Podcast: Strata’s 2024 naughty and nice list

From the scandals around Netstrata – and the harsh scrutiny all strata managers have faced as a consequence – to the departure of Building Commissioner David Chandler, 2024 was a huge year in strata.
We look at those events as well as the roller-coaster rides for apartment owner clients of two now notorious strata managers who have found it just too easy to convince NCAT members to do exactly what they want, rather than what apartment owners need.
In fact, we ask the question, is the NCAT tribunal so ill-equipped to deal with strata issues that it is actively undermining Fair Trading’s efforts to improve public confidence in apartment living.
And finally, we highlight a new build-to-rent development in the heart of Sydney which will allow long leases and pets, but remove toxic strata committees, rampant rent increases and the threat of Airbnb displacing residential renters.
Ooops! In the podcast we said we were going to mention two ambushes in the Four Corners TV episode that brought Netstrata to book.  We talked about Stephen Brell but forgot to mention former Strata Commissioner John Minns.  However, we covered him in detail last week, so you’re not really missing out.

Transcript in Full

Jimmy

It’s that time of year. Santa’s on his way and we’re gonna tell them who’s been naughty and who’s been nice in Strata. Actually, the second list is pretty short.

But seriously, it’s a good opportunity to look back at what’s happened and what has been an amazing year in Strata.

Sue

So much has happened really, it’s quite hard to pinpoint it all in some ways.

Jimmy

So we’ve got the Net Strata Four Corners debacle. We’ve got the David Chandler’s retirement. We’ve got the ups and downs of life with Whitney Wang.

And we’ve got some good news. I’m Jimmy Thomson. I write the Flat Chat 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 Age, the AFR and Domain.

Jimmy

And this is a Flat Chat Wrap.

Sue

So, Net Strata, I suppose, was the biggest story of the year, wasn’t it?

Jimmy

Huge, absolutely huge. I mean, we’re still feeling the fallout from that. I sent an email today to the Fair Trading media people and said, whatever happened to that inquiry?

Sue

Oh, yes, because they were having an inquiry into it.

Jimmy

Yeah. And they had an independent inquiry by a company that was behind the whole star rating thing, you know, the ICERT thing that David Chandler brought in. And they, oh God, back in August, I think I was talking to them and they were saying, yeah, they were just a week or two away from reporting.

What happened?

Sue

Yeah, that’s the problem with Christmas, isn’t it? I mean, Christmas can be a great time. But the trouble is lots of stuff gets shoved away.

And sometimes big announcements get made on Christmas Day, just to try and get hidden.

Jimmy

They call it take out the trash day.

Sue

That’s right. If you want to try and make sure that nobody pays any attention to what you’re doing, do it around now.

Jimmy

So just to recap, and bear in mind that a lot of this stuff has already been covered in the website and there are links to, for instance, all the ABC reports that we’ll be discussing. So you can go and check for yourself if this piques an interest in you. But to recap, I think it was back in April, Four Corners did a report on, it was on Strata management in general.

And because it’s a national program, it had to go to every state. But the big fallout from that was two, let’s say, on-air ambushes. The first one was Stephen Brell, who was managing director of Net Strata and was president of Strata Community Association, which is the Strata manager professional body group.

Sue

In New South Wales.

Jimmy

Umbrella group. And so he was asked about insurance commissions and he said, quite rightly, Net Strata, Strata managers don’t take insurance commissions. But then the interviewer, Linton Besser, said, yeah, but you have a subsidiary company that organises Strata insurance and it takes commissions.

And those commissions are sometimes more than the commissions would be if the Strata managers were just taking commissions directly.

Sue

That’s right, because they gave some figures, didn’t they? And they found that enormously inflated costs.

Jimmy

One customer said that they were paying something like 120% on top of the actual premium. They didn’t realise this because it was being filtered through the brokerage. So Stephen Brell stepped down as president of SCA and went off to work for his company.

And we had become intimately acquainted with Net Strata as the Strata managers in our new investment property.

Sue

That’s right. And you hadn’t liked them from the beginning, had you really? You’d had trouble with them right from the start.

