This week on the Flat Chat Wrap, as we approach the election, we are looking again at the various parties housing policies and wonder what they really mean.
We recorded this before the announcement that young people will be able dip into their Super to help fund the purchase of a flat or house if the Coalition holds on to power, and the revelation on ABC radio that they couldn’t find a single economist who thought it was a good idea.
I mean, do young people have much in the way of super anyway?
Instead we focus on the previous offer to older Australians to downsize and put their profits into their super. As we discuss, with the gap between median house and apartment prices being almost double, that could be a big chunk o’ money.
Elsewhere on the pod, we are revisiting a couple of hot topics that have been covered in detail on the website. There’s EV charging and some disturbing information about how the strata Hub will work, for a start.
There another piece of bad news for the benighted owners of Mascot Towers and a revelation from the Forum about a 24-unit block that’s just been hit with a $2 million special levy for a balcony revamp that might not even be needed.
All that and more in this week’s Flat Chat Wrap.
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TRANSCRIPT IN FULL
It’s the last week before the election, and they’re throwing out policies. When I say throwing out; they’re spreading their wisdom.
So, we’re going to talk about some policies that are related to apartments. We’re going to talk about electric vehicles, because I listened into that webinar the other day. What else have we got, Sue?
We’re also going to be talking about the latest development in Mascot Towers, which isn’t so good, either. And, the case of an apartment building, which has just imposed a huge special levy on its residence.
Alright. I’m Jimmy Thomson, 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 it’s Sunday, and we’ve retreated to our little office, to get away from the smell of barbecue smoke from downstairs.
Because it’s such a lovely day. It’s a good BBQ day, really.
Whatever they’re doing; they’re either burning charcoal, or burning whatever they’re trying to cook and they shouldn’t be doing it. And you know who you are and you’d better stop. All right? Now, the election; well, we’ve got this policy, which is unfortunately about superannuation and downsizing. I say ‘unfortunately,’ because I don’t really understand superannuation, to be honest.
You better learn it quickly, now you’re getting older!
I should, but apparently, they’re going to allow anyone who’s over 65, who sells their house because they’re downsizing…
Anyone over 55, Jimmy.
They can then put $300,000 of the money they get from selling their big house, into their superannuation when they move into a smaller property, which let’s face it, often means apartments.
Absolutely. And they will have much more time, when they won’t be penalised on their pension, for having that extra money.
See, that’s the bit I don’t understand, is the pension thing. But anyway, it must be good news for potential downsizers, or the government wouldn’t be trumpeting it and the opposition wouldn’t be saying “oh, yeah, we’ll do that and we’ll go better.”
Well, the opposition has kind of said it’s a bit modest, really, and they say they don’t really know what kind of effect it will have. They say if you’re around 55, or just over; how many people who have families, would have kids out of home by then? Tanya Plibersek came out and said look, I don’t think I’m going to be an empty nester by then. I think my kids are going to be living with me forever and Bill Shorten chimed in and said the same thing. So maybe, it might be a bit of an empty promise for some people. I mean, for people without families; but they’re not classified as (technically) empty nesters, are they?
No. It’s all very well to decide to downsize, to make the most of the tax benefits, but then, when your kids come home from school or work, you say “oh, by the way, next week, we’re moving out. Find yourself somewhere to live.”
“You’re sleeping in your car, or you’re couchsurfing with your friends.” But in some ways, it’s a good time to be downsizing of course, because there’s now a record gap (price gap), in both Sydney and Melbourne, between the price of units and the price of houses and this gap has never been as big before. I mean, I guess the pandemic; you know, a lot of people went to houses during the pandemic. Now, when you look in Sydney, the median unit price is less than twice the cost of the median house price and it’s the same in Melbourne, as well. So in Sydney, the house price now is $1,591,000 and the median apartment price is $796,500, so that’s a huge gap.
It’s almost double, isn’t it?
Sure, and in Melbourne, the gap, I think, is even bigger. The median apartment price in Melbourne is $510,000 and the medium house price is $1,009,144, so that’s easily double.
Oh my god, I can’t do math!
It’s just as well that you’re a really good writer, because you’re really crap at figures.
