In the same week that we get a new property services commissioner in NSW we hear that the first building construction certifier in NSW has been been sin-binned for a year (at least).
What’s the connection? With the new commish appointed to do to real estate agents and strata managers what David Chandler has been doing to the building industry, maybe he too will be kicking ass and taking names.
Or will he? As we discuss in this week’s podcast, for all their faults (which are many and great), strata managers and RE agents haven’t been destroying people’s hopes, dreams and finances to anything approaching the extent and frequency of dodgy developers.
So what will he be fixing that is seriously broken? In the absence of a clear answer, we’ve speculated (which is much more fun, anyway) about what most needs attention in property services.
And we ask what the Real Estate Institute of NSW is going to do, having walked away from the advisory committee, now that one of their own has been given the top job.
FYI: The question was answered here, a couple of days after we recorded the podcast.
Talking of David Chandler, we discover who is the first certifier to be struck off under the NSW Building Commissioner’s “get tough” regime, and why they’ve taken away his clipboard.
And we take a look at vertical retirement villages that allow oldies to go up in the world rather than suffer a steady decline in less-than-splendid isolation.
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TRANSCRIPT IN FULL
We have a new Property Services Commissioner, in New South Wales.
Appointed late last week.
I don’t know much about him, do you?
I know a little bit about him, because he sent me a press release.
So, we’ll be having a chat about that. We’ll be talking about a certifier who has been delisted.
That’s probably the first one for a long, long time, isn’t it?
Yes. I know a couple of them have resigned, but you’ve found a story about someone who has actually been struck off. And, we’ve got one for the oldies; luxury retirement apartment blocks. The old vertical village, becomes a retirement vertical village.
And, they look pretty amazing!
I can’t wait to get old!
You don’t want to rush that, trust me! Okay, I’m Jimmy Thomson, and I write the Flat Chat column for the Australian Financial Review.
And I’m Sue Williams and I write about property for Domain.
And this is the Flat Chat Wrap.
So, who is the new Property Commissioner, and what will he or she do?
Good question! His name is John Minns. According to the press release we got from Fair Trading last week, he brings more than 25 years experience as a real estate business owner and agent. Most recently, he was managing director of Canberra-based Independent Property Group and is a previous director of the Academy of Real Estate Services, where he worked to improve professional development and training opportunities. That’s according to the Right Honourable Kevin Anderson, who is the Fair Trading Minister. Our regulars will remember that a few weeks (or maybe a month or so ago), they announced this expert panel for property services and it’s full of people in building management, strata management, rental people, real estate… I think they’ve got short-term rental people in there, as well. They don’t have tenants and they don’t have apartment owners.
So, they don’t actually have any consumers of these services?
There’s no consumers. I mean, what would they know about living in…
That’s a bit weird, isn’t it? If you’re wanting to improve something, wouldn’t you actually liaise…
With the people who are the victims?
Well, that’s right, because they’re the people will be able to say, ‘these are the areas in which we need improvement,’ surely!
You would think; but in their wisdom, they chose not to do that and then I don’t think this even qualifies as the first hurdle. I think they were all on the starting block, when the Real Estate Institute of New South Wales said ‘hang on a minute! This is not going to be independent. This is coming under Fair Trading! We are out!’
Ah, they thought it was going to be an independent body, because I guess, discussion had been around that. But, then they kind of thought it’d be easier to put it under the auspices of Fair Trading.
Since Fair Trading look after real estate agents and building managers and strata managers and, they have their rentals laws and everything. I don’t know; I’m going to check. By the time you hear this, Tim McKibbin, of Real Estate Institute of New South Wales may have decided that he wants to play, afterall. We’ll know about this; read the piece in the Flat Chat website and I will have an answer on that. It seems like a big gap in their expert panel, that they don’t have realistic…
I mean, this guy’s obviously from the Academy, which I’ve never actually heard of…
I think it’s like the ‘Ponds Institute.’ Remember that?
