Podcast: Total control, new bloke on the block

This week’s podcast comes to you from less-than-sunny Glasgow, which may explain the slightly different sound quality.

But the chat is up to its usual standards as we speculate on what new Building Commissioner James Sherrard will bring to the job as he fills the substantial shoes recently vacated by the redoubtable David Chandler.

Then we have a look at the recent revelations about Netstrata allegedly slipping old receipts and invoices into their strata schemes’ portals.

This has led to some strata owners realising for the first time how much extra they have been paying for compulsory insurance, thanks to hidden brokerage fees and commissions.

And we speculate on what the next strata scandal will be – the potential misuse of “full delegation” clauses in contracts, which allow strata management firms to take over the running of strata schemes with little or no consultation with their owners.

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

Transcript in Full

Jimmy

Here we are sitting in a hotel in Glasgow in Scotland, and it’s not raining yet. Since we last spoke to you we have been in Saigon, Paris, Berlin, London and Southampton.

Sue

So we’re exhausted.

Jimmy

We’re absolutely exhausted But we’re still excited about doing the podcast because we’re crazy that way… we’re crazy for the podcast! We’re going to talk today about what’s happened while we’ve been jetting around the world including. Yes, there’s the appointment of the new building commissioner James Sherrard and more revelations about Netstrata and more to come by the sound of it. I’m Jimmy Thomson I write the flat chat column for the Australian Financial Review and I edit the flat chat website

Sue

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

Jimmy

And this is the Flat Chat Wrap.

So we have a new building commissioner David Chandler has as we know he’s retired and

Sue

Well, he’s gonna still be around isn’t he I think probably working as a consultant or something probably yes

Jimmy

Yes, but cutting back a lot on his hours now. Now. He was a real force of nature Mmm, I mean, I think I used the term bullish approach Which I think is fair.

Sue

Mmm. Yeah, but you had to be like that I think to get all the stuff done that he managed to get through and he had great standing with the New South Wales Parliament Didn’t he because they gave him the incredible powers they did which was which he used for good.

Jimmy

Well, basically he said You know without and not in so many words if you don’t give me the powers by changing the law Then I can’t do the job that you want me to do.

Sue

That’s right So I mean he’s changed so many things about the construction industry It’s kind of hard because I think a lot of people still don’t have much confidence in new apartments But we really need to improve the competence Because that’s the only way we’re going to solve the housing crisis really by building lots of new apartment

Jimmy

But the other view which was growing in volume towards the end of David’s tenure was he was putting in Restrictions standards, etc. That was making it harder for people to build the new buildings now I mean and that sounds ridiculous because what it sounds like is developers were saying you’ve got to let us build dodgy buildings So that we can build the number of apartments that need to be built But then that was a whole point of the exercise was to stop dodgy buildings being built

Sue

Mmm, that’s right And I mean lots of other things are being looked at at the same time about and stamp duty And about negative gearing other things that can help people financially

Jimmy

So, you know, hopefully but as you said, it’s all about the confidence in the actual buildings You put your money you put down a hundred thousand dollar deposit on an a new apartment or a fifty thousand dollar deposit on a New apartment and yet that comes with a commitment to find the money to pay for the apartment when it’s finished That’s a big gamble. It is and it shouldn’t be any kind of gamble at all.

Sue

No, that’s right It’s funny because we talked last week about a story I was doing about somebody who was living in an apartment in North Sydney and had lots of problems with noise issues from a gym Downstairs. Yeah, and the story appeared this week and I was looking at all the comments And many of the comments were that people would never live in apartments because of noise issues, right? And somebody was saying well Everyone, you know overseas Japan Tokyo everyone lives in apartments But apartments are built with such high standards that there are rarely any noise issues Yeah, whereas in Australia, you know, they always heard about lots of noise issues And it’s probably not true really but we just do need to have buildings built to a certain standard so that people would you know These stories about noise issues and problems with everything else cracking and membranes and all that kind of stuff Kind of pushed into the past.

Jimmy

Well, you know, it’s interesting the standards the Australian building standards I mean they have changed over the years, but they’ve been based on Criteria that were set back in the 1950s if not before Where there was no expectation of people living in apartments and when you talk about the noise Transmission issue between one apartment and the next one Well, you’ve got the thickness of the the flooring for a start how thick and how solid is the concrete then?

What’s on top of that? Is it carpet? Is it timber?

