Podcast: Strata struggles will still be alive in 25

Looking forward to 2025 involves a certain amount of looking back and we wonder this week what will happen, if anything, as a result of the long-delayed outcomes of investigations into Netstrata in particular or strata management in general.

And we look at the proposed new strata laws for NSW.  Jimmy speculated that the least likely to make it all the way is the plan to bring strata contracts under Australian Consumer law.

Why?  Because the parties with the most to lose – Strata Community Australia and the NSW Attorney General’s office – are pretty powerful voices.

And we look at our poll on what Flat Chat readers like most about the proposed changes.

There’s a clear split between laws that affect existing owners and buyers but there’s one proposal that will affect everyone in strata that stands out from the crowd.

That’s all in this week’s and 2024’s final Flat Chat Wrap.

Transcript in Full

Jimmy

Last week we talked about the year gone by in Strata and promised that we’d talk about the year to come.

Sue

Yes, and is it going to be a good one?

Jimmy

Well, we shall see, we shall see. Look, there’s the potential for it to be a very good one for Strata owners and residents. It also has the potential to be really disappointing.

Sue

No, no, no, no. I can’t cope with any more disappointment. It has to be a good one.

Jimmy

So the big issues coming up will be the result of the Fair Trading Inquiry into Net Strata and the SCA and the SCA’s internal inquiry into Net Strata and the new laws that come in. And we have had a poll running in FlatChat.

Sue

I’ll be keen to hear about that.

Jimmy

Yeah. I’m Jimmy Thomson. I write the FlatChat column for the Australian Financial Review and I edit the flatchat.com.au website.

Sue

And I’m Sue Williams and I write about property for the Sydney Morning Herald, the AFR, The Age and Domain.

Jimmy

And this is the last FlatChat Wrap of 2024. Right, let’s get the Net Strata thing out of the way and the investigations into that. You remember this started back in March or April.

And they’ve got an independent company, McGrath something, I forget what they’re called, to come in and do their investigation. Now, I called somebody on that company and chatted to them back in April and said, how’s it going? And they said, oh, we’re a couple of weeks away.

Sue

With a result?

Jimmy

Yeah.

Sue

Oh.

Jimmy

I wrote to Fair Trading last week to ask them how it’s going and got a pretty snooty response, I would say.

Sue

Oh, what did they say?

Jimmy

This is an ongoing investigation and because it’s ongoing, we can’t comment. Oh, that’s the second excuse for saying nothing that government gives you. The other one is…

Sue

Freedom of information, privacy of information.

Jimmy

Privacy, privacy. And the other, the third great government excuse is we do not comment on individual matters.

Sue

Yeah.

Jimmy

Anyway, so they’re saying we’re not saying anything. It’s ongoing. They can’t say when it will be resolved.

I wonder if it ever will. I wonder if they’re just hoping it will just go away because I would bet all the toys under my Christmas tree that SCA has been lobbying hard for the government to just go and change your laws. Yeah, you look good.

That’s fine. You fiddle around the edges. We’ve sorted things out here.

Everything’s good. And, you know, by the time everybody comes back from the New Year celebrations, SCA will have settled back into exactly what it was before. SCA, by the way, if you’re not familiar with that term, it’s Strata Community Association.

It used to be Strata Community Australia, but then they spread their wings into New Zealand, so they can’t call it that anymore. Right.

Sue

So that’s a bit of a cynical attitude, really, from you. Yes, I know you’re a bit like a dog with a bone. You won’t let this go.

Jimmy

You’re damn right I won’t.

Sue

So Jimmy versus Fair Trading. I think I’ll put my money on Jimmy.

Jimmy

Well, it’s not Fair Trading. It’s SCA.

Sue

Well, yeah.

Jimmy

These are the gatekeepers. These are the culture holders. These are the people who, I mean, I’m getting emails from Strata managers saying somebody needs to do something about these people.

There are three or four people who are CEOs of big companies who have got themselves into positions of power in SCA, and they are determining the policies that SCA follows. This is not unusual. This happens in every aspect of business.

What we should not forget is that Strata Management is a business. SCA is a professional organization, allegedly, and they will do what works for them, just in the same way that doctors do what works for doctors, and trade unions do what works for their members, or they think what works for their members.

Sue

But doctors have a code to do no harm, and so they kind of have to look after their patients, and we want to make sure that the SCA looks after their clients as well as they look after their own people.

Jimmy

So the equivalent of the Hippocratic Oath for doctors, maybe we should call it the Hippocratic Oath for Strata Managers, or SCA, because a lot of Strata Managers are doing a great job.

Sue

Absolutely.

Jimmy

But yeah, the Hippocratic Oath for SCA should be first don’t rip off the client. How about that? Good idea.