Jimmy

Well, they turned up at the first AGM and said, normally we would take things from here. You’ve elected your committee and we’ll look after everything and we’ll have a few meetings with you during the year just to keep you up to speed. And I said, because I had just been elected chair for my sins, I said, no, that will not be happening.

We will be telling you what to do. And the first thing is, we being the committee, of course, the first thing is, could you give us the Strata role? And they said, we don’t do that.

It’s our policy not to give you the Strata role. And I foolishly said, eventually, look, I’m going to copy this to your managing director, Stephen Brell, and…

Sue

Because it’s actually against the law. They have to give you the Strata.

Jimmy

Yeah, and I honestly…

Sue

And they can’t keep saying, oh, it’s privacy and…

Jimmy

Yeah, which is exactly what they were saying. And I said, I’m sure he’ll be interested to hear that his agents are breaking the law. I actually thought Stephen Brell would go, oh, my God, what are these idiots doing?

Sue

What a fool you were, Jimmy, because he basically said, no, it’s fine.

Jimmy

It’s not against the law.

Sue

This is how we work.

Jimmy

And then I got this letter where they cherry-picked some comments on a flat chat forum where I had said to somebody, the Strata manager does not have to send you the Strata role. And he’s going, aha, look at this. You told people that they don’t need to get the Strata role.

What I was saying was, as an ordinary owner, the Strata manager doesn’t need to send you the Strata role, but the secretary is entitled to get it. So this turned into a huge, huge ship fight. Sorry, Barney.

And it was getting really, really nasty. And he demanded my resignation as chair of the owners’ corporation, which is interfering in an owners’ corporation in a way that they’re really not supposed to do. And then Four Corners happened.

Sue

And suddenly he went very quiet on YouTube.

Jimmy

Very quiet. I haven’t heard from him. I haven’t heard from him in ages.

I haven’t had a Christmas card, but there’s a few days to go yet. Anyway, they are off now. I mean, the whole Four Corners thing exposed a lot of shady goings on by some of the biggest Strata management companies in New South Wales, if not the whole of Australia.

And it really was a case of lifting the stone and seeing what crawled out. What has happened since then, as we were saying before, there’s been inquiries launched internal inquiries, external inquiries, fair trading, you name it. Nobody has come up with any solutions.

I have heard that fair trading organized a round table meeting between representatives of owners and representatives of the Strata managers. As someone who put it to us, the prey and the predators.

Sue

In the same room together.

Jimmy

Well, what they said was, we’re going to have a meeting with all you guys together around the same table. And here’s a genius idea. A representative from each group will co-chair the meeting.

Can you imagine?

Sue

I don’t think you’re going to get very far with that.

Jimmy

So I don’t know what has happened at the meeting, but they got an independent chair in which was really necessary. So everything’s gone very quiet. Strata managers who used to go on my LinkedIn feeds and say that I was basically indulging in clickbait and I was exaggerating all the problems.

And I’m just repeating stuff that’s been on telly and that they’ve responded to and that other Strata managers are saying.

Sue

And from your experience.

Jimmy

And from my own experience.

Sue

And from your letters you received to the Flatshark website, of which there are many constantly.

Jimmy

Yeah. And the fact of the matter is that Netstrata, which is a provincial Strata management company based in Wollongong where it was, they have a business model that involves them coming in to buildings where there are a lot of people. The majority of owners have no idea about Strata and they say, look, guys, we know what we’re doing.

We’ll take over. We’ll run things for you, which theoretically could work really well.

Sue

Yeah. And everybody’s incredibly relieved because it means they don’t have to do any work.

Jimmy

They don’t have to do any meetings.

Sue

And they don’t realise that really.

Jimmy

Well, you’ve got this vertical integration thing happening where the company that is making the decisions on your behalf has also got a subsidiary that gets the insurance premiums organised. It’s got a subsidiary that chases debts. It’s got a subsidiary that does maintenance.

And I’m not saying that’s the case with Netstrata. Although there are elements of that that are true. But there are other Strata management companies who are doing exactly this, this vertical integration.

And if they can get the owners to sign that contract on the first day, the first AGM telling them that they are ceding control to the Strata management, you’re stuck with it. Unless you’re prepared to fight it, which we clearly were.