Is it tile? You’ve got the noise that goes sideways some of walls and between apartments are so thin You know, you can hear the people next door changing their underwear And some apartments are built that the walls are so substantial and so Cleverly designed so that you wouldn’t even know there were people living next door to you Yeah, there shouldn’t be that huge range of quality I mean there are people who will say that they would live in an apartment and put up with a certain amount of noise if It meant they could afford to live there But that’s something that should be upfront.

You know, what we’re looking at is everybody being Expected to judge every apartment by the same standard, which is well, you know the standards We don’t know what they are for a start But I think they brought in an acoustic standard a few years ago and that some developers would say this is a four-star Acoustic level and people could go. Yeah, I’m not going to hear my neighbors walking around or I’m not going to hear them their TV But there’s nothing that says well, how about the three star in the two star? How do you know that you’re buying into an apartment like that?

Sue

And I think you’re right I mean acoustic standards have changed so much and there aren’t really fresh challenges today. Everybody has got fantastic sound systems Hmm, everyone’s got great TVs Yeah, and they watch much more TV than obviously they ever used to and they attach their TV to the wall Yeah, that’s wrong might be the other side of your wall. Yeah, that’s right And yeah music is it’s kind of noisier because it’s all those kind of deep Really lots of techno music.

Yeah, there are real challenges But also I guess our expectations have changed as well like I grew up in what you would call housing commission in Britain and it was a row of Terrace houses and we heard looking back. We heard our neighbors, you know We could hear them whenever they went the toilet flushed, right? But that was kind of quite exciting really because you had a toilet.

That’s right for my parents It’s the first time they lived in a house with a toilet indoors So it was kind of a novelty, but we could hear the people Arguing we could hear the kids shouting there were kids the same age as us and we didn’t really think anything of it Hmm, but now we’re much more about living quietly and you know We kind of feel that we’re entitled us because we’re an entitled generation We’re entitled to our own privacy and sound whereas, you know houses apartments sometimes get a bad rap Whereas houses can be really noisy, you know, you you have neighbors mowing the lawns

Jimmy

Leaf blowers.

Sue

Yeah, that’s right Houses can be incredibly noisy too and it can be harder to rein in the noise from houses We had friends who had the we’re in a standalone house But they had really noisy neighbors and there was nothing they could really do they kind of went to the council council said well No, you just have to call the police Whereas in an apartment building if it’s functioning properly as it was meant to there are lots of things you can do about noise About casual noise.

Jimmy

Yeah, and you know persistent noise. Well there it’s part of the standard bylaws It’s part of the law that you can’t create a nuisance anyway to get back to the new building commissioner His name is James Sherrod. He’s has a long track record.

He’s recently been working with Transport New South Wales It seems in the area of acquiring properties so that they could build these new motorways and stuff Oh, wow, that’d be controversial. Yeah, so he would be used to a bit of personal conflict He’s worked on the Olympics here and the Olympics in London. He sounds like I hate to say this He sounds like the ultimate bureaucrat.

Well, that sounds very pejorative doesn’t it does it sounds like it sounds like he’s a bit of Sir Humphrey maybe from

Sue

Yes minister, but maybe that’s what the job now entails We’ve had the period of huge change and uproar and they’ve been systems put in place now That should safeguard the the security and the building integrity of new buildings So maybe now is the time for a more well, he’s talking about collaborative being more collaborative Hmm.

Jimmy

Well, I’m sure developers would welcome that I mean, I guess us consumers would be nervous that collaborative means giving in but it’s interesting that in his last One of his last interviews before he retired David Chandler said he was a terrible bureaucrat He just wasn’t good at being a bureaucrat He was good at getting stuff done and they’re not always the same thing. So maybe the government And it’s not actually a government appointment. It’s the head of fair trading the secretary Has made this appointment and I’m sure the government were very influential on who was on the shortlist But maybe they’re looking for somebody who is a bit more of a bureaucrat and a bit less of a bulldozer Mmm, sure.

Yeah, but interesting to see how it goes for the average punter And not actually just the average pointer for people who’ve been working in the strata Area as we have for many many years the idea that somebody is coming in and saying, okay I’m gonna stop kicking heads now.

Sue

Hmm.