Sue

That works really well.

Jimmy

They do have a code of conduct, which sometimes you look at what they actually do and look at what their code of conduct says, and it’s almost like a checklist of all the things they’re not going to do. Cynical? Perhaps, but it is December and Christmas is just around the corner, and you know how much I love Christmas.

Sue

Oh, don’t start that. Christmas is a great time.

Jimmy

Yes, it is.

Sue

You just have to buck up and get with it.

Jimmy

Right.

Sue

So what’s next?

Jimmy

And the other thing that’s coming up next year is a whole bunch of new laws. Now these laws have had their second reading, which basically means the Fair Trading Minister, Anula Chantibon, has set out his stall with all the things that he wants the law to have and why. Which is a really important thing.

People don’t realise this, but when it comes to disputes, and you know, there’s always disputes over interpretations of the law. When it comes to disputes, people will say, well, when the law says this, it means this. You can go back to the second reading of the bill, and you say, well, the Minister, when he gave the second reading, this was his interpretation.

And that’s basically the one that got voted on, and that’s the one that should apply in cases where there are grey areas. So that’s all. Basically, the whole of the second reading is on the FlatChat website for anybody who wants to go and look at it.

So there are a lot of changes to the law, to the way things work, and they include things like strata management contracts coming under consumer, Australian consumer law. That is huge.

Sue

Yeah, absolutely.

Jimmy

And that is, I think, the most vulnerable change in the law. I would bet anything that SCA, the guys who are running it now, and I don’t know who they are, are out there saying, oh, this goes too far. Just leave it to us.

We’ll be fine. You know, we’ll make sure it’s observed.

Sue

But we really want that to stay in, don’t we?

Jimmy

Absolutely.

Sue

I think it’s long been a catch cry of people that, say, buying a new apartment, you have less protection than if you buy a new toaster.

Jimmy

Yep. Unless you buy one in the toaster building. Sorry.

Sue

So yeah, so we really want that to stay in because this is going to be the biggest purchase of most people’s lives, really. And to have so little protection about that, really. And transparency and all those things.

Jimmy

And it’s not just the purchasing, it’s the management. You know, if you’ve got a management contract that says that the strata manager cannot be held responsible for any mistakes that they make, even when they know they’re making a mistake, that’s ridiculous. And Australian consumer law, anybody who challenged that under consumer law, would almost certainly win the case and have the contract revoked.

So what this would do is make SCA go back and look at their contracts, their very one-sided contracts, and say, what are we going to get challenged on here? Because they know that they’ll just be one after another if they don’t fix it. So that’s probably the major change coming up.

And there’s things like training for committees is going to be, I mean, who’s going to do it?

Sue

Who’s going to run the training, you mean?

Jimmy

And how are you going to know people have been trained?

Sue

Yeah, they get maybe a certificate or…

Jimmy

Well, somebody’s going to have to pay some money to put together a course that, you know, our niece recently had to do an exam online, where she had to put a mirror behind her and put her camera on so that anyone looking at her online could see there was nobody behind her answering the questions. So I don’t know if they would go to that extent. But I think there has to be some way of confirming that people have actually participated in some sort of training course.

Sue

Well, probably a better solution would be, I know you’ve just done the, like, because you lecture at Boston University, every year you have to do a kind of an anti-discrimination course to make sure that you’re kind of sensitive to ethnicity and gender and all that kind of thing. And that was just a simple multiple choice exam, wasn’t it?

Jimmy

You had to do online. No, no, it was more than that. It took two and a half hours.

You know, there were video scenarios where somebody, a male staff member is interested romantically in a female staff member. And she says, I’m going to go and fix up this room for this meeting. And he says, I’ll come with you.

And as he’s saying that, he puts his hand on her back. And then the question was, what would you do? And it gave you three, as you said, multiple choice.

But it was quite sophisticated. But I think with the advent of Zoom as becoming very much part of our strata lives, a whole committee could be sat down and there would be a camera on the committee while they all go through various multiple choice things. That would probably be one way of doing it, which would be reasonably cheap.

Because it’ll have to be cheaper. It won’t get done.

Sue

Yeah, that’s something to look forward to, see how that works.

Jimmy

Yeah. So that’s the promise of 2025, is that the laws are going to be changed and hopefully the right laws will be changed and they won’t be shoved out the side. Because that does happen.

Sue

Or watered down too much.

Jimmy

I mean, what will happen is some member of the opposition will come in and say, I’ve got all these constituents who are really worried about this or that. And we’re going to object to the law. And currently it’s not so bad in New South Wales, but it’s federally, nationally, the politics are descending into this anything you want, we will object to kind of thing.

So let’s hope that doesn’t happen with the strata laws.

Sue

Yep, absolutely.

