Podcast: How green strata can be a good buy

The Flat Chat Wrap is back with a look at sustainable apartments and the reality of spending a bit more to make a unit cheaper to live in.

The latest message is that even if the average ‘green’ unit costs $11k more, it will save you heaps of money… and salve your conscience too.

We also uncover two worrying trends in one of our states where developers are loading up strata committees with their employees – ignoring any allegations of obvious conflicts of interest.

Meanwhile, apartment owners seem blissfully unaware that there may be any potential problems. “They say they’re going to take care of defects and it’s in their best interests to do so, isn’t it?”

Well, is it?  Or are there some developers who are more concerned with profits than their reputations – since they can change their names any time they like?

And finally we look at the conundrum of increased immigration putting pressure on the housing stock versus the need for skilled migrants to build more apartment blocks.

Is temporary accommodation in migrant camps the answer? Make them attractive places to stay – they don’t have to be like prisons. And would it be any worse than migrants having to share a two-bed flat with a dozen other renters?

That’s all in this week’s Flat Chat Wrap.

Transcript in full

Jimmy

Today we are going to talk about arithmetic.

Sue

Arithmetic?

Jimmy

Yes, I was listening to a report on the radio and it was talking about the number of people who have voted early up until now.

Sue

Oh right.

Jimmy

In our election here in Australia which I think we’re choosing the person who’s not going to let Donald Trump make us the 51st state after, maybe the 53rd after Canada and Greenland. Anyway, they were saying that the 4 million people have voted early.

Sue

That’s a lot, isn’t it?

Jimmy

It is, compared to 3 million people last year and the ABC announcer who really should know better said that’s a 125% increase. No it isn’t. It’s a 33% increase.

It’s an increase of one-third of the original figure.

Sue

That’s true, that’s very true.

Jimmy

So I don’t know where he got this 125%.

Sue

I hope he’s not the one sorting out the sausages for the sausage sizzle.

Jimmy

Well yeah, you want to know you get your right proportion of sausage to sizzle on that. Apart from that, today we’re going to have a happy story about sustainable apartments. We’re going to talk about developers, especially in Victoria, who are keeping control of their buildings in very sneaky ways and we’re going to talk about, we’ve got to talk about the housing crisis and the election.

It’s only a few days away. If you’re listening to this on Friday, it’s tomorrow, if you haven’t already voted early, among the one-third increase of people. I’m Jimmy Thomson.

I write about apartments for just about anybody who will publish my stuff and I edit the Flat Chat website, flatchat.com.au and I’m Sue Williams and I write about property for the Sydney Morning Herald, the Melbourne Age, the AFR and Domain. And this is the Flat Chat Wrap. Sustainable apartments, Sue Williams.

 

You’ve got a big story coming out in the weekend papers.

Sue

Mmm, that’s right. It’s about how there’s so many more sustainable green homes now on the market and lots of green apartments as well.

Jimmy

Right.

Sue

Because when I first mentioned this story to you, you said, oh it’s just about green houses, is it?

Jimmy

Yes, that’s exactly what I said, almost.

Sue

And no, it isn’t. It’s about, mostly about apartments. There’s lots of apartments now coming onto the market which have fantastic environmental credentials.

Jimmy

Right, because I was thinking, the other day we got a press release from somebody about the government, the federal government’s grants for batteries that they’re bringing in will have allowances. Basically it’s going to make them tax free or something. So there’s going to be incentives for people who’ve got solar power to put batteries in houses but not apartments.

So I thought, well once again, what really needs to happen, you know, the potential for apartments to become sustainable is huge, but once again the government doesn’t know how to deal with it because they’re not dealing with one person who can make one tax rebate claim.

Sue

And as well, a lot of it is about retrospectively fitting kind of sustainability into apartments. I mean, it’s great for new apartments which are sustainable because they tend to be designed to have lots of fresh air and light and, you know, their orientation is the right way, all that kind of thing. No gas, less energy use, new appliances.

I suppose it’s harder to retrospectively refit older buildings.

Jimmy

Yes, but even so, I mean, if it’s possible to put batteries in, if it’s possible to put solar panels on your roof and if it’s possible to store that electricity in the building, then they should come up with a way of doing it that doesn’t have to use this freestanding house ownership as a model.

Sue

Absolutely, because it affects so many more people really.

Jimmy

Yeah, now having said that, you’ve got good news.

Sue

Yeah, well the fact that there’s so many apartments now and they’re kind of being developed by maybe boutique developers. Like, I looked at one by HIP vs. Hype in Melbourne.

