Podcast: Soft soap won’t clean up strata scandal

So the NSW Fair Trading Minister has revealed his law changes in the wake of the Netstrata scandal and they are, as one strata insider put it, like being slapped on the wrist with limp spaghetti.

With the news hot off the printer, Jimmy jumped in with both feet to claim this is a pretty poor response to the revelation that apartment owners are being misled and ripped off by some of the people whose job it is to look after them.

Admittedly, this was recorded before he got the response from Fair Trading that you can read here. Maybe it will all make more sense once everyone has calmed down but for now Jimmy is ropable, which if nothing else makes the podcast more entertaining.

Also in the pod this week, the “wellness” benefits of buying the most expensive home in Australia.

And the areas in your state and across Australia where you are least likely to find apartments that are designed with the health of their residents in mind (according to Dr Sarah Foster of RMIT University in Melbourne).

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

Transcript in full

Jimmy Thomson  00:00

Fair Trading Minister has tabled a new strata management law

Sue Williams  00:04

Right

Jimmy Thomson  00:05

In Parliament today.

Sue Williams  00:06

Oh,

Jimmy Thomson  00:06

This is hot news,

Sue Williams  00:08

Okay,

Jimmy Thomson  00:09

And it’s a reaction to the controversy over Netstrata and the charging of commissions on insurance policies.

Sue Williams  00:21

Fantastic.

Jimmy Thomson  00:22

And he’s absolutely come down on them like a ton of bricks.

Sue Williams  00:25

Oh, look forward to hearing about that.

Jimmy Thomson  00:28

Well, yeah, you would if it was true, but it’s not been slapped on the wrist with wet spaghetti would be more like the thing we’re going to talk about that. We’re going to talk about, where is the worst place to live in an apartment in Australia?

Sue Williams  00:44

Oh no,

Jimmy Thomson  00:45

Yes, probably exaggerating a little bit. And on a similar topic, where is the most wellnessy place to live in Australia, in an apartment? I don’t think wellnessy is the word. I will have worked out what the correct word is by the time we come back, I’m Jimmy Thomson. I write the Flat Chat Column for the Australian Financial Review,

Sue Williams  00:48

And I’m Sue Williams, and I write about property for the Sydney Morning Herald, the age and the a foreign domain.

Jimmy Thomson  01:13

And this is the Flat Chat Wrap.

Sue Williams  01:28

So tell us about this new strata legislation that’s coming up.

Jimmy Thomson  01:31

It just, just came in this afternoon, hot off the press. It’s called the Strata Managing Agents Legislation Amendment Bill, 2024,

Sue Williams  01:40

Very catchy,

Jimmy Thomson  01:41

Yeah, it’s a zinger. Problem is that strata management, and it’s part of the whole problem actually, is that strata management is covered by different pieces of legislation. The strata Management Act is part of it, but there’s also the Property and Stock Agents Regulation, the Strata Schemes Management, Regulation, the Community Land Management, the, I mean, it just goes on. Look, it’s a reaction to the whole Netstrata scandal. And you know that where they were discovered that to have been charging commissions on insurance, but doing it in such a way that they weren’t telling the owners that that’s what they were doing,

Sue Williams  02:23

Right Because they owned a lot of companies, didn’t they that they were referring their business to, and yeah, they were getting so

Jimmy Thomson  02:29

The companies were getting the commission, but the strata managers weren’t. But it didn’t make any difference, because it was all going into the same pot. So they come up with a few things. It’s literally just got this. It seems that they’re saying that they’ve got to be more open about the commissions that they’re getting and where they’re getting the commissions from.

Sue Williams  02:49

Good, yeah,

Jimmy Thomson  02:51

And they’ve got to tell owners corporations if they’ve had any dealings with the developer in the past 24 months. So you know, you we, because we know that what strata managers, some strata managers, are doing, does he have a relationship with the developer? The developer says, Can you set up all our strata laws and bylaws and things? And by the way, we’ve got some embedded networks, because we want to rip off our owners even more than we’re doing it already. Can you help us with this? And some strata managers say, yeah, we can do that. And and then they do that because they will get more work from the same developer.

