We’re heading across the border to Victoria this week where the Greens are flexing their balance-of-power muscle by demanding changes to the state housing program, as detailed in this post on the Flat Chat website.
We ask what it is that they want, and which demands they are most likely to negotiate away to get other elements of the deal over the line.
Will it be their demand for 30 per cent of all schemes to be affordable or social housing?
Or will it be the stringent curbs on Airbnb and its ilk.
The latters may be low-hanging fruit but nationally the Greens have a patchy track record when it comes to short-term holiday lets.
And if you’re thinking, “it’s Victoria, so what?” don’t forget that the states use each other as guinea pigs and any policy that works in one territory is likely to find its way to its neighbours before too long.
We also relate how NSW Building Commissioner David Chandler’s iCirt gold star rating system has become such a valuable asset for developers that some are saying they have it when they haven’t even applied. Naughty, naughty!
And we introduce an escape from the stress and tension of apartment living with our new “lock up and leave” feature that highlights our personal choices from all the terrific holiday deals on our Mildrover website.
By the way, if the sound quality isn’t quite up to our usual standard it may be because it was a Zoom call to a motel in Lismore.
TRANSCRIPT IN FULL
Good morning, Sue Williams.
Sue Williams 00:01
Good morning, Jimmy!
I’m in sunny Sydney; where are you?
Sue Williams 00:06
I’m in Lithgow, which is a bit sunny, but it’s really chilly. I didn’t bring enough clothes, I’m afraid.
You’re up in the mountains. So today, we are going to talk about what’s happening down in Victoria. We’re going talk about the iCIRT ratings and how some people are making claims that are not absolutely true. And, we’re going to talk about a new feature that we’re bringing in, which is ‘lock up and leave,’ which is a bit different. I’m Jimmy Thomson, I write the Flat Chat column for the Australian Financial Review.
Sue Williams 00:46
And I’m Sue Williams and I write about property for Domain.
And this is the Flat Chat Wrap.
So Sue, are you aware of what’s been happening down in Victoria with the Greens?
Sue Williams 01:09
The Greens have made a very strong stand, haven’t they? They’ve been saying that Labor has to commit to stronger reforms, to ease the state’s housing crisis.
Well, first of all, the Greens hold the balance of power in the upper house in Victoria, so they can certainly slow down and possibly even block legislation. And you may recall, that before Daniel Andrews retired, he came through with this housing package. They were going to build all these houses, and they were going to demolish lots of old public housing and replace it with a mixture of public and private…
Sue Williams 01:52
That’s the way of the future, isn’t it? Having both of them together, not just blocks of public housing, stuck away somewhere, where it’s all public housing tenants, but mixing them? That seems to be the very modern way to go. That’s what’s been happening in Europe a lot and in new developments around Australia, as well. They kind of think, why would you isolate public housing tenants, and make them feel different to everybody else, as well. It’s nice to have a big demographic mix.
Look, glass half-empty view of that particular proposal; you’ve got a lot of buildings that are really old, really rundown, that are pretty much past their used-by-date, and you’re going to replace them with modern design, modern construction, newer, better buildings… Can you understand why the Greens are saying don’t knock these down?
Sue Williams 02:43
I guess they’re worried… In Sydney, we have a very bad habit of knocking down public housing, replacing it with private housing, and then putting those public housing tenants into other suburbs, much further out, time-and-time again. Often, those buildings have been there for a long time and they’re often in really prime parts of Sydney. You look at Sirius, right on the harbour, just opposite the Opera House; those apartments are going to be so expensive now. Originally, it was a very brutalist public housing building. Now, god knows where those people have been moved to. So I suppose the reluctance is always that that might happen, that it might all be private housing, and the public tenants have to go somewhere else. But if it is a genuine proposal, that will be mixed, and there will be plenty of room for public housing tenants, then it would seem like a really good idea.