They’ve just got a new apartment development coming up. They’ve done about six of them so far. And in Sydney, the developer Mulpha is a big one looking after environmentally sustainable apartments.

They’ve got, in the northwest quarter, they’ve got an awful lot of buildings where they’re going to be running off 100% renewable electricity and having solar panels on the roof and great new, highly efficient appliances. And 70% of the area of northwest is greenery, so that’s fantastic to reduce carbon emissions. Lots of people are moving in there because they’re really concerned about the environment, especially if they’ve got kids.

Jimmy

People want to do something about the environment. I mean, but the problem is they just don’t know what to do.

Sue

Yeah, and it’s interesting with northwest because you’ve got a lot of families moving in there and they have things like composting activities for kids to teach them all about the environment.

Jimmy

Right.

Sue

And kids love it.

Jimmy

Yeah, of course. They love getting their hands dirty. Absolutely.

Sue

So yeah, so it’s just about the next generation as well. Whereas for us, it’s about anxiety about the world at large but also about saving money on energy bills. And they can, an environmentally sustainable apartment can cut those energy bills by 30 to 50 percent, which is amazing.

And then of course your apartment, when you’ve got those kind of things, there’s much a better chance of resaleability because people are always looking for future-proofed apartments as well. And many of those have got induction cooking so you kids are not exposed to gas. And lots of these places also have communal gardens and natural landscapes and NAFES high ratings as well.

So it was interesting, I was talking to the CEO of the Green Building Council of Australia, Davina Rooney, and she was saying that sustainable apartments are more expensive to build but then the savings can be huge in the long run. Right. She said they’re about eleven thousand seven hundred more expensive to build per apartment.

Jimmy

Eleven thousand.

Sue

It’s not worth a lot, is it really?

Jimmy

Yeah.

Sue

It’s just a drop in the ocean. But in total financial gains over a 30-year period, they can deliver nearly one hundred and eleven thousand dollars in savings.

Jimmy

Right.

Sue

And that’s through cheaper loans, lower energy costs and high appreciation and attracting a premium price. So yeah, it’s a good investment.

Jimmy

And people will buy places that the, you know, people are buying electric cars because, you know, despite all the negativity, especially from certain quarters of politics, electric cars mean you’re making a meaningful contribution to the planet, you know, and it’s just, it’s a feel-good thing. And when you think of the amount of money that people spend on the look of their apartment, you know, the colour schemes and the furniture and things like that, why wouldn’t they spend a bit more when they buy the apartment to get one that’s going to make them feel good about where they live for years and years and years?

Sue

And also feel good literally too, because, you know, they’re often much more comfortable to live in because you don’t have to have a heater blasting all the time in the winter or an air conditioning blasting all the time in the summer.

Jimmy

Yeah.

Sue

They can be, you know, really great temperature most of the year round with minimal energy costs really. Because there’s a new development of eight three-story townhouses in Hawthorne and they’re passive house certified.

Jimmy

Right.

Sue

So they’re designed to stay at 23 degrees, which is a really comfortable temperature, all year round in summer and winter.

Jimmy

Wow, that’s good.

Sue

And they’re going to be using in total 70% less energy than a typical home. That’s incredible, 70%.

Jimmy

Good. You know what I think would make a big difference to apartments is, I mean a lot of apartments have big balconies, which is good for temperature control, and big sliding doors. The trouble is with a big sliding door, if that’s your air intake for your flow-through, if you’ve got flow-through, it’s a kind of all-or-nothing thing, isn’t it?

I mean, you’ve got this big door that you’ve got to slide and if you only have it open a tiny amount, it whistles. What they need is some way of building a sliding door with a vent in it.

Sue

Oh, okay. But the vent doesn’t let in air?

Jimmy

Well, it does let in air when you want it to.

Sue

Oh, okay.

Jimmy

So you’ve got to do it in a way that still allows the doors to slide open.

Sue

Hmm.

Jimmy

Maybe I’ll make that my next project.

Sue

The sliding door.

Jimmy

I bet there’s one out there already.

Sue

I’m sure there is. Do you remember yesterday we were talking about, I was saying, wouldn’t it be great if they had made a little travel coffee machine that you could take on holiday?

Jimmy

An espresso.

Sue

Yes. And we looked online and yes, there was one and we’ve ordered it.

Jimmy

Yeah.

Sue

So yeah, most things have been invented way before we’ve actually thought of it.