Sue Williams  03:29

So this will will at least make people aware

Jimmy Thomson  03:31

That they’ve got a relationship and a long standing relationship, sure. And then people will say, well, that’s fine. We all have long standing relationships with people we can trust and stuff, but

Sue Williams  03:42

Can you trust them?

Jimmy Thomson  03:43

Well, the developers can. So that’s one of the things.

Sue Williams  03:50

So with the first thing, making commissions much more transparent and declaring them so they’re not actually outlawing them.

Jimmy Thomson  03:57

No, nothing has been outlawed because

Sue Williams  04:00

it just feels a bit like a poor second best, doesn’t it really

Jimmy Thomson  04:03

Oh, or third or fourth or fifth best? I mean, I think we all kind of knew this was going to happen when the Fair Trading minister said that they were going to look at changing the law in consultation with the Strata Community Association, the strata managers, professional body, and the Owners Corporation Network. I can tell you what I’m hearing from the Owners Corporation Network is that they are really unimpressed with this, and I’m sure the Strata Community Association people are pretty pleased, because they are. They’re not going to change anything.

Sue Williams  04:38

They’re just going to tell you about it.

Jimmy Thomson  04:39

Yeah, the big change is we haven’t stopped ripping you off. We’re just telling you exactly how we’re ripping you off. And because most of their owners don’t know what’s going on anyway,

Sue Williams  04:48

yeah, yeah, they can present it in a very positive light as well, can’t they? They can say, Look, we do get commissions, but this helps keep your strata costs down,

Jimmy Thomson  04:57

Yes.

Sue Williams  04:58

And for people who don’t know any better. That can sound quite a persuasive argument as well.

Jimmy Thomson  05:02

Yeah. I mean, I was talking to a strata manager the other day. One of the things that strata managers do when they’re helping to set up a new strata scheme is the developers say, Can you kind of keep the levies down in the budget, because that’ll put people off from buying and so the strata managers say, oh, yeah, we can do that, we can, you know, just keep these fees down and keep these costs down, and so that at the end of the day, it looks like there’s not much that’s going to be paid in levies. And then when the owners come in and start actually having to pay for things, it goes these, this budget you’ve given us is ridiculously low. And then, and this has actually happened to us recently, the strata manager says, oh, yeah, but you’ve been paying more than you were supposed to in our case, not here in this apartment in which we sit, but in our other place. The problem was the gardens were a terrible state. They were just it looked awful. It was one of the big selling features of this this development was the gardens, and they were just full of weeds and dried plants. It just looked awful. And so they said, Can we get the building manager people to do the gardens better? They said, Sure, we’ll spend another couple of hours a week on or a couple of hours a day or whatever on that. And so they got they rescued the gardens. And when our committee went back to the strata managers and said, Look, you underestimated our budget. We you know we’re gonna have to pay more in our levies. They said, Well, you spent too much in the garden. So it’s that. And there is something in the law that says, if you have been deliberately misled on what your levies are going to be, you can get the developer to pay the difference.

Sue Williams  05:46

Has that ever happened?

Jimmy Thomson  06:45

Never, never. Because you get lawyers involved, and the lawyers would take them to NCAT, and then you suddenly realize that you’re going to spend more on lawyers than you would get back from the levies so

Sue Williams  06:58

And more in time as well. And anxiety,

Jimmy Thomson  07:00

Anxiety, you know, emotional energy. So does this new law have something that says that strata managers should be held liable for deliberately underestimating levies? No, it’s just basic stuff they could be doing. Does this law say, “Hey, here’s a here’s a way of fixing the strata Insurance Commission thing. You can’t take it anymore,”

Sue Williams  07:27

And it’s so annoying, because this is a time where, you know, we are short, we’ve got a shortage of housing, so we’re built. We’re hopefully going to be building a lot more high density and medium density housing. And at this juncture, people, why would they have confidence in buying? And well, they don’t have confidence. They might have a they might have confidence in the construction

Jimmy Thomson  07:48

Because of David Chandler,

Sue Williams  07:49

Because of David Chandler. But then if the Strata Management Act lets them down, strata managers let them down, then, you know, there’s so much pain and misery there.