Look, it’s it’s one of these things… I think the idea, possibly is based on well, the government already owns the land, so it’s not like they’ve got to go and find spare bits of land, to put new buildings in, before they knock the old one’s down. But I think it’s an emotional thing as well, isn’t it? You think we’ve got a shortage of housing; why are we knocking apartment blocks down?
Sue Williams 04:09
And I suppose, you look at it from an environmental point of view and there’s lots of embodied carbon in those buildings. So knocking it down, and starting again, could be a huge environmental waste, if those buildings are sound. But then, you know, we’ve got some great architects, who do some amazing adaptation work, but presumably they’ve looked at those buildings and thought they can’t really adapt them.
They’ve adapted Sirius, though. When I used to live in London, I had some friends in Brixton, who lived in this tower block, and it was really awful. It was kind of a council block, that had been sold to private people, but also, there were still public housing people there, as well. It was really ghastly block; it was a high rise and there was always vandalism. People were always vandalising the lifts, with graffiti everywhere, and Brixton in those days, was kind of a bit of a crummy area as well. It was a little bit dangerous, a bit edgy.
And then, the local council decided to completely upgrade the building and they introduce great security. So not anybody could kind of wander into the lobby and go into the lifts; you had to have a key to get in. You had to have a key to get to a certain level of the building. And suddenly, the building really improved dramatically. And my friends still live there 30-years later, and they love it. I mean, it’s a high rise, but it’s got amazing views over London.
Now, they’re really sought-after apartments. So some things can be adapted and made an awful lot better and maybe, governments are perhaps not really applying their minds to that possibility as well; I don’t know.
Well, you know, like you said, you presume that they’ve looked at the possibility of adapting the buildings and improving them… Well, maybe they haven’t; maybe they just haven’t. You’re talking about politicians. You’re talking about politicians talking to developers and the developers saying “look, it would be easier just to knock the whole thing down and start again.” Or maybe, that would be the easier; it might even be the most economic way to do it.
But, is it the most socially-efficient way to do it? I mean, we don’t know. We should ask someone in Victoria, if that process has been gone through. But what are the other things that the Greens are asking for? We know they have the balance of power in the upper house… That gives them a lot of power. What other things are they demanding?
Sue Williams 06:43
One of the things that they’re asking for is more regulation of short-stay, which is something probably quite close to your heart, Jimmy. They’re asking for a 90-day cap, that owners corporations have more power to regulate their own buildings and ban them if they want to, and a mandatory public register, of any short-term lets? That would seem quite reasonable really, to me.
Let’s set that aside for a moment… The other things they’re asking for is an increase in the tax on empty properties. There is already a tax on empty properties in Melbourne, in certain parts of Melbourne, but they’re wanting it spread to the whole of the city, or even beyond, so that empty properties in the country have to pay additional tax. I’m trying to think of what the other things are…
Sue Williams 07:35
I think rent controls.
Yes, that’s a big thing with the Greens.
Sue Williams 07:40
Absolutely. They want a two-year rent freeze, followed by, I think they want a permanent cap on rent increases as well. Like the kind of cap that they have in Canberra at the moment.
Yes. Which has a better track record for rentals than anywhere else in Australia and the rents have not gone up in Canberra by anything like as much as they have elsewhere. I think the cap is something like, no more than 10% of the original rent is the increase; something like that. There is a percentage limit on the increase that the landlords can put on the rents in Canberra. Which seems fair; it’s not like they’re saying we’re freezing the rents, even though all other prices are going up. They’re saying no, it’s got to be reasonable.
Sue Williams 08:28
Critics of that move always say “oh, yes, but it will deter investors from staying in the market, or coming into the market.” I don’t know that it would; I kind of think a 10% rent increase is a pretty good increase on your money, isn’t it?
Yes. And the thing is, that as far as I recall (and I’m hoping somebody will correct me if I’m wrong), but the limit on rent increases in Canberra is something like the CPI… You can go up by whatever the consumer prices are going up by, but to a maximum of 10%. You can put a bid on top; you can make a bit more money. What you cannot do is make the ridiculous profits that some landlords are managing to get, if they happen to have lucked into the right area, with the right property.