Jimmy

I’m gonna stop kicking backsides and taking names I’m actually going to sit down with the developers and the people who live in strata and you know people like OCN and the strata managers Lord help us and And we’re going to work out how we can move forward and get all these apartments built It worries me that James Sherrod who seems like a very able person very experienced They’re not trumpeting that he’s had a huge amount of experience in the residential sector Hmm and there’s a big difference Obviously, there’s a big difference between building roads and building apartment buildings There’s also a big difference between building office blocks and building sports stadia then from building apartment blocks because Apartment blocks are where people live and people have to be able to live in some level of harmony

Sue

But David Chandler, what was his background in construction was a residential.

Jimmy

He was building our residential Yeah, I would imagine I’ve imagined a lot of residential He was he was very consumer focused.

Sue

Hmm.

Jimmy

Yeah, I got a feeling that mr Sherrod and we’ll try and get him on and have a chat with him Yeah, I’ve got a feeling he is much more outcome focused in terms of let’s get these apartment buildings built Hmm. Yeah, and how he’s going to do that without Changing and maybe probably has no intention of changing this the standards that have been established by David Chandler But you know, he said when people don’t play the game they will be pursued without fear or favor. Oh, that’s good Yeah, yeah, so I mean we’ll see if he if he stands by that But you know There are lots of people around like the good developers like we constantly talk about Murdoch and people like that Who have done the right thing and try to do the right thing and and charge a bit more for it?

And I think they are the kind of model for the way forward.

Sue

Sure. Absolutely And there are other good developers, but sometimes things do go wrong, you know, like Fraser’s property They built Central Park in Sydney, which is one huge number of awards both locally and overseas But they’re having problems with the building now with them, you know, do you remember the falling? Plant the planter boxes falling off the building and they’re scaffolding up and yeah, it’s kind of a tricky one I think they found that some of the the bolts the heads were shearing off So they have to get that fixed.

Jimmy

Yeah, it sounds as if they are doing it Yeah, but that building would be past its its defect stage, wouldn’t it?

Sue

Yes, but I think they started negotiating about that a while ago.

Jimmy

All right a few years ago So that that’s when the problem first came to light so things can just happen But as long as the developers are kind of quick to try and get in and remedy the situation and that’s a big difference The developer says oh we can see the problem here and we have a responsibility to fix it Whereas when you get developers who say there is no problem here. There’s nothing that we need to fix That’s when you get into these really nasty issues as we discovered all those years ago.

Sue

Yeah.

Jimmy

All right. Well, let’s wish mr. Sherrod luck

Sue

Yes, welcome to the bullpit

Jimmy

And hopefully we’ll be talking to him sometime soon when we come back we’re going to talk about net strata and strata managers in general and the issue of Delegation bull delegation that’s after this So there’s been another big story in the ABC The ABC seemed to be leading the way and a lot of these things Linton Besser who did the original story on net strata which saw Stephen Braille stepped down as president of the strata managers Union the SCA

Sue

New South Wales.

Jimmy

Yep, New South Wales and So the Strata Commissioner John Mince step aside while they’re investigating conflicts of interest Linton’s been shortlisted for a Walkley.

Sue

That’s right.

Jimmy

Yeah, which is great About time our area of journalism got recognized So we just last week had another ABC report from Amy Greenbank about how net strata have been quietly filing receipts and invoices on their the Controversial commissions for insurance. Well, they’re not commissions They’re calling them brokerage fees right and that way they used to be able to get round the legal requirement to Declare commissions, right because they they have their own insurance companies, don’t they?

Sue

So they’re basically saying we’re not accepting commissions for referring stuff to them

Jimmy

But we’re taking brokerage fees and it’s all going into our bank account anyway So and then and now a lot of strata committees are looking at these Seeing these invoices for the first time and going hang on you charging us like in one case somebody was like over a hundred percent Commission or brokerage fee on top of the actual premiums for the their insurance

Sue

Yeah, so it’s really kind of illustrated another huge.

Jimmy

Well the enormity of the issue that exists but what this has opened up and this affects a lot of other strata managers is the whole question of Full delegation. Yes Tell me what you mean by full delegation There is a part of the standard SCA New South Wales Contract that says that the strata manager can take full delegation of all powers and that is there as a kind of safety net for instance if a Strata committee became so totally dysfunctional that nobody was talking to each other. They couldn’t have meetings or the people who’ve been running the place either passed on or Moved on and the people who are left had no idea what they’ve been doing because it had been some sort of autocratic Set up until then whatever some disaster that meant buildings were not getting things done.