Sue

So it’s good that there is so much heat on Strata managers. Obviously, there’s lots of Strata managers out there doing a great job. Lots of companies doing good.

Jimmy

I feel really sorry for the Strata managers who have been knocking their pan in to try and do the right thing for months, if not years. That along comes one of the biggest and most influential. You don’t get much more influential than being the president of the professional body.

And they appear to not be doing the right thing.

Sue

Yeah, absolutely. Well, we look forward in the new year to seeing.

Jimmy

The outcome, if it ever surfaces.

Sue

And of course, one of the Strata managers we’ve heard a lot about has been a man called Whitney Wang.

Jimmy

And we’ll talk about him after this. We’re back. And Sue, before we took that little break, you mentioned Whitney Wang.

But do you remember in the Four Corners episode, the Strata manager, I think his name is Michael Lee, who hired, according to the program, hired people to… Security guards. Security guards to stop people coming in and voting against him being reelected chair in his building.

Sue

I’m sorry for laughing. It would be funny if it wasn’t so tragic. And for those owners in there, it was absolutely appalling, terrifying.

Jimmy

And then they go to the NCAT and say, OK, we want a statutory appointment. A compulsory Strata manager who will take over the whole running of the building. And the NCAT member says, yeah, sure, fine.

Have you got any companies in mind? And Michael Lee says, yeah, I’ve got this company. They’re terrific.

And they go, OK, we’ll take them. Just happens to be run by his wife.

Sue

So, oh, my God.

Jimmy

And he is still out there. He’s still operating. And NCAT is still dithering as they do.

Now, the person you mentioned before the break was Whitney Wang.

Sue

Yeah. And he’s the head of a company called PSMG.

Jimmy

Which stands for Professional Strata Management Group.

Sue

Oh, well, I didn’t know that. Well done. And he was recently banned for 10 years.

And the company was, I think, deregistered for a while as well. And he’s appealing that. So he’s appealing that on December the 16th.

So we’re watching that with interest.

Jimmy

But this was months ago that he was, you know, he was suspended. Well, he wasn’t suspended because he kept.

Sue

Well, no, he was debarred. But they said, OK, then he launched his appeal. And they said, OK, because you’ve got an appeal going on, so you can carry on working, which seems bizarre.

Jimmy

Yeah.

Sue

I mean, if you murder somebody and they say you’re going to have a trial in a year’s time, they don’t say, oh, but you can just carry on doing whatever you’re doing.

Jimmy

Rather than murder, let’s not overstate this. But imagine you’ve got somebody who comes into you’ve got a shop and somebody comes into your shop and says, I just start snicking stuff. And you say, right, you’re banned from the shop.

You’re not allowed in here anymore. And they go to court and say, well, I haven’t been found guilty of anything. You’ve got to tell them to let me back in the shop.

I mean, it’s that kind of thing where there’s no protection for strata owners from people who are prepared to push the law to its absolute limits.

Sue

Yeah, absolutely. It was interesting because Wang was kind of removed from a number of buildings.

Jimmy

Yeah.

Sue

He was put in as a compulsory strata manager in some buildings. Other buildings wanted to remove him from just being the strata manager. Yeah.

And yet still NCAT was considering putting him into other buildings when other buildings were having trouble.

Jimmy

Because they don’t check.

Sue

No, because they just kind of go round and round. And we talked about that last week, I think, about how we wanted specialist NCAT members, really, who specialise in strata.

Jimmy

Somebody was saying on the forum the other day that if the strata hub is to have any value at all, that’s the one where you put all the information on. If you put on there, you know, Whitney Wang or Whitney Houston or whoever has been disbarred and pending an appeal from acting as a strata manager, and that was there for people to see.

Sue

That would be handy, wouldn’t it, really?

Jimmy

Yeah, well, it would stop at least the idiot members of NCAT would be able to look at it and go, oh, maybe we shouldn’t put this guy in as compulsory manager. With huge powers. Total power.

They take over all of the powers of the committee.

Sue

Including spending money on legal fees and stuff.