Sue Williams 09:18
I mean, you have to really feel for renters at the moment. My nephew and niece both rent, and my nephew has just been forced to move out of the place where he rents with his girlfriend, because rents have gone up so much. The landlord has evicted them, presumably so that they can increase the rents by even more. So you know, they suddenly had to find a new place and that’s really difficult to do, as well. Whereas, my niece who rents too, she had (as you know Jimmy, because you helped her), she had a terrible water problem the other day.
It was a burst pipe under the sink.
Sue Williams 09:55
The place was flooded; the carpet… So finally, they sent in a plumber, very late out, because she didn’t want to make a fuss, because she’s terrified that they’ll put the rent up or evict her, in exactly the same way. We’ve got renters living in that fear and misery. And she’s now living with very wet carpets.
The mould has started already, because it’s started to smell. I say to her “well, why don’t you call the real estate agent and say ‘please, can you send somebody to drive the carpet?'” She said “I don’t want to make a fuss.”
They were a bit antsy about sending a plumber over to fix the pipe even. This is a really unhealthy way to live. I mean, the rental sector should be a great alternative to buying a property, for those people who want to use the money in a different way, or don’t have as much money. But in fact, it’s not even a second-class option, is it really? It’s kind of like a real fourth-class option.
Her reports of the way she was spoken to by the rental agent, who was just coming up with all these nonsense facts and figures about how long they could take… You know, 24-hours in an emergency, which is rubbish. The rental agents; sometimes I feel a bit guilty, because I’m always hammering rental agents. But I have never come across one yet, who actually gives a damn about the tenants, and all they’re concerned with is getting the rent paid on time, and making sure that the owner isn’t hassled.
And in this case, the owner was overseas, and they’re saying “we can’t send a plumber around until we’ve spoken to the owner.” Well, no… There’s actually laws about that, but they just treat people with contempt. I can understand why your niece doesn’t want to hassle them over the carpets, because she’s worried that they’ll turn around and say “oh, you’re too much trouble and we can get somebody in here tomorrow.”
Sue Williams 11:50
So of all these things in Victoria, what do you think is the one that’s likely to get sacrificed? Because they will go to Labor and they will say “we want ABCD.” Labor is going say (because they’re politicians), well, look, we’ve got a bit of wriggle room here.
Sue Williams 12:10
One of the things they’re asking for (which I think is highly contentious really), is inclusionary zoning, to require a minimum of 30% of public and affordable housing in developments of 15 or more homes on private land, across the state. So if you’ve got a development of 30 apartments (because it’s likely to be apartment development, which is a new development), then 10% of those, in a new block of 30; 10 of those would have to be public and affordable housing.
Well, that’s not going to happen, is it? I mean, I think you’ve identified the sacrificial lamb, in these demands.
Sue Williams 12:50
I think that’s a tricky one. You kind of think, maybe in much bigger developments, you could certainly have at least 15%. But you know, if you’re doing a small development of 15 homes… What’s 30% of 15, Jimmy?
30% of 15 is about five; four or five.
Sue Williams 13:09
That’s quite a lot, because it’s only a small development. Developments might be really high-quality ones. That would make it quite difficult for developers, I would think, to make the kind of money they need to put those developments in place.
I think that’s one of the ones; it will certainly get a tweak, if not be kicked to the curb.
I’m just thinking back on the Greens… They’ve had a very chequered history, when it came to short-term rentals, because back in the day, when they were coming up with the legislation here, I think the big thing that was coming from the Greens was (and the Tenant’s Union), that they wanted the right for tenants to be able to let their properties on Airbnb, and they were very pro-Airbnb. I
‘m thinking of the MP for Balmain, who raised the whole thing… The Greens MP here in Sydney, pushing the idea of allowing Airbnb for everybody. And obviously, they didn’t realise that this was going to absolutely hammer the rental market and the people that they were representing, were the ones who were going to suffer most. Now they’ve realised; now they’ve done a full 180 on that and they’re saying “this is crazy.”