Jimmy

Yeah, we’ve thought of it, it’s already happening. That is a rule of life. When we come back, we’re going to talk about an alarming trend, it seems, in Victoria for developers to maintain control of the buildings they develop in a very sneaky way.

That’s after this. There’s been a couple of interesting emails, posts on the flat chat forum from somebody really frustrated that, and I think you’ve encountered this in a couple of stories you’ve done, where developers are keeping control of their buildings. Now, we know that this goes on to some extent here in New South Wales, but it’s particularly bad in Victoria, mainly because nobody’s doing anything to stop it.

And you’ve got this weird situation in Victoria where they changed the law. It used to be you could have, I think, 12 people on the strategy committee, maximum. They changed the law to make it a maximum of seven, but the owners’ corporation can vote to have 12 if they want.

Sue

Right. And can they have fewer than seven or is that the absolute minimum?

Jimmy

Oh yeah, yeah, they can have fewer, but the minimum is one. And what has happened in some buildings is that the developer using proxies, using their direct contact with the purchasers, have said, oh, we’ll look after the building, elect us onto the committee. So they then hold the majority of seats on the committee.

Sue

Especially if they’ve got apartments that still haven’t been sold because they’ve still got the votes of those apartments too.

Jimmy

Yeah. And so then they can do lots of things like not being overly diligent in checking for defects and things like that and letting it all run out.

Sue

It’s just a clear conflict of interest, isn’t it?

Jimmy

Now, somebody wrote to me and said, what can we do? Can we expand the committee so we can get more owners on it? And my response was, no, you’ll just end up with more representatives from the developers.

So what the developers do is they say, we’re nominating this guy who’s our assistant CFO and we’re nominating this person who’s our head of marketing and we’re nominating this person who’s head of defects or whatever. And they come onto the committee and then they set the agenda for the building. And obviously, it is not in their interest to do anything that would affect the developer.

Now, you can say theoretically, the owners corporation can still say at a general meeting, well, we don’t want to do what you’ve told us to do. We’re going to do something else. Organising something like that is huge, almost impossible.

If the developer is sitting on the committee, if they’re the chair, if they’re the secretary, they can control the message that’s going out to people. They can demonise people who are trying to change things. They can avoid having things discussed.

And the thing is, the law in Victoria, there are two parts of the law. One of them says that members of the committee must act in the best interests of the building. And they should not be influenced by any other considerations, like, for instance, any financial benefit.

And the other thing is that the tribunal in Victoria can remove people from the committee. Now, putting my rumple of the Bailey hat on or wig on, I would say if you are an employee of a company and you are representing that company on the committee of a strata scheme, the conflict of interest is so obvious that it should not be permitted.

Sue

Yeah, quite.

Jimmy

You know, if you are an employee of a company and you’re on a committee, who is your allegiance to? Why are you on the committee? To influence decisions.

If you are influencing decisions, then who’s to say what motivates the decisions you make?

Sue

That’s right. So there should be a clear law that if you are an employee of the developer or have any financial dealings with the developer, you shouldn’t be allowed to be on the committee. Is that what you’re saying?

Jimmy

Absolutely. That’s what I’m saying. Yeah.

Now, there are some benefits to having a developers representative on the committee in a new building because they have insight.

Sue

Yeah, yeah.

Jimmy

But to have a majority of a building controlled by the developer is just asking for trouble. And for some reason, people in Victoria and strata seem to be defects blind. Like they just let things trundle on and trundle on until the defects period runs out.

And then suddenly they’re racing off to court saying, hang on, you haven’t fixed these defects. And at least we’ve gone some way down the track here in New South Wales into putting a process into place. For instance, in a new building that’s higher than three stories, the owner’s corporation is encouraged to hire somebody to do a defects inspection and the developer must pay for it.

Now, that’s very different to having a situation where the developer on a committee in Victoria is sitting there with a majority saying, oh, look, the defects situation is under control. Don’t worry about it.

Sue

Yeah, that’s right. And it’s funny, I’ve talked to people in Victoria who say to me, well, no, it’s great having the developer there and it’s great having his representatives there because he wants to leave us a good building and it’s in his interests to have a great building and leave a good legacy. Well, it might be in his long-term interest, but he might not actually realise that.

Lots of people are motivated by profits.

Jimmy

Yeah.

Sue

And it’s hard to say that developers are any different to most business people.

Jimmy

Any other corporation. Corporations are, their whole basis of their business is to make money for themselves and their shareholders.

Sue

That’s right.

Jimmy

That’s their number one priority.