Jimmy

But this is something I was going on about the other day, and I think this is going to be my campaign for 2025.

Sue

Oh, watch out, people.

Jimmy

NCAT is actually undermining fair trading’s efforts to make people more confident and living in strata.

Sue

Yeah.

Jimmy

Fair trading are laying it all out. They’re bringing in new laws. They’re trying to streamline their system.

And then finally, people get to the point in a dispute where they say, we need somebody to adjudicate. And then along comes NCAT. And it goes pear-shaped.

Sue

And it’s been like that for years. I remember going to NCAT about a matter, well, maybe 10 years ago, 15 years ago. And we were advised by lawyers, look, you never know what NCAT is going to decide.

So try and gather as much evidence as you can. Try and get as many people as possible to write to NCAT to complain about this certain matter. And you just really need to make them realise how important this is, and the strength of feeling about it.

Which has nothing to do with the law. But it’s kind of like they were saying that you just never know which way NCAT is going to rule. And so you really just have to try and put pressure on them, which is ridiculous.

There is a right way and a wrong way. And they should choose the right way.

Jimmy

I know you’ve got the situation where NCAT, if you look at the law setting up NCAT, it says that it was to be a low or no cost tribunal. I.e. it was intended so that any person could turn up and plead their case and say, this is the law and that person has broken it. Or this is the law, they say I’ve broken it, but I haven’t.

Okay. It should be quite simple. What happens is you turn up at NCAT and the other side says, oh, we’ve got this raft of lawyers here.

And the member goes, great, I won’t have to explain strata law to everybody because they’ve got their lawyers there. And so the plaintiff goes, well, I’d better get a lawyer as well. And there you go.

You’ve got your no cost legal dispute is gone.

Sue

And I talked to somebody involved in a building the other day. And after two years, they had spent $200,000 in legal fees at NCAT. And they had ended up in exactly the same place as they had started.

$200,000.

Jimmy

Yeah.

Sue

It’s only a small building.

Jimmy

Yeah.

Sue

It’s a hell of a lot of money.

Jimmy

Rulings from NCAT to the strata manager that the strata manager, big company previously mentioned in this podcast, had decided to ignore. And when they went back to NCAT and said, hey, the strata management company has ignored your rulings. The NCAT people said, oh, well, you’d better start another complaint process then.

Sue

Fill in all the forms again, put another fee, start paying some more money. Yeah, it’s absolutely ridiculous. So yes, NCAT, maybe that is the next level of apartment living that has to be sorted out.

Jimmy

I will want to know who in NCAT deals with fair trading issues because the answer will be, oh, we all do, which actually means none of us do.

Sue

Yeah.

Jimmy

Because you call up NCAT with a fair trading issue and they say nothing to do with us. It’s fair trading.

Sue

And nowhere does the buck stop.

Jimmy

There is no buck stopper.

Sue

Be careful how you say that at home.

Jimmy

When we come back, we’re going to talk briefly about David Chandler having left us this year. It’s after this. He was the colossus of the building commission, was he not?

Sue

He certainly was. Although he never really thanks you for saying things like that. Kind of a bit embarrassed, really.

But I think he’s taken enormous pride in cleaning up the construction industry, really. I mean, I think most buildings that are being built now, we can feel fairly confident they’re going to stand up. They’re not going to fall down and don’t have huge defects because many of them bear the handprint of David Chandler.

And good on you, David. And I hope you’re enjoying your well-deserved retirement. Although I think he’s still working as a consultant to the building industry, isn’t he really?

Jimmy

Yes. I mean, what he’s trying to do now is get back to his last great love in building.

Sue

Fishing.

Jimmy

Which was teaching people how to build properly, rather than pursuing people who hadn’t built properly.

Sue

Educating the industry.

Jimmy

To get it right from the start. And it was interesting in his most recent post on LinkedIn, he alluded to the fact that he was asked to be antagonistic towards dodgy developers. And he certainly fulfilled that remit.

But his successor is already making noises about being more…

Sue

Cooperative.

Jimmy

Cooperative, which is probably not a bad thing because the structures are there for pursuing people or getting people to establish whether or not they are good operators or not. And that’s the ISERT system. That hasn’t gone.