Especially in Melbourne, where you’ve got no restriction on short-term rentals at all. Basically, you’ve got to almost destroy the building twice, before the government will ever step in. And I don’t think anybody has ever been prosecuted there, under the laws that they have, even though as we know they have terrible problems. There’s some really nice buildings, in some really nice spots. For instance, you’ll get travelling football supporters coming into Melbourne and they’ll go “hey, look, there’s all these apartments available on Airbnb in this one building; let’s all go in there.”
And then what they end up doing is, they arrive on a Friday night, there’s no public space in the building (because it’s not designed for that), so they take over the lobby and have a huge party in the lobby. Can you imagine living in a building like that?
Sue Williams 15:32
It would be horrendous, wouldn’t it?
Yes. So obviously, the Greens have decided… I just wonder; I mean, maybe this is me with my glass half-empty head on… That’s one of the things that will be sacrificed, when they get to the negotiating table with the Labor Party, if it comes to that.
Sue Williams 15:52
Well, you never know, because Federally… I mean, the Greens got an awful lot of criticism, because they were holding back the Federal government’s huge housing package. In the end, they kind of won really important concessions for affordable and public housing. It’s great to have that other voice in…
For sure. And I have to admit at this point, I was one of the people who criticised the Greens Federally, for holding out for more, and they did the right thing. They’re in a good spot in Victoria, because they’ve got a new Premier and she’s just finding her feet. So there is a vulnerability there. and maybe, they will get more out of this than we imagine.
Sue Williams 16:37
When we come back, we’re going to talk about David Chandler’s iCIRT ratings, and how they are being kind of misused. That’s after this.
Sue Williams 16:54
We’re huge supporters of David Chandler, the New South Wales Building Commissioner and he seems to have achieved an enormous amount of change in the industry, in New South Wales. One of those things is by having an iCIRT rating for developers, so we can look at developers, we can look at the kind of developments they’re creating and thinking do we want to buy off the plan with this developer? Are they okay? Do they have a good track record for developing and for building? Are the buildings still standing; that kind of thing. He’s developed that iCIRT rating system, so we can see what kind of star developer we have.
We might go with a three-star developer, which might be a bit cheaper, or we might choose a five-star developer and know that everything (hopefully), is going to be okay. Or we might look and see there’s a developer without any iCIRT rating at all and then we will be much more cautious about buying an apartment with them. I mean, it’s a great system. At the beginning, a lot of people were saying well, is this really going to work?
But we have to say this really does work, because both Jimmy and I… You probably remember Jimmy, a few weeks ago, we went and looked at a new building and we were talking to one of the development people there. I don’t know who they were really; they were kind of hired by the developer, to show people around. We said to him “has this building got an iCIRT rating,” and he said “yes.”
Sorry to correct you, but he offered the information.
Sue Williams 18:25
Oh, that’s right. He said “and in addition, this building has a five-star iCIRT rating. And we both said “really?” I think there’s only one five-star rating that has been issued to Mirvac, I think.
I think LendLease might have one, as well.
Sue Williams 18:45
Appraisers Property might have one too; these really big top- notch developers. So we were kind of surprised, because it was a much smaller developer. He said “David Chandler was here the other day,” and we said “really?” And then I think you said something Jimmy, about knowing David Chandler.
I said “hey, I know David. I’ll give him a call and ask him what he thought of the building.”
Sue Williams 19:09
And then the guy immediately blanched; he stepped back a bit, and said “actually, on second thoughts, it wasn’t David, it was his his Deputy.”
Whom he named; he said it was Matthew Press. I said “yeah, I know Matt as well. I’ll give him a call.”