Yes, I do! Where they all wear white coats and pretend to be scientists.
They walk around, making cosmetics and face cream.
Maybe, we’re being unfair to him, but, if he was based in the ACT… Is he still based in the ACT? I mean, this is about New South Wales.
It’s just over the road, isn’t it?
Yes, but conditions change from the ACT to NSW.
They’re in a terrible situation there, because they don’t have any comeback for defects in apartment blocks, as they’re discovering. I think that the fact that he was in the ACT is less significant than the fact that he was very prominent in real estate. The real estate people can go ‘alright, we’ve got one of our own in there,’ so maybe, they’ll come back. But, what are they gonna do? What’s it all about?
That’s what I was gonna ask; well, I did ask you!
I’m repeating your question for you.
Oh, okay, thank you.
It says here, ‘the Property Services Commissioner will reflect the successful model taken by the Building Commissioner, David Chandler, to reform the building and construction sector and work with the Property Services expert panel (the one we were just talking about), and the New South Wales Government to drive positive reform to support consumers and streamline services delivered by the regulator, to agents and property service professionals.’ So, they have said (‘they’ being the government), he’s basically going to be to real estate and building management, what David Chandler is to building construction.
Okay, and David Chandler, as we know, comes under Fair Trading and he’s had enormous effect on the industry. He has been given lots of legislative power to do certain things, hasn’t he? Is this Property Services Commissioner going to be given those huge laws to support him and any work that he wants to do?
I don’t know, but it was interesting, because last week, when I got this press release, I emailed the Fair Trading office. It’s actually ‘Better Regulation and Innovation (Fair Trading).’ I sent a note to them and said “so, this guy is going to do reforms in the same way that David Chandler has in the building industry? What is so wrong with real estate and the professional services in property, that this new chap is going to be doing the same thing? What are the problems that he’s going to be fixing?”
Okay, and what did they say?
They’re going to get back to me. I think they were a bit shocked. I think they wanted to say ‘hey, we’ve got another Commissioner; we’ve got another David Chandler… We’ve got him sorting things out and everything’s gonna be better for everyone.’ You say ‘well, better than what? What’s the problem that you’re fixing?’
Sure, because we all knew the problems that the Building Commissioner was going to have to face, but with a property’s services, I don’t know. I mean, under-estimating prices? That’s really difficult, in such a rapidly escalating market.
But then, you should have a more flexible algorithm, basically. You should be able to say ‘this is a previous price. This is the price we expect on the current graph, but on future sales, it could go as high as this.’
I guess under-quoting is a huge problem at the moment, for people.
People are getting shocked, when they go in to buy property. The thing is, that people who have the figures; who are able to look at the graph… get the guy who did the curve for COVID. Get him to do curves, for highest prices. You know what I mean; they can calculate these things, to a reasonably accurate level. Are they choosing not to do so? Is this one of the things this Mr. Minns is going to fix? I think it should be.
And, we’ve had a number of real estate agents, being reprimanded by Fair Trading. Maybe more of them will be, or maybe, there’ll be harsher penalties against them for misbehaviour, or dipping into trust funds?
Well, they tend to get jailed.
Maybe, they’ll catch more?
Well, I mean, they could certainly tighten up the rules. I guess a committee; well, there’s no real estate… At least the Real Estate Institute isn’t there at the moment. It’s the old question, how do you get turkeys to vote for Christmas? Are they going to come in and say ‘we need to be tougher on ourselves?’
Well, that’s right. If you don’t have any of the consumers in the same room, telling you where the problems lie and what to fix, how do you actually know what’s going wrong? I mean, it does seem a bit like a PR exercise, doesn’t it?
It seems very like a PR exercise. Since there’s nobody there to hold the blowtorch to their bellies, then there’s every chance that they’ll meet and do little tweaks of little bits of legislation, and nothing will really change. That’s always the danger with these committees. David Chandler has been so effective, because he is not answerable to a committee. He’s been given the ammunition and the weapons to go and fix things, partly because the problems are so bloody obvious. With these guys, somebody needs to be in there, asking questions. Under-quoting is one thing. The other thing is transparency. If a real estate agent knows that a building (for instance), has already been tagged by David Chandler as being defective, then that real estate agent should be told, they have to tell the purchasers.