Jimmy Thomson  07:59

Yeah, they had an opportunity to fix a lot of things, and what the strata managers are saying to them is, as you said, there’s a lot of new buildings coming on. Don’t come down on us too  hard. Just make it look like you’re doing something.

Sue Williams  08:13

So strata managers on strike, yeah, like the CFMEU you

Jimmy Thomson  08:17

I was talking to a very senior strata manager today, before this came out. And he was saying, you know, the CFMEU problem is a big issue, and it’s a real issue, because you can see where the problems are, whereas with the strata management thing that we were talking about, it’s all like, oh, somebody did something that was a little bit wrong and a little bit dodgy. And I said, Well, I guess it. Guess the thing is that you don’t have any bikeies in strata management? And he said, You think?  So Yeah, so, very, very disappointing. Mr. Anoulak Chanthivong, you started off. Well, actually, I don’t know if he started off well, did he? Has he done anything

Sue Williams  09:00

Not much,

Jimmy Thomson  09:00

No, it hasn’t done anything to help us in strata. And there’s the strata Commissioner, John Minns, with his huge staff that he has now, that’s two people, four. It’s gone up to four.

Sue Williams  09:12

Oh, my God, it doubled, doubled.

Jimmy Thomson  09:14

So I’m sure he’s pulling his hair out. This is such a nothing thing. Somebody said to me today that this law was a knee jerk reaction to stories in the media. And I said it’s a knee jerk reaction to people in Strata Community Australia, saying, Do not dare touch us. Speaking of whom I wrote to them a couple of weeks ago. Said, look, we’ve all been through a very tricky time, and you know, we all need to we’re on the same side, and we can all work together. And how about you give me a call

Sue Williams  09:49

And have they called you?

Jimmy Thomson  09:51

I’ve been sitting by the phone for two weeks like a lovelorn teenager waiting for the phone to ring.

Sue Williams  09:57

Oh, well,

Jimmy Thomson  09:58

Me, I don’t know. I don’t know why they. Think I’ve been against them. I keep telling people they’re a cartel, and I have to say this professional standards thing, remember, we were at the launch of that, and they were so pleased. There are now professional standards. Talk to lawyers and accountants how they feel about strata managers having professional status, they’re going, Oh, well, we might as well not pay our fees now, because the whole thing has been so demeaned and undermined. They’re not professionals. Some of them are. Look, we know people who are really, really, really good, but they are not the people who are running Strata Community Australia, Strata Community Association. They are not the people who are running that little Cabal. So we’ll see what comes out of it. But I’m sure that the word out of and I’ll send them a message tomorrow, but I’m sure the word out of Fair Trading is, look, this is just the beginning. It just kind of feels like the end. When we come back, we’re going to talk about the best and worst places to live for wellness in Australia. That’s after this.

Jimmy Thomson  11:10

Sue. You’ve written a story that’s coming out this week.

Sue Williams  11:13

Yeah, that’s right. It’s about what kind of wellness facilities can you expect from Australia’s most expensive home.

Jimmy Thomson  11:21

So I guess we’re not talking about the apartments that have got damp on the walls and water running.

Sue Williams  11:26

We are certainly not been to an apartment like that today, and that was very, very different.

Jimmy Thomson  11:31

And there was no wellness factor in that at all, apart from the well under the floorboards.

Sue Williams  11:36

That’s right. No, the most expensive home in Australia, as we know, was an apartment that cost $140 million yeah, that was a penthouse at one Sydney.

Jimmy Thomson  11:47

Did we read the room?