Sue Williams 19:31
And then when we came back home, I checked the iCIRT page, to look at ratings and lo and behold, the developer was nowhere to be seen. And then I emailed the developer and said “is it true you have this?” There was silence for a while and then they finally came back and said ‘well actually, no.’ I said “but your representative at your site, insisted this was true.” They said “oh no, he must have got confused, between an iCIRT rating and when they issue The Certificate of Occupancy.”
That was the weird thing; he came out with that. We didn’t say anything about iCIRT.
Sue Williams 20:10
He wouldn’t have just told us; he had no idea who we were. So he was obviously telling everyone and other people may have been impressed by that and may not have checked. So if anybody’s in any doubt that this iCIRT rating is really working, and is really as sexy, as many people say it is, I think there is no doubt whatsoever now, because developers are actually pretending they have one, even when they don’t.
I’m just looking at the iCIRT page, which is in the Housing and Construction Building Commissioner page, on the New South Wales Government website. How do they decide on the iCIRT? This is one of these things that really annoys me, because they’ve decided to list all the criteria by which they judge a developer or a building.
They’ve had it so that the six criteria all start with C, which is very clever and very stupid at the same time. So the six things are capability, conduct, character, capacity, capital, and counterparties. Right… What does that mean? Capability I guess, means that they are able to do the building that they say they’re going to do. Conduct that is, how they’ve behaved in the past, maybe. Character; have they ever been to prison, or run away to a foreign country, when people tried to get their defects fixed? Capacity; is that different from capability? Capital; have they got enough money? Counterparties; do they have any dodgy friends, who’ve run away to foreign countries, when people have asked to have their defects fixed?
Sue Williams 21:54
I would never have been able to guess what counterparties were. I thought it meant do they have lots of people who have parties, and they’re a bit wild and they dance on the counter?
That was my second choice. So I mean, come on, guys; we don’t need to have everything starting with a C. How about putting something on your website, so people can actually understand what it is that you’re going on about? I mean, really…
Sue Williams 22:25
They took advice from a web designer, who said “this would look good,” but the whole idea is that it makes sense to people.
They’re problem sitting there in their office, going “what’s the difference between capability and capacity?” And somebody’s gone “it doesn’t matter; nobody’s going to pay any attention to this.” Well, hey guys, we’re paying attention. Get yourself sorted out. For goodness sake, it’s too important to mess around with stupid alliteration. So anyway, the point we’re making is it’s working, because developers are claiming they’ve got it, when they don’t have it.
I remember, right when this development started, I said to them “are you going to apply for the iCIRT thing?” They said “no, because we’re pretty confident in our product. It’s a big process and it’s an expensive process and we really feel we don’t need it.” So now they’ve decided maybe, they do need it, so they will just say they’ve got it, which is very, very naughty of them.
And I wonder how many other people in the industry across New South Wales are saying “just tell them we’ve got five-stars.” I have a feeling that having been alerted to this, the Building Commissioner’s office is checking out some of these people. They’re not putting it in their literature; they’re not putting it on their advertising. That was one of the things we said… “You’ve got a billboard outside, saying that all these apartments are for sale; why don’t you put your five-stars on there?” And the guy said “oh, yeah, well look into that.” Well, yes, the reason there’s no five-stars on there, is because they don’t have them.
Sue Williams 24:07
Interesting. I mean it’s funny, because if he had said four-stars, we both wouldn’t have been so amazed. We might have accepted it, but five-stars?
I just remember the look on that guy’s face when I said “oh, yeah, I know David Chandler; I’ll give him a call.” He was going backwards so quickly, you could almost hear the beeps. When we come back, we’re going to introduce a new feature, which we hope works for our listeners, which is ‘lock up and leave.’ We’ll talk about that when we come back.
Sue one of the things in our recent survey that we did, a recent poll about what people like about living in apartments, was security and the ability to lock up and leave and go on holiday. Provided you haven’t left any pets inside, come back and find everything pretty much the same as it was when you left. We’ve got another website, which is called mildrover.com. It’s a travel website.