Sue

But I’ve talked to so many people who just say, oh, no, no, no, I’m sure they’re doing the right thing. And it’s just this incredible innocence.

Jimmy

Yeah.

Sue

This terrible naivety, really.

Jimmy

And then you look at all these buildings, like the ones where they’ve put the cladding in and they’ve had to change the cladding and they take the cladding off and they find that the buildings are rotting because defects haven’t been fixed and water’s been pouring through and the timber frames are just rotted away. I mean, people putting the new cladding on some buildings are coming back to the contractors and saying, what do you want us to fix it to? Because it’s all just mouldy, rotten wood inside.

Sue

Is that just in Victoria?

Jimmy

I’ve only heard of that happening in Victoria.

Sue

Wow. That’s horrendous, isn’t it? So you think you’ve got one problem, but you’ve actually got many, many more.

Jimmy

Yeah. I mean, everybody, even in, I remember the former president of SCA in Victoria. I think she became former president because she said that to be a strata manager in Victoria, all you needed was a mobile phone and a steady pulse.

And the qualifications for strata managers there are very low. Anybody can start up. And of course, the first thing a lot of them do is get into cahoots with the developers because that’s where the money’s to be made.

Victoria really needs to have a hard look at itself. And there’s no point in anybody saying, oh, you guys in New South Wales, you know, you think you’re so much better, but look at all the problems you’ve had. Well, let me tell you, Victoria, problems are coming for you when all your new buildings run out of warranty and the defects start coming through.

When we come back, we’re going to talk briefly about the housing crisis, the election and all the plans to fix it. That’s after this. As I was saying earlier on the radio this morning, they were saying that a lot more people have voted early this year.

Sue

It’s interesting because they’re the decided voters, aren’t they? So maybe it’s just the undecided voters who wait till the end to see what other announcements there’s going to be and the last minute polling, who’s going to influence them. Whereas people who know who they want to vote for and who are quite committed to a certain party, why not go early?

You know, you miss out on sausages, but they’re not very good for you anyway.

Jimmy

Vegetarians vote early. I also heard this morning they were saying that Anglicare have done their survey of the affordability. And apparently if you’re on a job seeker allowance in Australia, there are only three rental properties, three rental properties that you could afford to rent.

Sue

In the whole of Australia?

Jimmy

In the whole of Australia.

Sue

Oh, my God.

Jimmy

Something like if you are on the aged pension, the basic aged pension, there’s only 67.

Sue

It’s just horrendous. And they might be kind of way out in regional Australia. They could be anywhere really.

Jimmy

They’re not going to be in Potts Point, that’s for sure. So, and I was thinking about the election. I mean, there’s a lot of people, apparently the same number of people, the same percentage of people who last time around thought that there should be more immigration, which is about 40 odd percent.

Now that same percentage thinks there should be less immigration because they see, and with some justification, if you are bringing more people into the country, then there’s more demand on housing, which means prices go up and availability goes down. But then the industry is saying, if you want us to build more houses, you’ve got to let us have more trained immigrants come in to build the houses.

Sue

Yeah, bricklayers and all the trades, all the skilled trades really they need.

Jimmy

Also, if you want the infrastructure that is required to service these new buildings, like roads and things like that, we need to keep taxes coming in, which means we need to have more people in the country working, which means we need to have more people injecting their energy and their money into the economy. It’s complicated, isn’t it?

Sue

Yes, maybe we should reopen the migrant camps. I was actually thinking that. Yeah, when they used to bring migrants over to Australia to repopulate or perish and they all stayed in those migrant camps.

Jimmy

No, not permanently.

Sue

No, they only stayed there for six months to a year, I think, and they were rehoused.

Jimmy

Maybe all those COVID camps that never got built.

Sue

All those Nissan huts as far as the eye can see.

Jimmy

Yeah, look, you know, some of those, a decently built migrant camp would probably be better accommodation than people having to, you know, have 12 people in a two-bedroom apartment.

Sue

Sure. Well, do you remember when in Britain in the 18th century, when there was…

Jimmy

Do I remember Britain in the 18th century? I’m not that old.

Sue

If you’d remember reading about it. Before they were sending over convicts, they would keep them in hulks, you know, the old ships, floating in the docks. And, you know, for them, they felt it was a great way of providing accommodation for people that they didn’t have room for in their prisons anymore.

Although, obviously, conditions were horrendous and lots of people died and terrible diseases and stuff. But these days, I mean, there were ships that were… There’s a hotel that’s a big ship in East Timor, off the capital.