Yes, because we had one instance recently didn’t we, where an apartment was being listed, even though the building was denied an Occupancy Certificate. Do you remember a few years ago, the law changed, to say that real estate agents had to tell potential buyers if the home was the subject of a horrible murder, as a result of somebody buying a place and then discovering that someone died there?
Is it the case that maybe, real estate agents are expected to reveal these things, but developers don’t have to? In which case, developers are the ones who need to be brought into line.
You kind of think real estate agents should be reading the newspapers. They should be reading these reports; they should have Google alerts, when the Building Commissioner puts any orders on buildings in their areas.
That was their answer. You know, when people said you should have been telling people, they were saying ‘well, we didn’t know.’ That’s just a lie.
That’s just ridiculous!
If you’re that incompetent, you shouldn’t be selling anything, to anyone.
You’ve got a huge building going up in your constituency and you’re running adverts for the building….Surely, you would know if there’s suddenly a massive problem with that building?
And the other thing I think could be very significant, is embedded networks.
Do you want to just tell us a little bit about embedded networks? For those who…
Who missed the last year of this?
I mean, it’s a really critical issue.
What happens with embedded networks is that, let’s say, every apartment block needs to have a storm drain tank, because apartment blocks tend to put a lot of concrete, where there used to be soil and grass… The rain comes down, it sits on the concrete; it all tends to get concentrated into one area and go into a storm drain, which can cause big problems in the drains. Every building has to have a storm drain tank, that’s just standard practice. So, along comes the storm-drain-tank-people (which is a bit of a specialised part of the building process), and they say to the developer ‘hey, we will install the storm drain tank for free, if you persuade the owners to sign up to a very long -term maintenance plan,’ which starts expensive and gets more expensive every year. The developer goes ‘yeah, I can do that.’ Even though the law says he or she can’t sign a contract that’s valid beyond the first AGM, they turn up at the first AGM, with the strata manager and a real estate agent in their shiny suits, saying ‘yeah, this is standard practice; just sign this contract.’ As soon as the Owners Corporation agrees to that, then it’s legally binding.
I think owners just don’t quite know what’s happening at that first AGM and they think ‘well, stormwater drains; of course, we need tanks and things. Obviously, we need to have these things, otherwise, we’re going to be deluged, every time it rains.’ They’re going to agree, but it’s an absolute rort, isn’t it? Normally, developers should be providing it.
They’ve paid for it already.
Exactly! So, you’re basically paying for basic services, that should have been provided for free in the first place.
It’d be different if the developers were saying ‘we have saved $30,000, on this stormwater drain, so this is how much is coming off the price of your apartment.’ They’re never going to do that. It’s a rort, totally.
And then, these contracts; these long-term contracts, wherever they’ve been compared to other contracts, they’re nearly always overpriced, because it’s in the interest of the company to try and push for as much money as they can get.
Your stormwater drain tank is there; you’ve got your maintenance contract and if it’s overpriced, you find somebody else to maintain it. At the next AGM, you put up a proposal ‘can we change the company, because these other people will do a better job, for less money?’ So you know, it is a total rort. It’s complicated slightly by things like electricity. An energy provider will come in and offer a similar deal and even come in and say ‘look, we’ll put electric vehicle charging stations in your building, but you’ve got to get the building to sign up, so that we are the energy provider,’ which sounds like a similar kind of dangerous area, except that the law says that each individual owner has the right to change their electricity provider. So, there’s a safety net there. It can mean that the building can get a very good deal on this as a whole and individual consumers can get a very good deal on it, but once that deal ceases to be a good deal, they can go and find another provider. That’s fine, but it does muddy the water on the embedded network thing. In fact, I would say to John Minns, if you’re listening, put that number one on your agenda for your first meeting, with your expert panel. What are we doing about embedded networks?
