such, that the tenants would end up signing leases that were grossly unfair. So, somebody has suggested that we have a standard strata management agreement, where the amounts that you pay can vary, but the basic responsibilities are set down by law, and nobody can vary that. Strata managers will say “well, you can come to us and say that you don’t like this clause or that clause, and then we can decide whether we want to sign that contract or not.” Which is great, if you are an 150 apartment block. You’ve got a lot of power in that relationship, but if you’re a 12 unit block somewhere… Well, you know, the strata manager’s are just going to say “we’ll take it or leave it.” You say “well, we really want a strata manager, and we’d quite like you to be our strata manager.” He will then sign our contract, but we’re not varying anything; the only thing we’ll vary is the price.
Sue 30:46
That’s right, yes!
Jimmy 30:46
Because, they were almost working like a cartel. That kind of “okay, go and get another strata manager who’s not a member of our group,” and you think “why would they not be a member of your group? Because they’re not professional!” So, they’re saying, if you want a professional manager to run your strata scheme, then you’ve got to accept our terms. It’s just not right.
Sue 32:56
So, the Owners Corporation Network (the Peabody for the apartment owners), could they go into talks with the SCA and kind of hammer out an agreement between them?
Jimmy 33:06
Be clear on this; SCA has absolutely zero interest in changing the standard strata management contract. There’s no benefit for them in doing that, so they are not rushing to the table, to do anything. There is nothing to stop anybody from rewriting the contract in a way that is more fair, or even favours the Owners Corporations, but every time you write a clause about all the elements, then you run the risk of SCA saying “well, that’s the same wording, as we have, so that’s copyright, so, you can’t do that.” It’s almost like you have to find a new language to write it in, which is impossible. Then, you’ve got the lawyer’s fees. I believe OCN has been wrestling with this for a couple of years and you know, there’s good people in there; they’re all volunteers… It’s too hard. The simple solution is for Fair Trading to do what it says on their tin, and get people to trade fairly, and say “hey, here’s a standard contract. It works for you guys. It protects the strata managers and it protects the strata schemes; just vary the figures to suit yourselves, but there are elements in there that must not be changed.” Oh, we have got through a lot today! 43 minutes, before the edit. Once we take out all my ramblings, it’ll be down to about 20. But, there’s a lot happening, all of a sudden. It’s like it’s all been building up, waiting for…
Sue 34:42
The New Year’s kicking off, Jimmy!
Jimmy 34:43
Alright, thank you again, Sue, for your contribution.
Sue 34:47
Pleasure, Jimmy. Thank you for having me.
Jimmy 34:49
And thank you all for listening. Bye