I remember once writing a story; it was about billions, and I’d written millions. Oh my god, horrendous! But yeah, it is a good time for people to be moving from houses into apartments, because apartments (even though they’re quite expensive), they’ve never been cheaper, compared to houses. So this could be a big boom.
So this could push apartment prices up, because of more demand?
It could really.
And it could push house prices down, because of property coming on the market. But that’s if it actually has any effect at all.
Yeah, but you kind of think it might do. Because with this policy (if it comes into effect), then there may be some downsizers who end up giving up their houses and moving into apartments, and there’s some fantastic apartments around at the moment.
I think it will affect the high-end of apartments. A couple can put $600,000 into their super fund. So if that’s your profit; get that into the super fund, and you can still buy a really nice apartment, in a nice area.
And as well, you’ve got a lot more investors coming into the market now and they’re kind of going for apartments, and because houses are simply unaffordable, first homebuyers are going for apartments as well, because they can’t afford to buy a house.
Yes, and the other thing that intrigues me, that came out over the weekend, was a report in the Sun-Herald and The Age that something like 15 or 16 of the tightest constituencies (in terms of the vote spread), have more than 40% of their residents that are tenants. They reckon tenants could play quite a significant part in the election, if they look at the parties that are going to look after them best. The thing is, there’s no policies out there for tenants.
Because you kind of think well, do tenants classify themselves as tenants above all, or do they classify themselves as another kind of demographic, so you know, they’re looking at other policies?
The generational thing, or their education level, or the kind of work that they do?
They might not define themselves in the way they live.
But it seems to me, that there’s a potential target voter group there. In the long term, rather than the government constantly pushing this idea that tenants need to become homeowners… It’s not a bad idea, except in this economy, homeownership is an investment choice. All homeownership is about investment, rather than housing. So once you start pushing people to move from tenancy into homeownership, it’s the equivalent of saying “oh, you’d better buy some shares, as well.” I think the government should say “okay, well, this is our long-term aspiration, to get more renters owning their homes. In the meantime, let’s make life better for the renters.”
You know, let’s give them more security of tenure.
Now, I know this is a state-based thing, but the no-fault eviction thing, which happens when, in a hot property market, the landlord can say “we want you out at the end of your tenancy for no reason,” except that what they don’t want to have to do, is negotiate with the sitting tenant, on a higher rent. It’s easier and more profitable often in a booming market, for the landlord to say “you’ve got to go, so I can get in somebody who will pay more money.”
That kind of rental inflation is making it really difficult for people and that’s what’s leading to things like some of the increase in homelessness, that we saw during the pandemic. You know, people who just couldn’t afford the increase, or they couldn’t afford, because their landlords weren’t reducing their rent and now it’s more a case of the landlords are saying “okay, I want to make up for the money that I lost over the pandemic, so I’m getting rid of these people. I don’t want to even say to them ‘hey, will you pay this amount more rent,’ because then it becomes very tricky, legally.” Again, it’s a state -based thing, tenancy, but the government should be looking at ways of supporting tenants in that area while they’re still saving to buy a house, rather than just saying to them “oh, here’s some money to help you buy a house, or have a flat, but in the meantime, while you’re saving to get your deposit, we are just going to leave you; throw you to the wolves.”
That’s a good idea. Because the government always wants to support investors, especially as they say ‘mum and dad investors.’ Investing in residential property is pointless, without having tenants there.
Are your mum and dad investors in property?
There you go. Government’s argument out the window. We did a test; they failed.
Yes, because your mum isn’t an investor in property, either.
No. Well, it’s interesting that they’re throwing out these things, but it feels very much like an empty promise, the whole downsizing-pension thing, and they’re not doing much for tenants, and maybe they should be doing more for tenants.
That would be nice to see.
I think you’re right; I don’t think people identify themselves necessarily as tenants, but if the government comes along and says “hey, here’s some benefit for tenants,” then you go “oh, that includes me.”
Absolutely and they might be the people who are investing money instead, in small business, or investing money in propping up the share market. You know, ignoring the volatility in that, but trying to make it much more stable. So, you know, they’re making valid investment choices as well, and they should be recognised for that.
Okay. When we come back, we are going to be talking about electric vehicles, again.