And then really, they need to have the consumers in there, to tell them about their experiences of embedded networks, anyway!
Yes absolutely, but I have a whisper, that Fair Trading is already looking at this.
Oh, good. I think they’ve done some work on it in Victoria, haven’t they? The Victorian Government. They haven’t really done very much in New South Wales, yet.
And we know that up in Northern New South Wales, some developers are trying to lock people into long-term building management contracts.
Which is something we thought we’d got rid of, years ago.
You wouldn’t want to get between a developer and a bucket of money, would you? Alright, when we come back, you’re going to tell us about this certifier, who has been delisted. That’s after this.
Sue, tell me about this certifier, who has been struck off.
New South Wales Fair Trading has been investigating a certain certifier in Sydney, after the Building Commissioner reported him for issuing an interim Occupation Certificate, for a building in Auburn. Do you remember the one that he’d said was the worst building he had ever seen? It had bad waterproofing, it had fire defects; it was riddled with problems and this man, Jason Storer, a certifier at AED Group… It was said that he’d issued these certificates on behalf of the building, so New South Wales Fair Trading disqualified him from being registered for a year. Banned him for 12 months.
From issuing any more certificates.
And at the end of the 12 months, apparently, he can apply to re-register, but has to satisfy them that he has learned the error of his ways. We have to say, that he is appealing this decision.
In NCAT, yes, absolutely. I guess he got lots of criticism, because he issued those certificates, then the developer was able to start selling apartments in these two… They’re quite big; 16-storey apartment buildings in Auburn.
It also prevented people from invoking the sunset clauses on those apartments like they could have, theoretically. In the absence of an Occupancy Certificate, they could have said “okay, we’re out. Give us our money back.”
Yes, ‘we want to move on.’
According to the summary of disciplinary action, it says he engaged in ‘unsatisfactory professional conduct, specifically issuing three interim Occupation Certificates, which authorise the occupational use of a building when lifts in two towers of the building were incomplete and posed a significant hazard to the health and safety of the occupants of the building.’ Now, his defence is that he was basing his certificates on certification that had been provided to him, by other professionals.
The other trades. Then, he just looks at the paperwork.
He said that the fire department came in and had a look at the fire safety issues and they didn’t raise any concerns. This is the old thing that has been the problem with certifiers all along, which is recently, they wouldn’t even set foot in the building. They sat in an office and they’d look at the certificate from the plumber. It said that the plumbing is okay, and they take it that the plumbing is okay. The electrical fitter would say all the electricals are okay. They would never set foot in the building. I’m not saying that in this case, that’s what happened or didn’t happen, but it’s a problem endemic in the certification trade, that the certifiers are not actually checking. This is what Jason Storer said; that was his defence. He was just making sure there was a certificate for each individual component. He didn’t have to go there and say ‘that lift isn’t working, therefore, I’m not going to issue the certificate.’
So do the trades actually certify their own work?
So, it will be the plumber who put in all the water systems who will be saying ‘yes, I’ve done this job well. I’m fine,’ and then that report would go to the certifier, who would say “okay, fine.” So, at no point is there an independent person coming in, looking at all the issues and saying “well, yeah, this has been done to scratch,” or “this hasn’t been done at all well?”
I mean, that is basically it. I don’t know what the form says, but at some point, a piece of paper goes from the trades to the certifier and on it, it says ‘I have completed this work satisfactorily.’ Instead of the certifier jumping in their car and driving to the building site and having a look around and going ‘hang on; this isn’t good,’ they just go ‘tick. Certified, certified, certified.’ What has happened with David Chandler coming in, is that other trades and the potential owners of the apartments are saying to him ‘you need to get your team down here to look at this building, because it’s not up to scratch.’ With this one, David Chandler said it was the last straw. This is the straw that broke the camel’s back, where he decided we need really strict laws and the ability to come in and issue notices on these buildings. Otherwise, this is never going to change.
