Podcast: Qld forced sales, big trouble in Little Bay

No sooner had we said last week that Queensland needed to look at their “collective sales” laws – allowing a super majority of owners to compel the minority to sell their units – than the state government there announced that’s exactly what they plan to do.

The precise process for this remains to be thrashed out in parliamentary committees, but you are dealing with a community that values – possibly over-values – property owners’ rights to do what they want with the home that they own (unless, of course, those rights have been sold off by the developer).

And there’s a reason this was known as “forced sales” when the idea was first mooted in NSW that 75 per cent of owners could over-ride the wishes of the other 25 per cent and sell off their building – especially one that was well past its use-by date and could be replaced by something that made more efficient use of the available space.

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LISTEN HERE

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We also take a quick squiz at other body corporate law changes on the table, such as removing unreasonable bans on pets, curbing smoking on common property and allowing bodies corporate to tow vehicles that are blocking common property.

Later on, we discuss the announcement that the Victorian Building Authority is teaming up with the Australian Tax Office to identify phoenixing builders and prevent them from starting up again after they have shut down and walked away from their debts and obligations (like defects) in previous projects.

And we’ll be looking at a massive much-rejected development project that just won’t go away and which we’ve called “Big Trouble in Little Bay”.

All that and more in this week’s Flat Chat Wrap podcast.  

TRANSCRIPT IN FULL

Jimmy  00:00

We’re going back to sunny Queensland today. Yes. Because, shortly after we recorded our last podcast, they changed the law (or they talked about changing the laws).

Sue  00:02

Oh, nice! As a result of what we said?

Jimmy  00:06

 I’m sure they suddenly thought… No, they had a big conference last year, and there was a few proposals regarding body corporates. So we’re going to talk about that. We’re going to talk about the Victorian Builders Association, who are going to crack down on phoenixing, they say. And, we’re going to talk about the controversy over the new big development proposed for Little Bay in Sydney. We’d better get on with it. I’m Jimmy Thomson, I write the Flat Chat column for the Australian Financial Review.

Sue  00:48

And I’m Sue Williams, and I write about property for Domain.

Jimmy  00:51

And this is the Flat Chat Wrap.

[MUSIC]

Sue  01:06

So Queensland has been having a government review of their strata laws for the past four years, haven’t they, and now they’ve come up with something?

Jimmy  01:12

The first set of proposals were issued this week. Everybody’s getting a little bit excited and that’s about as excited as they should get, because these proposals, first of all, have to be tabled and then they have to create committees… Then, they’ve got to call for submissions, and all the people who oppose the ideas and support them, have got to have their 10-cents worth. But the biggest element of this tranche of proposals is, they’re going to do away with the requirement for a unanimous vote, to extinguish a strata scheme.

Sue  01:48

So that’s if you’ve got maybe, a very old building; you want to sell it to developers who want to knock it down and build something else?

Jimmy  01:54

 Yes.

Sue  01:55

Previously, they needed 100%.

Jimmy  01:58

Absolutely.

Sue  01:59

And now, it will take only 75% of owners to vote for it, or no less than 25% of owners, voting against it

Jimmy  02:07

When they proposed that in New South Wales (and when they put it through back in 2016), it all seemed clear before they did it, that you just needed to have a vote. But then (quite rightly), they put in a lot of hurdles that had to be jumped, to get the vote through. Basically, you have to form a committee, the committee has to report back to the owners corporation… Then they’ve got three months’ mandatory cooling-off period, and then they have a vote to decide. And then, they have a vote; not just on unit entitlements, but also the unit owners. So it’s unit entitlements, and then a head-count. So there’s a lot of hoops to be jumped through. I don’t know if Queensland will go through that level of checks and balances; possibly because every state likes to do something different from what the other state did. They might not; they might make it harder. They might make it easier; it remains to be seen. But the fact of the matter is, there are a lot of old buildings that are taking up quite a lot of space, and not giving a lot of accommodation in that space.

Sue  03:21

So it’s an important part of the renewal process. I mean, as buildings get older and older and become less fit -for-purpose, then it’s good to make it easier for people to vote to either renew them and completely refurbish them or something, or allow them to be knocked down by developers.

Jimmy  03:39

But you know, you look at the some of these old brick two-storey walk -up buildings; the first thing that strikes you is how small the windows are. And that’s partly because I think, they were based on European or British designs of the 1950s and 60s, when they were built and the idea was to keep the sunlight out, as much as possible.