Jimmy

When we come back, we are going to look at the standings in our poll of what you like best about the proposed laws. That’s after this.

Sue

So what did the poll ask Jimmy?

Jimmy

Well, I put 10 items from the proposed law changes and asked people to pick five of them as their favourites. And it’s quite interesting that it divides very significantly between the changes in laws that apply to people who are already owners and the changes in laws that apply to people who are about to buy or about to enter strata for the first time. For instance, one of the proposed changes is that developers will not be allowed to deliberately underquote levies to attract more new buyers.

The levies have to reflect the actual cost of running the buildings. And there’s things like that. The disappointing thing is it’s one of the things that John Minns had suggested was a two-stage AGM, first AGM.

You know, have your first AGM, get everyone together, elect your committee and do not agree to any contracts. But there are things like embedded networks and things like that that have to be revealed. Anyway, so of the 10 questions, the ones about new apartments were like in the bottom half of the league.

So I’m going to ask you a question. Here are the top five. I’ll give you an idea of them and you can tell me what you think the most popular one was.

So one of the new laws will be that strata schemes will not be allowed to defer essential maintenance. Strata committees will have to undergo training. Strata contracts will have to come under Australian consumer law.

The building manager will have to have the best interests of the strata scheme and committees will be required to observe strata laws in their dealings. They can’t just ignore them.

Sue

Okay.

Jimmy

So what do you think is number one?

Sue

I reckon that’s the last one you said, that strata committees will be required to observe strata laws.

Jimmy

Nope. You want to take another punt?

Sue

Is it the one about strata’s coming under consumer legislation that we talked about?

Jimmy

That’s far and away. It’s by no means scientific. We had about 100 people made their votes.

18% of them said put contracts under Australian consumer law and the rest were all kind of round about the same level. 14% said that committees or strata schemes should not be allowed to defer essential maintenance. 14% said they should observe the strata laws.

13% said the building manager has to keep the best interests of the scheme to the forefront of the thinking and only 12% liked the idea of training. Now that’s obviously partly because our readership has a lot of committee strata committee members in it and they’re kind of going, really? How many evenings a week do I have to give up?

But it still made it into the top five.

Sue

Okay. So it is a big impost on time, but people were kind of willing to consider it anyway.

Jimmy

Yeah. But this idea of, well, we talked about the contracts coming under Australian consumer law and that is a good thing. It has to be a good thing.

I think politically it’s very vulnerable. I think the attorney general’s office of New South Wales will say, hang on, this is our territory. We decide the laws for New South Wales and you’re handing a chunk of our responsibilities, which we usually ignore, over to the federal side.

We’re not having it. And I think I’m sure there will be a lot of pressure from them. In an ideal world, fair trading and the attorney general’s office would be sitting down once a week and working out how they can work well together.

In fact, they seem to be like opposition football teams. You know, the Sydney FC and the Western Wanderers of politics.

Sue

So they meet for the occasional derby.

Jimmy

Yeah. To pretend that they’re going to work on things together and nothing ever happens, nothing ever changes. So yeah, that’s my ill-informed opinion on that.

The building managers having to put the best interests of the schemes at heart.

Sue

I mean, you know, you’d expect that because obviously building managers would do that, but…

Jimmy

Why then are people concerned about it?

Sue

Yes. And we do know that building managers can tend to favour one group over another group. I mean, often they will favour owners over tenants and one can understand that bias, although…

Jimmy

They shouldn’t do it.

Sue

No, exactly. But we have had examples in the past of favouring different ethnicities. Yep.

And favouring, like say, Strata committee members over everybody else.

Jimmy

Very much so. That’s such a no-brainer for a Strata building manager, I should say.

Sue

And really, they should be careful about that kind of bias, obviously.

Jimmy

But you know, our friend Francesco Andreone, who’s written quite a few pieces for us this year and has his own website, GoStrata, I think it’s called. He made the point that when you’ve got services on a fixed contract, the less they do, the more profitable they are. OK, so if they can evolve, and this applies to Strata managers as well, if they can evolve a relationship with the committee, that means we will look after you guys and we will make sure that you get reelected.

But apart from that, every time we answer a call, every time we do a job, every time we look at a problem, that actually depletes our profit margins.

Sue

Yeah.

Jimmy

So, and it might not be, and it probably isn’t the individual managers, you will have a big company saying to them, whoa, guys, you just put in three overtime claims in the past month, just pull it back because this is eating into our profits. So you can see why in some cases, some building managers are very much more focused on the profit margin of their service rather than the actual quality of their service. And I think that’s where this comes from.

Sue

Yeah.

Jimmy

And there’s also the fact that you, where do you go to get a qualification to be a building manager?

Sue

I don’t think there is a qualification.