Because, you have to hold somebody responsible for this, don’t you really? Otherwise, it will just continue and it’s a terrible situation. I think it was when private certification was introduced; was it 10 years ago?
And this has been a problem that has plagued so many buildings.
Back in 1998, the developers went to the government and said ‘look, we cannot build buildings at the speed you want us to, because there are these paper-shufflers and pen -pushers in local councils. They’re not giving us the certification quickly enough to move on with the jobs.’ So, the genius government at that time (which may have been Labor)…
It was Bob Carr, wasn’t it?
Yes. They said ‘right, let’s make it that the developer can hire the certifier.’ Now, we don’t have the local council going along at their speed; this goes at the developer’s speed. The developers immediately (not all of them, but some of them), got their favourite certifiers and said ‘oh, by the way, we’ve got another half-dozen blocks going up and if you want to be the certifier on those blocks, you’d better certify this block.’
I think David Chandler is looking at situations where a developer has done bad work in the past and then matching it with certifiers who have certified bad work and whenever the two come up together in his books, he’s saying ‘okay, alarm bells are ringing. I’m going to go and check this.’
Yep, it’s a big old Building Commissioner Swiss cheese, where if the developer, the architect and the certifier and the engineer…
And the builder…
The holes line up and there’s a big hole right through the Swiss cheese, David Chandler’s going to come charging through that hole, saying ‘right!’
Is that your analogy, or is that his?
The Swiss cheese? It’s actually your brother’s.
Yes! Your brother who works in Occupational Health and Safety. He talks about how you can have different holes in the process and the process continues, but when the holes line up, then you’ve got a problem.
Well, thank you, Steve, for that!
Well done, Steve, you finally get a mention on the podcast. The cliche these days is a perfect storm, where you’ve got high winds and heat, whatever. I like the Swiss cheese. I do find that when I get Swiss cheese, I check to see if there are any holes that go all the way through. But, that’s just me.
And, when we come back, we’ll be looking at apartments for retirees.
Yes, sounds fantastic. I feel like I want to retire, already.
It sounds like an oxymoron; apartments for retirees, because we tend to think that older people will tend to not want to live in apartments, but we’ve been finding out for the last 20 years that actually, more and more do. Why would retirees want to live in apartments anyway, Sue?
Well, they’re getting sick of doing the gardening; they’re sick of doing all the maintenance. They want an easier life, so naturally, they start drifting towards apartments and they often want to spend (in normal circumstances), a big part of the year travelling, as well. It means that they can lock up and leave, so apartments are actually perfect for retirees.
And, the security?
Yes, the security.
Yes, that’s right. Lift straight up to their apartments, from the carpark.
And, no stairs inside the apartments.
Yes and often, a lot of the buildings which have been designed specifically now for retirees, have lots of landscaped gardens. They might have vegetable beds, where they can do a bit of gardening, there as well. They often have big courtyards, too. You kind of think that maybe, retirees will want small apartments, but they don’t. They all want two or three bedrooms, because they want their grandkids to come over and stay. There’s lots of these retirement villages now popping up (well, retirement blocks), just aimed for retirees and the facilities in some of them, are just incredible.
You’ve got a pool, a gym, a spa, a yoga room. Some of them have got card rooms, bridge rooms and somebody who’s in charge of organising activities and events for them. You know, maybe wine tasting, a book club; all that kind of thing.
So this is somebody hired, presumably, by the building manager?
Or, the developer, from the very beginning. What’s different about these buildings is the developer develops them, but then also manages them, but at the same time, when you decide you want to leave (or maybe you die) and you move on somewhere else, you sell back to the same developer and he or she resells it. Sometimes, you receive the capital appreciation and sometimes, they buy it back at the same price you bought it. So, that’s the regulations in New South Wales; they were all changed a few years ago, to make it much more transparent. The difference with these is, instead of strata levies, you pay a monthly management fee and that covers nearly everything, except I think, your electricity use and your internet. It covers your land tax, it covers your rates; it covers all those kinds of bills and it also covers all the services that you’re going to receive. Some of them, they do laundry for you and that’s part of the management fee.