I know we’ve been talking about electric vehicle charging a lot, recently. But I have to say, it’s one of these issues that really seems to have captured the imagination and interest of strata residents, even though there’s only something like 21,000 electric vehicles in the whole of Australia at the moment. Everybody seems to sense that more are coming. There was a webinar that I logged into (eventually), last week and having promoted it for about a month, I then went to get my ticket on Thursday morning, and was told it’s sold out.
But you managed to get a ticket in the end.
I got a ticket from our friends at OCN, but what had happened was, they’d put a limit of 1000 links. I mean, there’s no reason that I can think of, apart from possibly bandwidth, that there should be a limit on the number of people who log into a webinar, but they put a limit on the thing, of 1000. So, that had gone by Thursday morning, but then when I actually logged in, I noticed there was just under 500 people who were actually listening in. So people had gone “I’m interested in that,” and I imagine a lot of people in strata committees, for instance… People had said “I’m going to be listening into that webinar,” and somebody else had said “well, I’m going to be listening in,” and they’d say “alright, we’ll tell you what was in it;” that kind of thing. People just thought it was a good idea and didn’t get around to it.
Was it during the day?
Yes, it was in the afternoon.
And can they go onto the link and listen to it afterwards?
I think OCN are providing a recording of it for people. What came out of this; we’ve been talking a lot about the myths around electric vehicle charging… Basically they said, look, there’s so many levels you can come at and it can be incremental, that you can start with people just charging overnight on a normal electrical socket, then when demand grows, you kind of have to look at the infrastructure and providing basic electrical power at a level… Say an apartment block has 1000 kilowatt limit on its power supply, before all the fuses blow; what happens is, between five and seven o’clock at night, people are coming home, they’re putting on their air conditioning, they’re putting on their electric cookers, or whatever, and the usage of electricity spikes at that point. If half a dozen people, or 20 people in the building, were also coming home and charging their cars at the same time, which is what you’d probably do, then it could bust the limit. But a very cheap and usable technology exists to say well, between those peak hours, you can’t charge your car. All that means is that you plug your car charger in… You go upstairs, you contribute to the use of electricity in the building; the car is not charging, until it’s gone down below the peak. So that’s one thing that I found really interesting. It was also stated that one of the reasons given for not allowing people to charge their cars, is that your strata schemes aren’t allowed to resell their common property electricity. This is not true; they’re exempt under the law, from the laws that stop ordinary people reselling their electricity. So that’s one thing and the other thing is this notion that you can’t sell or provide electricity to one owner in their car space at a cost, because everything has to be done according to unit entitlements. That’s bullshit! They’re quite capable of providing a service to owners or residents, if the owners corporation decides to do so. So there’s this mythology about electric vehicles, but the one thing that is very true and very clear, is that people are coming to buildings, to either rent or buy and one of the questions increasingly being asked is ‘do you have electric vehicle charging? Do you have any plans to instal it?’ Those people, if they can’t get electric vehicle charging, and if there is no plan to instal it, then that’s a black mark. Surveys have shown that most electric vehicle owners are quite happy to charge overnight. They don’t need to have a big, super-duper instant fast charger. The car is going to be sitting there overnight for most of them anyway, so just let it charge up quietly, using existing power. So that was really interesting in that webinar. We always get a big response on the website, when we talk about electric vehicle charging,
It does seem to really capture people’s imagination, doesn’t it really?
One of the experts was predicting that by 2050… I mean, the government’s saying, or Labor Party’s saying, that by 2050, all cars sold in Australia will be electric-powered, or at least, electric or hydrogen, or something like that. One of the experts was saying that in the turnover of cars in apartments, apartment owners and renters tend to turn over their car ownership much more rapidly than house owners. The average turnover for a house owner, is about 12 years, whereas apartment owners it’s down about six or seven years, they’re looking to get a new car. They reckon that there will be a point quite soon, where 40% of the cars in apartment block parking, will be electric. It might be 2030; I should check it.
That’s not very far away, is it?
It’s not at all and that’s just because of the churn of vehicles. People in apartments (for whatever reason), are more likely to buy new cars and those new cars are increasingly likely to be electric, especially as new kinds of vehicles come online, and the price goes down, because of the number of sales and the technology is cheaper.