Sue  04:01

And certainly no ideas about balconies.

Jimmy  04:03

No, And now they’ll be replaced by buildings with wide open window spaces, balconies, lots of fresh air, or opportunities, they’l be higher. The one thing that you will lose is ceiling height, because they can do that. But you know, they can build higher buildings with more accommodation in them, in the same footprint of these older buildings. So you take (as we’ve often referred to the apartment block where we used to own), where they had a great big backyard that had two Hills Hoists and that was…

Sue  04:41

And a bomb shelter.

Jimmy  04:42

And a lot of these buildings with the backyards are now used as car parks for the residents. Well, those car parks will go underground, and all that space will become housing, so it’s a good thing.

Sue  04:55

Yes, because some of the buildings are in really prime locations, aren’t they? So it’s good be able to build more housing in really good locations, close to transport, or close to amenities, near parks, by the beach; that kind of thing. So, yes, this is good thing, because I think in Victoria, you still have to have 100% of owners to vote if they want to abolish their strata scheme. So hopefully at some point, they’ll come come in too; come up to the 21st century.

Jimmy  05:24

I had a meeting with Amanda Farmer the other day (the lawyer and online presence)… We agreed that Victoria might be 15-years behind. Or to put it this way, we feel that Victoria is where New South Wales was, 15-years ago, when we both started writing and campaigning about strata. And the funny thing and the ironic thing is, if you talk to Victorians about it, they’ll tell you that they’re fine; that everything’s fine, because it hasn’t been exposed yet. The stories are just starting to come out. So it’ll be interesting to see where that goes in the next year or so. Meanwhile, back up in Queensland, it’s not just collective sale, or forced sale (depending on which side of the fence you’re on); they’re also proposing new laws about pets.

Sue  06:16

The same as New South Wales, where you can’t ban all pets from buildings?

Jimmy  06:22

Yes. They can restrict pets in buildings, but there has to be a reason for it. And one of those reasons is not “we’ve never had them, and we don’t want them.” It’s, got to be more specific than that. Then it could be that you’ve got residents who are frightened of animals. One of my students the other day; this fluffy little dog ran up to her and she was absolutely hysterical. I think she’s from China, where dogs carry a risk that they don’t carry here and she jumped out of her skin, almost. And you think, well, if you had a significant Chinese community (or any other cultural community in a building), where they really didn’t like to have animals around, they could put up a good case for saying “well, this is not part of our culture.” So that’s another one that needs to be thrashed out. They’re going to change the way they run buildings, so that housing committees are elected, and they’re going to try and improve the procedures for taking complaints and taking them to tribunal, and things like that. So they are tidying things up. They’re going to allow owners corporation (sorry; body’s corporate, as they are in Queensland)… They’re going to allow the body’s corporate to pass by laws that restrict people from smoking in the open air, on common property.

Sue  07:47

Like on balconies; courtyards?

Jimmy  07:48

I don’t know if it’s balconies; they wouldn’t consider them common property in Queensland. But I think there will be an element that ‘smoke drift is a nuisance,’ that was brought in, in New South Wales. So that wherever you are (whether you’re on your balcony or not), if you’re annoying your neighbours, then you can maybe, be restricted. But the other thing is that I think that at the moment, common property restrictions on smoking are just for inside the building. But if people are standing outside, smoking on common property, and that smoke is going into people’s apartments, then that could be a problem. And towing cars; they’re changing the laws so that if a car is in a position on common property, where it’s blocking access, it can be towed away. I thought they already had that in Queensland; I thought it was the one state where you could still tow vehicles, but maybe it’s the specific circumstances. And what is missing from all this, of course, is the pre -sale of management right contracts, which they’re going to have to deal with, when they get to dissolving community title schemes for sales to developers, or whatever, because those schemes could have a manager under contract, but that manager could have a contract for 20-odd years. Suddenly, the caretaker is going to have a contract for a building that doesn’t exist anymore. How is that going to work out?

Sue  09:22

Happy days for him!

Jimmy  09:25

I wonder if people who are living in apartment blocks and schemes in Queensland, who are faced with a long-term contract…. They can’t get out of it, and they’re not happy with the performance of the care-takers; they might go “do you know what, let’s just sell the building to a developer and let them cope with it.” Right, when we come back, we’re going to talk about the announcement from the Victorian Builders Association, the VBA, that they’re cracking down on phoenixing. That’s after this.