Sue Williams  11:49

No, but I’ve been to see the display apartment of it, and it was absolutely fabulous. But they’ve just unveiled the wellness facilities that go with that residential tower,

Jimmy Thomson  11:58

Right? Which is One Sydney

Sue Williams  12:00

Penthouse is at the top, yes, and it’s incredible. The gym, well, it’s got a pool house which is all made of deep green marble with all these columns and leafy palm trees and fabulous original artworks and cane and linen sun loungers right lined up. A la the French Riviera,

Jimmy Thomson  12:20

Okay, is this on the ground floor or

Sue Williams  12:23

No, it’s upstairs. It’s not on the top floor. It’s kind of in the middle, I think, right? And it’s all set in a glazed facade that makes you feel, apparently, as if you’re swimming in a cool green water hole in Australia’s top end,

Jimmy Thomson  12:35

A cool green

Sue Williams  12:36

Water hole in Australia’s top end. And then they’ve got this fabulous gym with all these rooms for massage and treatments and a yoga and a Pilates studio,

Jimmy Thomson  12:44

Wow.

Sue Williams  12:44

And then they’ve got a garden on level two the podium, and it’s loads of trees and stuff. It’s all communal areas for the towers, because it’s going to eventually be three towers, right? And this is the first one right, and there are two of the towers are linked with the podium right, and many of the wellness facilities are within the podium, right. And they’ve also got a concierge who kind of books things for you and guides you to things and links people with all the services there, really. And it’s interesting, because this is a huge trend in top end apartment living, right? Because this wellness real estate now is said to be worth an estimated 438 billion US worldwide, right? And, um, like One Sydney looks pretty amazing. But in New York, there’s a building in Chelsea where it has a spiritual concierge to spruce residence, mental health,

Jimmy Thomson  13:41

Okay, yes, a spiritual concierge,

Sue Williams  13:44

Absolutely in Santa Monica, there’s one that has a one acre rooftop Park.

Jimmy Thomson  13:49

Wow. So you got a spiritual concierge, and you say, I wonder what his name is, her name. And say, Oh, my chakras, my chakras, my chakras, are all messed up. Can you fix them for me?

Sue Williams  14:02

Oh, I bet they would.

Jimmy Thomson  14:04

They would,

Sue Williams  14:04

Oh, absolutely,

Jimmy Thomson  14:06

You’d hope so. You’d think

Sue Williams  14:08

They’d put you on a year long course. Probably, yeah, you’d never get out of but, yeah, but then it’s interesting. Another one is quite the opposite.

Jimmy Thomson  14:18

Is this a boot camp?

Sue Williams  14:19

It’s this building in San Francisco, yes, it has a ninja warrior inspired training course, all right, with high tech amenities, okay, I think that’s that’ s a bit more interesting, isn’t it? Than A than a meditation spiritual advisor. Ithink

Jimmy Thomson  14:32

You’re never going to ward off a mugger by meditating at them,

Sue Williams  14:38

No, but you could tie them up. You could catch them and tie them up. The Ninja Warrior person could do that for you, and then you could talk to them about why they’re doing this. Did they have a bad childhood, and how they can improve their lives and stuff.

Jimmy Thomson  14:50

Apparently, when George Harrison was attacked in his home by somebody trying to kill him, he’d started chanting Hare Krishna, really, because that was as his default, in danger. I’m about to die. I have to do my religious thing. And it was his wife that I think she hit the guy with a frying pan, which is a much more effective way so,

Sue Williams  15:13

But probably stunned the person before and sort of into inaction. And then she managed to stum For real. Yeah.

Jimmy Thomson  15:21

So wellness is a big, big, big business, and people who are who can afford us 140 something million, 100 and 40 million. Do you think they get charged extra for the wellness?

Sue Williams  15:32

No,

Jimmy Thomson  15:33

I think that’s free. Comes with it.