And it might well be that they have a lot of the GoGet cars; the ones that you you rent. A lot of those are going to be electric vehicles in the future and a lot of people are considering having those in their buildings, so that they will end up needing less car parking space. Lots of architects are now planning new buildings, where they’ll have parking, but that parking can be changed over to other uses, if it’s not used as parking anymore. That’s kind of part of the future-proofing of buildings and that might be that they’re creating extra apartments, or they’re creating common property gardens down there. You know, hydroponic gardens. It’s really an interesting area. They’re thinking that we may be needing less car parking in the future and we might all just be graduating to common electric vehicles.
Better not tell Michaelia Cash. She’ll be using that in the election campaign. “They’re coming to take away your car!” When we come back, we’re going to talk about the latest disaster at Mascot Towers.
And, we’re back. Sue, what is happening at Mascot Towers now? How can it get any worse than it already is?
It’s a good question, Jimmy, because you kind of think it’s such a disaster already. The latest disaster is that the local government minister has discovered that the occupancy and completion certificates for the Towers, have gone missing. You think, how can that happen? You know, you’ve still got those 130 residents that were evacuated…
And they’re renting…
In June 2019. It was such a long time ago, and they’re still not in the building. That was after the cracking was found and it looked like the building was sinking. But they’ve discovered that the Botany Bay Council, which was the certifier for those certificates at the time, have misplaced the documents.
So this has got nothing to do with the certifier of the building next door, who’s been struck off for life?
That’s right. It wasn’t a private certifier; it was the council. The council no longer exists; it’s been absorbed into another council, but you think, how could they possibly misplace such important documents? I mean, it’s incredible!
Is it suspicious?
Well, I don’t know.
Is there somebody’s name on the bottom of that document, who would rather it wasn’t public knowledge?
Quite possible, isn’t it, really?
Yes and also, if the council have certified something and not done it properly, then they can join the queue of people being sued by the Mascot residents.
That is quite possible, because those certificates were apparently signed in July 2008, so that’s how many years ago? As you said, I’m useless at math?
Thankyou, 14 years ago.
Nearly 14 years.
That’s not very long ago. They should be on the database. There should be a soft copy of those, as well as the hard copy. Oh god, you feel so sad for the owners in Mascot Towers.
And this actually shows one of the good sides of the Strata Hub that Victor Dominello’s setting up, where everybody has to put that kind of information into the central information hub.
So it can’t be lost; in theory, anyway.
The downside, as explained to me this week, of the hub is (as we were saying last week), a lot of people will be nervous; a lot of chairpersons and secretaries will be nervous, about having to have their email addresses and phone numbers available to everybody on the strata roll. It turns out when it comes to tenants (and we know that tenants being registered on the strata roll, is a bit patchy)…. I mean, there are fines for not doing it, but it doesn’t always happen. So the government, recognising this, has said, well, we’re not even going to look at the strata roll. If a tenant in a building comes to us and says “I want the name and number of the chair and secretary,” they will look at their bond records for that building and if that tenant is listed on their bonds…
Just to double-check that they actually are a tenant in that building, and they aren’t a journalist like me, just trying to get information?
Pretending to be a tenant. So suddenly, that whole thing about listing the tenancies, has been taken out of the hands of the owners corporation in each strata scheme and now the government are the ones sitting there going “oh, Sue Williams. Yeah, that sounds familiar, you can you can have this information.” Actually, it’s probably not as easy as that. It’s probably a form to fill in and they probably check.
And it might take six weeks to get the information, maybe.
But there are people who see that as a kind of sinister side. I mean, I think tenants definitely should be allowed to find out the name and number of the chair and the secretary of their block, or at least, be given an email address and a contact number. It might not be their private email address and contact number, but it’s one by which they can contact those key people. I think the sinister thing is that it’s the government deciding who should get this, rather than the owners corporation saying, well, here’s our strata roll. So, the Hub is good, if it’s going to stop documents, like occupational certificates, mysteriously disappearing. What else have we got, Sue?
We’ve got an apartment building, where owners have been hammered with a huge special levy. So you know all about this apartment building, don’t you, Jimmy?
Somebody wrote to us at the Flat Chat forum and basically said, look, we’ve got a small apartment block; it’s just slightly more than 20. There was a delayed AGM (but that happened for a lot of people, during the COVID pandemic), and then only three owners turned up at the AGM. They were told that they needed to bring their balconies up to code, presumably because the balustrades were too low, and it was going to cost $2 million, so they immediately agreed on a special levy. A one-hit on $2 million, between 24 apartments, which works out at $80,000 each.