Sue

And they still have huge powers of entry. You know, when they suspect something’s going wrong, they can go into a building. So we’ll just have to wait and see.

And hopefully that will turn out well.

Jimmy

Yeah. I mean, because there’s been a lot of people in the industry saying, oh, we’ve got a housing crisis here and we shouldn’t be attacking developers because they’re the people who build the apartment blocks. Well, we should still be attacking bad developers who rip people off.

And that’s part of the thrust of the new laws, which we will talk about next week. And on a sunnier note.

Sue

Yeah, it’s interesting. We’re big fans here at FlatChat of build to rent. Building apartment buildings, they’re still managed by other companies or the developer.

And they’re perhaps a little bit more expensive than rentals on the private market. But they tend to have great amenities. You know, they tend to have lots of communal facilities and they’re really well run.

They have community groups within them and stuff. And they give you security of tenure. And you as a tenant, you have the right to paint your walls any color you want to.

You can put up pictures and all that kind of stuff. The kind of stuff that you really miss as a private renter. So it’s a really healthy addition to the landscape having build to rent.

And it’s interesting because a new build to rent has just opened in Sydney city centre. Just over Gadigal station. Because I think before that, many of the build to rent have been infill projects in outer suburbs.

Because that’s where there’s been the land really, where it’s been cheap enough to develop it. But now it’s actually coming to the city centre and hopefully will come to, you know, suburbs in the inner city. And it will kind of take a part of the market.

And most importantly, I mean, it’s only a small fraction of rental apartments. But more importantly, I think it puts pressure on the private rental market to lift their game.

Jimmy

Yeah. And you know what it won’t have? These build to rent.

Sue

It won’t have huge rent rises because they can only rent. They can only rise by a certain amount every year. That’s one thing it won’t have.

Jimmy

It will have pets.

Sue

It will have pets. Absolutely.

Jimmy

What won’t it have? Airbnb.

Sue

Oh, well, that’s true too. Yeah.

Jimmy

So you’ll be able to rent in an apartment at a reasonable rent. I think they’re probably a bit slightly more expensive than the average rent for an area. But you’ve got that security of tenure.

Sue

You’ve got a building manager on site usually.

Jimmy

And it is one body that is deciding what should and shouldn’t be done in the building. You don’t have these committees of well-intentioned people, half of whom want to rebuild the whole building, the other half of whom don’t want to spend a cent more than they have to because they’re on fixed incomes and constant battles and conflicts where you’ve got two lots of people or more than two lots of people all pulling in different directions. Basically, you go in, if you don’t like it, yeah, say I’m out, I’m cancelling my lease.

I’m going to leave and go and live somewhere else. And if you do like it, then you’re in a happy place.

Sue

Absolutely.

Jimmy

And now that we have achieved this happy place, we’ve had a good look at 2024 so far. Next week, which will probably be our final podcast of the year, unless the government decides to dump a whole bunch of new legislation while we’re all singing jingle bells, we’re going to look at what 2025 will hold for those of us who live in Strata. Thanks, Sue, for taking time.

I know you’re getting very busy because you’re heading off on a big adventure.

Sue

Yes, well, you are coming with me too as my handbag.

Jimmy

I’m your handbag and roadie.

Sue

We’re going on a cruise down from Sydney to Hobart, just a little five-night thing, but it’s the first Australian literature cruise. They do this in Britain and they do it in America and Cunard, the cruise line, is trying it in Australia. And I think there’s six or seven writers.

Jimmy

Yep.

Sue

And we’re going on this cruise and we’re giving workshops. We’re doing panel discussions all about books and writing and reading and stuff.

Jimmy

Six or seven writers and about 2000 passengers.

Sue

Yes, that’s, yes. So, yeah, we’re all doing different workshops on different things. And I’m doing travel writing and memoir writing and historical fiction writing.

And we’ll see how it goes.

Jimmy

I’ll be in the bar if anyone wants me. Thank you again, Sue. And thank you all for listening.

Sue

Fabulous. Thank you. Bye.

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 or your favorite 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. Go Unlimited to remove this message.