Sue Williams  15:35

I mean, if they want, but then, you know, like everything that’s free, you can often have a value add, which means you have to pay for it, like you probably can have a personal trainer, and the concierge will book it for you and stuff, but the personal trainer will cost you $200 an hour

Jimmy Thomson  15:48

At least.

Sue Williams  15:49

But there’s also, I mean, there’s a wine gallery there and a bookable kitchen where you can have wine tastings, and probably the building will organize that for you, but they’ll probably charge you for the wine tastings and stuff, right? So, I mean, there’s always, you can probably always pour more money into it, really,

Jimmy Thomson  16:06

Right? I can’t understand how people can make the kind of money that allows them to buy a place like that. I mean, it’s, are they all drug dealers or something, or property Oh, they’re all developers. They’re all property developers. Or they could be dot com billionaires. They could be or they could be Tom Cruise. Yeah, he’s worth a bit. He is very impressed with him jumping off the side of the

Sue Williams  16:30

Absolutely 62 years old, and he was running and biking, and he looked pretty good, didn’t he good? Truth?

Jimmy Thomson  16:36

Yeah,

Sue Williams  16:37

We looked up how much it was worth as well. Was it about 400

Jimmy Thomson  16:39

650 million?

Sue Williams  16:39

650 million

Jimmy Thomson  16:41

Was that U.S or Australian

Sue Williams  16:44

U.S

Jimmy Thomson  16:44

So that’s like a billion Australian.

Sue Williams  16:48

So he could easily…

Jimmy Thomson  16:49

No wonder he loves this country. He’s so much richer when he’s here.

Sue Williams  16:51

Yeah,

Jimmy Thomson  16:53

I’m a billionaire in Australia, he tells his friends.

Sue Williams  16:56

But if it have stayed with Nicole, they could have bought that penthouse.

Jimmy Thomson  16:59

Yeah, I think she did the right thing, honestly,

Sue Williams  17:02

Yeah, Andrew Urban seems a very nice chap.

Jimmy Thomson  17:05

Andrew urban, Andrew urban, used to do that TV show Keith.

Sue Williams  17:08

Keith Urban,

Jimmy Thomson  17:09

He seems like a nice chap.

Sue Williams  17:11

Andrew is good too, but much more likely to be a good husband, for Nicole

Jimmy Thomson  17:16

And Keith is a much better guitar player than Andrew.

Sue Williams  17:26

So that’s probably the best wellness place ever to live in Australia, right? And you said, you know about some places which are the worst ones in Australia?

Jimmy Thomson  17:35

Well, we were talking last week about the conference we were at, and one of the speeches, one of the papers delivered was about kind of place you need to live in, where your apartment has been designed with some sense of the wellness of the people living in it.

Sue Williams  17:51

So access to light and air

Jimmy Thomson  17:54

Space, fresh and outside space, you know, either in a balcony or a park nearby or, you know, and the size of the apartments as well

Sue Williams  18:03

Being well designed,

Jimmy Thomson  18:04

Yep. So you know, not, not just the basic size of the apartments, that’s an issue, but also the way the apartment is designed to make the optimum use of space

Sue Williams  18:14

And orientation,

Jimmy Thomson  18:15

Yep. And number one place to live is New South Wales like they just ticks all the boxes. Not all of them.

Sue Williams  18:25

Aparments designed for New South Wales are among the best country.

Jimmy Thomson  18:28

Yeah. Now they also looked into where in all the states like and they came up with the not surprising conclusion that if you live in a more deprived area of that your state, you’re less likely to live in a healthy apartment. And health of apartment apartments also includes things like mould and things like that, you know, and being properly built and not having the roof leaking and, you know, stuff like that. So if you live in a more deprived area, anywhere, your apartment is less likely to be a healthy apartment. And it seems like the worst place to live in Australia for in terms of the health of your apartment is in the Northern Territory.

Sue Williams  19:15

Really?