Jimmy

There is no qualification. For a building manager, yeah, sure. So, I mean, it’s very different because somebody was saying to me recently, you know, in the midst of all this stuff about strata managers, well, what kind of training do they get?

And actually they get quite a lot of training. And SCA, the one big success of SCA is that they’ve developed a training programme and strata managers have to get so many points a year to show that they’ve kept the training up to date. Building managers, meh.

Maybe there’s a TAFE course. I don’t think there is.

Sue

No. And it’s funny because some people tend to be former engineers, which is kind of handy for building. Some tend to be former concierge, which sometimes if they’re good, they can be fantastic.

If they’re not very good, can be a disaster as we’ve experienced before. And others might have had a real passion for strata. Maybe they’ve lived in apartments themselves and become building managers as a result.

Jimmy

Yeah.

Sue

So there’s lots of different paths to it, really.

Jimmy

We asked Tim from Strata Choice what his preference would be in choosing a strata manager. Would he rather have somebody who was a policeman or somebody who had worked in the hotel business? And he said the hotel, somebody who’s worked in hotel front of house is going to be a better choice as a strata manager because they can understand that people are different and people have different needs.

And I would say the same about a building manager. Do you want somebody who’s worked in the hospitality industry or do you want somebody who is an engineer or maybe from the army, maybe a SAPA? Would you want somebody like that as your building manager?

And I think the answer is somebody who has worked in maintenance in a hotel.

Sue

Yeah, that would be not bad.

Jimmy

That would be perfect, wouldn’t it?

Sue

It’s funny because years ago, we had to change our concierge service and we were advertising for a new concierge company. And one of the companies that came to us said to us, which ethnicity would you prefer? And we said, we don’t have a preference for ethnicity.

We just want good people. And then they said, okay, what weapon should they carry? We went, what?

We’re not that kind of building, hopefully. And it was kind of really strange. And eventually we went with a company who had a hospitality background rather than a security guard company.

And there was a huge difference between the two. So I think you’re absolutely right. Hospitality over everything else.

Jimmy

Hospitality and practicality. That’s maybe somebody from a cruise ship.

Sue

Yes, possibly.

Jimmy

Like the one what we have just been on.

Sue

Yeah, we’ve just been on a literature cruise, which was fantastic.

Jimmy

Yeah, on the Queen Elizabeth. And it’s funny, isn’t it? Everybody says, oh, you’re on the QE2.

And no, it shows you how brands really get fixed in people’s brains. Anyway, we were on a cruise ship and it was fantastic. And the people that we interacted with there could not have been more helpful.

Sue

It’s fantastic.

Jimmy

So that’s us. That’s us ready for our Christmas holiday. So this will be the last flat chat wrap for this year.

Sue

Thanks for listening to us all year. It’s been fantastic to have such great company.

Jimmy

Yes, the figures go up and down a little bit, but generally we’re getting a good bunch of people. And of course, the transcript thing never gets my name right. The transcription service never gets my name right.

Sue

What do they call you?

Jimmy

Oh, they put a P in Thomson.

Sue

Oh, OK. Well, that’s forgivable, isn’t it really?

Jimmy

Yeah, but no, it’s not. And they made a really mangled Eleni Petenos’s name.

Sue

Oh, I can imagine.

Jimmy

I think she ended up as Eleanor Petoneous or something like that.

Sue

And they have trouble with flat chat as well, don’t they?

Jimmy

No, that was the other transcription service.

Sue

Oh, OK.

Jimmy

I can’t really blame them because I was replying to an email the other day that had flat chat in the subject title and I saw it was fat chat. And I was about to make this funny little joke about how they’d got it wrong and about how it was very accurate. I realised I was the one who had made the mistake originally.

All right. Well, thank you all for listening over what has been a turbulent year. We hope we’ll have smooth sailing as we set forth into 2025.

Sue Williams, your voice, people love your voice. Somebody said to you the other day that they could listen to you all day.

Sue

Yeah, but they were probably lying.

Jimmy

I wish I’d been there because I would have said, no, you can’t. But thank you very much, Sue, for being such an essential part of this podcast.

Sue

And a happy Christmas to everybody and have a fabulous New Year.

Jimmy

And we’ll talk to you again in January.

Sue

Bye.

Jimmy

Bye. Thanks for listening to the Flat Chat Wrap podcast. You’ll find links to the stories and other references on our website, flatchat.com.au. And if you haven’t already done so, you can subscribe to this podcast completely free on Apple Podcasts, Google Podcasts, Spotify, or your favourite podcatcher. Just search for Flat Chat Wrap with a W, click on subscribe, and you’ll get this podcast every week without even trying. Thanks again. Talk to you again next week.

Transcribed by TurboScribe.ai.