Is there a care factor in this? I mean, in terms of, is there an on-site nurse?
There often is, in some of them, yes. In a couple of new ones coming up, they have a care facility as part of the building. So, you don’t actually have to leave, if you do get sick and you can’t look after yourself. You just move to another part of the building, so you’re still in your home environment, which is very attractive for people as they age.
They’ve till got the same neighbours around them.
Yes absolutely, and the same support.
Is it a concern that you’re selling the apartment back at the same price you paid for it? It’s not going to go down in value, is it?
Well, you don’t think so, no. But I mean, in the old days, I think before all these changes came about, people would have to sell their apartment when they left, but they had trouble selling it and maybe a developer would say ‘I’ll buy off you, but only when somebody else comes in to buy it.’ Now, they’re obliged to buy it very quickly, as soon as somebody puts it up for sale. It’s kind of give and take, really. It’s a different situation to buying a regular apartment. You know, it’s a really interesting trend, because baby boomers now (which is what this is aimed for), are pretty rich from the property that they’ve owned in the past. I mean, previous generations live in little retirement villages out in the country, really, because it’s much cheaper there. They might be a little bit more isolated, but these apartment buildings are being put up in the middle of the cities. On the North Shore of Sydney, or the Northern Beaches, or in the South, or in the Eastern Suburbs. They’re the places where people want to live. Maybe, they’ve lived there in a big house and they wanted to downsize into the same area and they’ve got the means; they’ve got the money to be able to do so now.
Look, it makes perfect sense, doesn’t it? I think there are apartment blocks that are almost organically becoming retirement homes, in a way.
Well, lots of downsizers are move into them.
And they tell their mates and gradually, there is a shift in the demographic, I’d say in our apartment block, probably at least 50% of the residents are over 50, maybe even older.
And because there’s a concierge; a 24-hour concierge, that’s a great comfort to people who may have emergencies, or may have falls, or something like that.
Well, we know there’s one lady who’s getting on a bit and if there’s ever a fire drill, the concierge goes up to her apartment and takes her arm and takes her down; gets her out of the building. It’s interesting. This is the boomer’s future. Nice apartments, nice people, well looked after… Perfect for a bit of a social life; pottering around.
And you don’t have to go and live with your kids, because you can’t afford anywhere and you don’t want to be on your own. Maybe, there’s an argument to be said, that older people should be surrounded by young people, to stay young, and there should be a real diverse community. But, I’ve spoken to a lot of people living in these and they say it’s fantastic, living side-by-side with people of a similar age, because you have similar interests. There’s no chance that an apartment next door is going to be rented out by an Airbnb party crowd.
You probably don’t have noise issues, nothing like that.
They’re a bit deaf anyway, so you can’t hear.
It seems a really fantastic solution for old age. I mean, we recently went to see a friend who had rebuilt his house to cater for him when he was older, but actually, I’d much prefer to be in an apartment building, with lots of people and help always at hand and spending time, swimming. I’ll have to learn how to play bridge, I suppose. I’ve never been able to do that, but it’s much better than the regular kind of retirement place.
There’s that lovely ad that was running; I can’t remember what it was for, which shows it wasn’t that effective. It was the young, dark-skinned woman with the bubbly hair, shopping for the old Asian lady, who lived next door. It was all about looking after people; looking after each other in the community. She’s done her shopping and got her weird Asian food for her and then, a couple of hours later, she opens her door and I think there’s some biscuits or dumplings or something, that the lady had cooked for her. In a building like that, you’d like to think that kind of thing would happen, a lot. People looking after each other, like when we were in lockdown and somebody gave us three tonnes of biscuits.
It was fantastic!
We still haven’t lost the weight. Thanks Sue!
And thank you all for listening. 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 podcast, 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.