Jimmy Thomson  19:16

If you live in a poor part of Northern Territory, then your apartment is going to be not a very healthy place. Which is kind of not surprising,

Sue Williams  19:26

Is that because they’re cheaper, so

Jimmy Thomson  19:30

They’re cheaper, they’re badly built, they’re badly designed, you know, they cater for lower economic groups, all that stuff, you know, which just reminds me of you telling me about the first class carriage on the train to Bathurst, and how there’s first class and ordinary class, and they’re exactly the same.

Sue Williams  19:51

Yeah, yes, they are, because I travel regularly up to Lithgow train and I I Go first class. Yeah, because. Only a little bit more. And I’ve often looked at second class, I thought, What is the difference? And then I’ve said to a couple of railway workers at various points, what is actually the difference? Thinking they’re going to say, Oh, there’s more red leg room here. I hadn’t noticed or something. And they said, well, actually, there’s absolutely no difference between the first class and second class,

Jimmy Thomson  20:18

Physically.

Sue Williams  20:19

No. And I said, Well, why are we paying more for first class? And they said, Ah, because you’re with a better class of people. I was absolutely horrified, yeah, oh my God, that’s terrible.

Jimmy Thomson  20:32

And being the good lefty that you are, you insisted on traveling down with your your people in the economy class,

Sue Williams  20:42

Like, my brother. He was overseas once, and he there was a train trip, and they said you can go in first class, second classes. No, no, I’m going in second class. And he said he spent the whole time crammed in with 1000s of people. It was horrendous.

Jimmy Thomson  20:58

But so much for your principles, exactly. So, that’s the thing. I mean, it’s not surprising, really, that you find if you live in a deprived area of a state that doesn’t have a track record in building apartments that are good places to live, then the chances are you’re going to be living or renting an apartment that it’s just hasn’t been well designed,

Sue Williams  21:23

Yeah, which is a shame, because there are some great architects in the top end, and there are some fabulous houses, and they’re kind of really built, you know, in a tropical way, to catch the breezes from the ocean and things like that. So you think there’d be loads of potential there for great apartment buildings as well, but you’re sure there’s the odd one here and there.

Jimmy Thomson  21:44

You know Darwin. I mean, I always think when we go to Darwin, you like, you really feel you’re in Asia and and I was talking to somebody the other day, Julie Grove of Strata Vault, and she was saying that the way, she first got involved in strata, she lived in Hong Kong, they came home and discovered a balcony had fallen off the building and landed on their car. They said. He said, this ridiculous, this balcony, balcony just fall off and and the people they spoke to said, Yeah, look, look, balconies are very popular. So people just stick balconies on their buildings. And it’s sometimes it’s not that well built, so at least we don’t have that yet.

Sue Williams  22:25

Well, yeah, I mean, there was a building near us in Kings Cross that was the hotel, and they they just stuck, oh, a

Jimmy Thomson  22:31

Clip on balconies, yeah,

Sue Williams  22:32

Yeah. And I think when they went on, we all thought, oh, they look really cheap and cheerful. But in fact, they’ve lasted, and that was probably about 50 years ago,

Jimmy Thomson  22:40

Although I remember looking at that building when the first horror stories about cladding came out, looking at that building, it had the flammable cladding all the way up the buildings. But somebody had put a bamboo fence around their balcony so that, you know, for privacy or whatever, right next to the flammable cladding, flammable cladding, and right next to their barbecue, I thought somebody has either not thought this through, or they’ve planning something terrible here, but now the flammable cladding has gone, replaced all that, and the bamboo, bamboo as well, has gone as well,

Sue Williams  23:16

But not the balconies.

Jimmy Thomson  23:17

The balconies are still there. They’re still hanging in there. Okay, right. Well, tomorrow we’ll find out what the reaction is, if anything, to this change in the law. But until then, thank you Sue for coming late on Wednesday night to to do this special podcast.

Sue Williams  23:36

Great Jimmy

Jimmy Thomson  23:36

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

Sue Williams  23:39

Bye.

Jimmy Thomson  23:39

Bye.

Jimmy Thomson  23:41

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 favorite 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 you.