[MUSIC]

Jimmy

A press release came out this weekend, from Victorian Builders Association, warning phoenixing builders that they are coming after them. So for anyone who doesn’t know what ‘phoenixing’ is, that’s when a company basically puts up a crappy building and when the owners find out that it’s got lots of defects and tell them to come and fix it, they go into receivership, or bankruptcy, or whatever, and disappear and then reappear with the same directors, with a another company with a different name, doing exactly the same thing. It’s not just a problem in Victoria, by any stretch of the imagination; it’s a huge problem here, in New South Wales. So the Victorian building Association has come out and said “we’re coming after you and we’ve got all these ways.” They will be working in conjunction with the tax office, so they can get the details of people who’ve had previous companies that have gone into receivership, or liquidation; I’m never quite sure what those different things mean. But basically, they mean the company doesn’t work anymore. And it sounds good, on the face of it. I was thinking, well, David Chandler, our Building Commissioner in New South Wales has been talking about cracking down on phoenixing, but he thinks he needs to go to ASIC to get the company’s; the Australian Securities and Investments Commission.

Sue  11:29

Yes, because wasn’t that when he very famously told them to get their ‘big boy trousers on?’

Jimmy  11:33

‘Big boy pants.’

Sue  11:34

He got kind of criticised for that.

Jimmy  11:38

Some people are too sensitive; that’s why he got criticised. I was wondering, why he’s not been doing this? Why has he not been going to the Tax Office and saying “can you compare all these details?’ Then you start looking at the detail of this press release; the tax office’s phoenix task force was set up in 2016… The Victorian Building Association was given increased powers to pursue phoenixing builders in 2020. They have caught 15 people…

Sue  12:18

Already, since 2020?

Jimmy  12:20

I think it’s not high enough.

Sue  12:22

It’s still quite a lot, isn’t it?

Jimmy  12:22

If that’s just the beginning, then that’s a good thing. But they’re claiming credit for having stopped 15 companies from having registration. It’s kind of a bit woolly; you think well, what the builders do here is, they put different director’s names on the companies. You know, they’ll get a primary school teacher from around the corner, who’s never done…  Or somebody’s very elderly mother and very elderly father; we’ve had that before in court. Yes. And there are well-practised ways of getting around this. So maybe the first flush of the 15 phoenixers is quite a good thing, but I kind of instinctively feel that they could have done more.

Sue  13:14

Well, at least it’s a start, whichever way it is, really.

Jimmy  13:18

I think these things snowball. I honestly believe that the people in Victoria; strata-dwellers in Victoria are living in a kind of… They’re not aware fully, of how they’re being ripped off and what they can do about it. I think that’s starting to emerge now and that’s what I was saying before; they seem to be where New South Wales was 15 years ago, in terms of tackling these problems. Partly because they don’t have the same level of problems as we had here. But it’s turning; it’s changing.

Sue  13:51

Maybe if they’ve only caught 15 phoenixers, most of the value in getting rid of phoenixing companies (I imagine), is stopping other companies doing it. So if they’ve got 15, and if they’re a bit high-profile, and if they’re attracting a bit of publicity for it, then any other builders or developers who are thinking of doing the same thing, it may give them hesitation.

Jimmy  14:13

Yes, but there’s no penalties. The penalty is, we’re not going to register your new company.

Sue  14:20

They don’t get fined?

Jimmy  14:21

They don’t get carted off to jail, where they belong.

Sue  14:25

That’s a shame.

Jimmy  14:26

I mean, they would possibly get carted off to jail, if they continued building, when they’ve been told they don’t have a licence. It’s not that great a deterrent, but it does stop more phoenixors getting into the market, so it’s a good thing. When we come back, we’re going to talk about a proposal for a big new development at Little Bay. I keep thinking of that movie ‘Big night in Little China…’ ‘Big Block in Little Bay.’ We’ll talk about that, after this.

[MUSIC]

Sue  15:04

We’ve been talking about the need for easier extinguishment of strata, so we can build more homes in good locations. Well, there was a revelation this week, about a big developer in New South Wales, Meriton, putting in a third proposal for a huge new development at Little Bay in Sydney. And as you can tell by its name, it’s only a little place; it’s not that big. I think previous applications were for 1,900 apartments, in a series of 22-storey towers. This is a little place, really. And then it was reduced to 17-storey towers, over a larger area. It was knocked back by the local council, then it was knocked back by the planning panel. And now, the New South Wales Government has this pilot scheme, to encourage developers to build lots of extra homes. If you’re a developer with a plan; with a proposal to build over 1000 homes, you can go direct to them, and they will give you maybe, a much quicker approval, so their process will be much smarter. And so Meriton has now gone to that New South Wales Government pilot programme, with an application to build lots of apartments in the same place. But the interesting thing is (well, there’s lots of interesting things), but the most amazing thing is, that if you see the application, you have to sign the confidentiality agreement and all the workers in the Department of Planning have to sign it as well. So nobody can actually talk about it, or reveal how many apartments it is, how many towers it proposes; where exactly they are. So this level of secrecy and confidentiality, it’s just bizarre, really.