And there are other places where they put ships in as hospitals. And I know this because I did a book about fistula, and they had this fistula hospital inside a ship and they used to float it around.

Jimmy

Right.

Sue

And they would have these fantastic surgeons go to visit all these really poor places.

Jimmy

Right.

Sue

And operate on people. So maybe we should be looking more at big ships.

Jimmy

Well, the trouble is that all these big ships are full of boomers spending their pensions travelling around the world.

Sue

All the cruising ships. Yeah. Sure.

Jimmy

I mean, there is one that is… Was it called the world?

Sue

World, yeah.

Jimmy

Which is actually permanent accommodation. It’s not a holiday thing.

Sue

Yeah, there’s another one which is permanent accommodation as well. I think it’s even more expensive. It’s incredible.

Jimmy

So yeah, what do you do? I think somebody, some clever person should put in all the things, all the theories by experts. You know, if we increase immigration by X amount, it will increase the pressure on housing by this amount, but it will also increase the tax income by this amount.

Put it all in a computer game, right? And then you say, and you can sit there and go, I think we should cut immigration by 20% and then see what that does to all the other columns. Somebody’s got that already.

Sue

Oh, of course. Yeah, sure. But you could probably see…

Well, I guess it depends what factors you factor in as well. Because some people might say, oh, great, look, some houses have opened up because we’ve got fewer people here. But then again, you’d have misery from the people who aren’t being allowed in, refugees, something.

So it all depends. Like with AI, as we discovered, it depends on your prompts.

Jimmy

Yes.

Sue

So if you’re doing algorithms and computer programs about housing, it depends on…

Jimmy

The questions you ask.

Sue

Yeah, that’s right.

Jimmy

And just before we go, slightly off topic, I’ve always been obsessed with the fact that Rose Bay was Sydney’s first international airport. And because the big flying boats would come in there and that captain’s…

Sue

Captain’s choice.

Jimmy

Captain’s choice flying is going to reintroduce the kangaroo route, as they called it, which was the flight on flying boats. It’s not going to be on flying boats, but originally you would fly to London on a flying boat and it would take 10 days because you’d land in places where they could land the boat, the flying boat, and everybody would get off and go and stay in a hotel.

Sue

Oh, God, that’s nice, really.

Jimmy

And then they would meet a plane. I think they got as far as Galle in…

Sue

Sri Lanka.

Jimmy

Sri Lanka or Colombo, Colombo. And then they’d get on the train to somewhere in India and then they’d get a BOAC… And a boat.

Yeah, and a boat. And they’d get on a BOAC flight to London. So now they’re doing this fantastic trip where it doesn’t take 10 days, it takes seven days, but you stop in places and go and have a bit of a touristy bit.

Sue

Wow.

Jimmy

Seven different hops, hence the kangaroo route because of the many hops that there were to get to London.

Sue

I mean, that’s a great way of travelling because it makes you realise that you’re travelling through all these countries, doesn’t it? Whereas if you’re just flying there in 24 hours, I mean, you just have no notion of it really at all.

Jimmy

Anything changing. So the cost of this thing is $49,000, this return trip. I think it’s a return trip.

I hope presumably they’re not just leaving them there. And I thought, wow, that is expensive. But then back in the day in 1947, on your 10-day trip to Britain cost £585.

Sue

And how much would that be worth today?

Jimmy

$35,000.

Sue

Oh, pretty similar.

Jimmy

So it’s not that, yeah. But nowadays you’re flying in comfort. They’re only going to fill half the plane.

It’s a nice big Qantas jet that they’ve chartered and everybody gets business class service.

Sue

So you’re thinking of doing that?

Jimmy

I think I’ll write to them and say, can I get a free seat? And here’s the other thing. It’s a luxury travel thing.

And they’re saying that they’re selling out. Selling really quickly. A lot of people with a lot of money to spend.

It is a great idea. I’d love to do it. I’d love to do it in a flying boat, actually.

That would be my dream. They still have flying boats. They still build them.

Sue

Sure.

Jimmy

Because Canada and the Bahamas, they use them a lot. It’s the easiest way to get from islands and things like that. And you can read all about that on our travel website, which is called mildrover.com.

Thank you, Sue, for coming down the corridor and talking about the good things that are happening in Strata. Yep, fantastic. And some of the bad things.

Sue

Thank you for talking about the bad things.

Jimmy

And thank you all for listening. We’ll talk to you again soon.

Sue

Wonderful. Thank you.

Jimmy

Bye. 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 podcatcher. 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. Bye.

 Transcribed by TurboScribe.ai.