You do a lot of travel writing, and have done a lot of travelling. I, a bit less so, but I’ve still dabbled in that area. So we’ve got this website, which basically, is a mixture of stuff that we’ve done, and stuff that we’ve seen, and special deals that have come up. They come across our desk, and they come across our desk every day. So we’re going to start this thing… Once a week, one of us is going to pick a favourite trip off the mild rover website. So this week, it’s you Sue. What have you chosen?
Sue Williams 25:51
I look through all the deals that there are, and I really liked a deal from Luxury Escapes in the Kimberley. I mean, I just adore the Kimberley; the only problem is, it’s really expensive to get there. I mean, as you know, it’s really far north of WA and it’s a pretty remote place. It’s quite hard to travel around. I’ve been to the Kimberley many times and I’ve just adored it. There’s some amazing places there. And now as well, there’s some real luxury places too. There’s lots of fabulous lodges you can stay at. I think the first time I went, we were staying in little motels and you had to double-lock the door, because it was a bit creepy.
Somebody walked into our hotel room once.
Sue Williams 26:33
They did. Nothing happened; they just got the wrong room, but it was bizarre that they had the key to our room. There’s fantastic places, like Berkeley River Lodge, to stay there. And the scenery is just spectacular. I mean, it’s the real wild frontier of Australia. I think sometimes, Australians go there much later in life, when we’re a bit cashed up, but we’re kind of too old to climb the hills and go up and see all the secret Aboriginal art galleries; the fantastic rock art. You have to clamber up the hills. Sometimes, you go out on small boats, and look at the wildlife and marvel at some of the incredible ochre scenery. I think some of us leave it too late and I kind of think it’s great to go when you’re still very able and you can walk; you can climb. I just saw this deal and I thought wow, that’s pretty good. The deal is actually five nights, from just under $10,000.
Right. And this is in the Berkeley River Lodge, which looks pretty fantastic from the pictures.
Sue Williams 27:46
Absolutely and it includes domestic flights from Darwin. They say the deal was valued up to $16,250, so it’s quite a big chunk off. I mean, they’re pretty good about putting together accommodation packages and getting good deals. And I just think going there is one of the most extraordinary adventures you can have in Australia and I would really heartily recommend it. The good thing is, if you live in an apartment, you can lock up and leave, and you can go there and it’s just absolutely amazing. It’s the exact opposite of living in an apartment in Sydney or Melbourne or Brisbane.
Except you’re in a really comfortable lodge.
Sue Williams 28:33
That’s right, but you’ve got a million stars, rather than your four–or-five iCIRT star building.
Good callback, Sue. Our website, mildrover.com is for the seasoned traveller, for people who’ve been there, done that and would like to go back and do it properly. And I think that really fits the bill. So we are going to do this once a week, briefly; just say “hey, check out what we’ve got on that website,”because there are some great deals there. There’s some terrific stuff coming through.
Sue Williams 29:17
As you know, we’re really mad about travel at the moment, because we just want to get out and it’s just fantastic that the world has opened up and Australia has opened back up again. If you can get it for cheaper, then even better, with the rising cost of living.
Right. Well, Zoom is about to kick us off, because we’re too mean to have a proper subscription and we’re using the free service. Thank you, Zoom. It’s been great talking to you, Sue.
Sue Williams 29:47
Fantastic. Thank you. I miss you, Jimmy.
Same here. We’ll catch up very soon, I believe, but if anybody’s interested in the story about the Victorian Greens, that’s on the website. I’m writing a piece about the iCIRT five-star ratings for my column this week, in the AFR, which will also end up on the website next week. So plenty for you to read and when you’ve done all that, get over to mildrover.com and plan a holiday. Do it now. Thank you very much, Sue, for coming on Zoom and thank you all for listening. We’ll talk to you again next week.
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, 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.