Jimmy  16:52

Interesting… The whole thing about overdevelopment, and under-supply has become a big issue. I mean, Harry Triguboff, who’s never (as far as I know, been not controversial)… He’s quoted in the papers saying “if they want to shut me down, then how are they going to build all the houses that they need?” There’s probably no one in Australia who has housed more people than Harry Triguboff and that’s something we tend to forget.

Sue  17:24

And all credit to that, really.

Jimmy  17:25

 But, it hasn’t always been a joyful experience for those involved. There was another article in the Sydney Morning Herald this morning; there was a big feature about the housing crisis. And an economist said it’s supply and demand, and housing is going up in price, because there’s a shortage of housing, there’s an increase in demand. He said, you’re never going to get developers flooding the market with properties, to bring their price down. There’s no point in that, in them doing that.  They need to keep the prices up and they certainly want to keep the prices up. And the way you keep the prices up, is by limiting the supply to be just under what the demand is. We see it with the oil-rich countries in the Middle East. They control the flow of oil, and whenever the price goes down a bit, then they they shut down production, until it goes back up. So this guy was saying you’re never going to get the developers to flood the market, or increase the market to the point where everything becomes affordable, because it’s not in their interest. And I think that’s true. And the missing factor in all this (as we have said many times), is the government. The state governments should be out there, building rental properties for people who want to have long-term rentals. I mean, all this stuff about, somebody puts up a big development and they put 5% housing in there for affordable housing… It’s a drop in the ocean! The government should have a special corporation that builds apartments for people to live in and if they want to buy them, that’s great; if they want to rent them, that’s also great. But this obsession with everybody having to live in a house that they own; that’s the problem.

Sue  19:27

Yes, absolutely. And they could be partnering with lots of housing associations, as well. People like Nightingale. It was started off by a group of architects, for building sustainable apartments for people and a lot of subsidised housing. I mean, they’re doing some fantastic work. So there’s lots of people out there doing lots of good stuff, but they may need more funds, or they may need more government approvals to help them along the way. So the government can be doing an awful lot more; I quite agree.

Jimmy  19:57

It’s this thing that there’s a negative taint on anything that seems to be Housing Commission and there shouldn’t be. But there is there is a middle ground there, for build good buildings in good areas, for the people that you need to live in the areas where they work. Let’s get away from the profit motive. You know, somebody (again, in this feature in the Sydney Morning Herald); they said “oh, you know, there’s this theory that every time somebody buys a three-bedroom apartment, then a one-bedroom apartment becomes available.” And she was saying that (she’s an academic; her name escapes me at the moment), what happens is the people who’ve got money, they’ll knock two apartments together. Or they’ll they’ll buy an apartment and it’ll sit empty for ages, because they’ve got another house somewhere else. It’s not as simple as that. You have to build housing (or apartments), for the people where they want to work and where they want to live.

Sue  20:58

Sure. And the build-to-rent sector is getting much bigger; a lot more people are getting involved in that. That’s obviously still for profit, but it is building often very good buildings, with a fantastic level of amenity, and which are really renter-friendly for tenants. And that’s something to be really welcomed. I mean, the sector is much more advanced in Europe than it is here. But there is an awful lot of injection of money into build-to-rent at the moment.  If only!

Jimmy  21:27

And the other thing that was mentioned in this feature, is negative gearing, and somebody said “we should be building houses for people to live in, before we build houses for people to have tax breaks on.” Alright, so we’ve solved most of the housing problems of Australia again. I’m sure somebody somewhere is sitting listening to us, going “oh, right, yes, that’s what I need to do; I’ll announce a new law on Monday.” Wednesday, to be accurate. Thanks, Sue, for giving up a chunk of your weekend again.

Sue  22:01

Pleasure, Jimmy.

Jimmy  22:02

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

[MUSIC]

Jimmy

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 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.