Wow! In one go?!
In one go.
So on the next levy notice… Maybe they pay $2000 a quarter; it will be for $82,000?
Yes and obviously, some people are upset and angry and asking, what can we do?
I think you discovered that a couple of people who had previously been on the strata committee, had sold up?
Just before all this came out. Three members of the committee have gone.
That smacks of insider knowledge, doesn’t it?
Yes, does a bit
But surely, they would spread that special levy over a couple of years, wouldn’t they? Or take out a strata loan?
Well, we had this discussion elsewhere. A strata loan would be the way to go, because a lot of contractors are not going to be interested in coming in and doing the work, unless they know the money is in the bank to pay them.
You say “we want this work done in two years time,” but you know, in the meantime, the danger still exists.
The builder will come around and say “okay, this is going to cost X amount for the materials, and X amount for the work and you know, the finishing, so can you give us the money for the materials now,” which is a reasonable thing to ask, because they have to then go and buy the materials.
And the price of materials is really going up hugely. I think construction costs are going up 20%, at least, so if you waited another few months, they could go up 30%-40%, because of the disruption to the supply chain.
I mean, the reason this job is so expensive, is because they’re replacing the balustrade, which means they’re having to lift some of the tiles on the floor. So, they’re having to replace the waterproofing on the balcony floor, and replace the tiling and because they’re doing that, they’re having to replace the French windows.
Oh, my goodness! It’s a huge job then, isn’t it?
And we, from our balcony; we’ve been able to watch a balcony on a building across the road, where, obviously… It was the terrace at the top. Obviously, their wall wasn’t high enough; it didn’t meet code. They were doing other work in the building and they’ve come along and installed a kind of glass panel at the top, so they’ve raised the affected height, to make it ‘in-code.’ That’s all it really takes, unless the balcony itself is falling down, but there wasn’t any mention of that in the email that was sent to us. I just think it’s slack strata management; you know, giving them bad advice. When I went online, somebody came back and said ‘well, that’s ridiculous, saying a strata loan. It’s going to cost an extra $160,000.’ Well, yeah, but across 24 apartments, that extra money is affordable, but there will be people in the building who just simply cannot afford to find $80,000, especially if they’re older, if they’re retirees; if they’re on fixed incomes. You wonder if there’s something else afoot here, where they’re actually trying to drive people out of the building. I don’t know how it was ever resolved, but there was a case; an old building, and investors bought in and suddenly came up with this plan to dig a car park underneath the building, while the building’s still standing there and then everybody was told ‘okay, we’ve agreed on this car park, and you’re gonna have to come up with $100,000 each.’ You realise afterwards, that what they were actually doing was saying to people ‘you need to get out of the building. We’ll buy your apartment off you,’ because they were planning to knock it down and rebuild.
Oh, my goodness, that’s really…
Sinister, isn’t it? But you know, if you’re not wary of these things going on, and it’s all about not turning up at meetings. If you don’t turn up at meetings, decisions like this can happen and suddenly, you’re behind the eight ball after that, because the decision’s been made and it’s much harder to reverse these things. You can have them reversed; you can go to Tribunal and say ‘can you put a stop to this, while we rethink our options?’ That’s much harder than actually being at the meeting and telling people not to vote for it.
Quite and at the very least, you should be reading agendas and minutes, so you’re up on what’s likely to happen.
Okay, well, we are overtime again; well, we won’t be overtime, by the time I’ve cut out all the ‘uums’ and ‘ahhs’ and errors and bad arithmetic! Thanks, Sue, for coming along and thank you all for listening. We’ll talk to you again soon.
Thanks for listening to the Flat Chat Wrap podcast. You’ll find links to the stories and other references on our website, flatchat.com.au And if you haven’t already done so, you can subscribe to this podcast completely free on Apple podcasts, Google podcasts, Spotify, Stitcher, or your favourite pod-catcher. Just search for Flat Chat Wrap with a ‘W,’ click on subscribe, and you’ll get this podcast every week, without even trying. Thanks again. Talk to you again next week.