They weren’t having the meetings They weren’t paying the bills There’s always been this delegation issue Whereas the strata manager can step in and say okay I will act as a chair until you get elected chair I will act as a treasurer until you elect a treasurer so same for the secretary What net strata have been doing is we discovered dealing with them directly they put in the contract the full delegation But yeah, then you realize what you’ve done is said it’s not in the case of an emergency It is like a standard practice And I recall the first meeting at our investment property the first AGM strata manager They’re saying normally at this stage You know you’ve elected your committee and we take over and run things and we’ll keep you informed of how things are happening

Sue

And which is quite foreign to most people isn’t in apartment.

Jimmy

You think oh, we’re in charge Our building here that for people who have been in strata for a while Yes But for people and a first AGM of a new building where the vast majority of people have never lived in strata before When your strata manager stands up and says this is standard practice we take over from here you go Oh, I didn’t know that well great. I don’t have to worry about it anymore

Sue

Yeah

Jimmy

And now this was before the whole net strata scandal broke out and a lot of people in the building were going Oh, wow, is that how it works and we had to stand up and say no you will not be doing that yeah Mm-hmm, and and then it became a real tussle didn’t it really well it immediately became messy because they refused to Provide the strata role to our secretary and their argument was well. We are the secretary

Sue

Yeah

Jimmy

But we’re saying the law says you’ve got to give the strata role to the secretary so the secretary knows who’s in the building and They said look at the contract you have signed over full delegation to us we are the secretary therefore We’re not breaking the law and I mean I have to say that nobody actually said those words But that was the clear implication They wouldn’t hand over the strata role But they said they weren’t breaking the law a lot of new buildings They get a new strata manager strata management company in the strata management company has set up everything In Consultation with the developer and you get to that first AGM and there are all these people who have never lived in strata before and even if they have they’ve never been to a committee meeting before and The strata manager stands up and says you’ve just signed over full delegation to us So we’ll take it from here off you go. I will let you know how things are going. That’s not necessarily a Bad thing except then you find out all this stuff about these commissions They are in a position where they can use the powers that they’ve been given to them Through the contract to start signing other contracts with their own companies, and it’s so obviously Potentially open to misuse So that is going to be the next thing now the story that Amy did and the ABC news Website she quoted a strata manager who basically said look the full delegation powers have always been part of contract But net strata have taken an extreme interpretation of what that means a ie whereas other strata managers would say look this is a safety net so that the whole system doesn’t fall over because of whatever is Happening internally in the the building net strata have taken that as far as we know to mean We can take full control and we can make decisions on your behalf And that is just that is fine if everybody is being angelic in their approach

Sue

And there are no problems yes

Jimmy

Yeah

Sue

But when there are problems it becomes really difficult And it’s really hard for owners to say it seems that we don’t have any power to decide anything in our own building if that’s What the strata managers are doing it’s really really difficult

Jimmy

Yes, and especially this thing of withholding the strata role. I mean people say well. Why would that be an issue?

Why do you need the strata role you need the strata role if the owners in the building want to get in touch with other? Owners they need to know who they are they need to know their addresses even the email addresses They need to know them well

Sue

And even if you’re going to hold a meeting you need to be able to tell people the strata managers might tell We don’t need a meeting about certain things whereas the actual Elected strata committee might decide you need a special EGM in in some instances But they can’t actually call that because they don’t have access to the strata role So they don’t have a means of

Jimmy

Contacting all the owners exactly, but who does have the means of contacting all the owners It’s the strata manager, and we’ve had a report somebody’s written to the flat chat forum Which I recommend people take a look at it because the stuff in there is absolutely fascinating somebody’s written and said we’ve had a lot of problem with our strata managers, and we decided that we want to change the strata managers and The strata managers have started writing to the owners saying that we are a bunch of evil Troublemakers, and it’s going to cost them thousands of dollars if they agree to change and even though they have had an EGM to Decide not to renew the strata managers contract the strata managers have said it was an illegal EGM And they’re refusing to stand down and meanwhile They’re writing all these letters to the other owners So you can see the power of having that strata role you can see why it is and any strata managers out there Who are listening to this it is against the law not to provide the strata role to the strata secretary the elected strata secretary the elected strata secretary and If you’re not sure about that talk to your own strata lawyers And they will tell you what is right and what is wrong okay the dawn has arisen right in Glasgow We are about to start the next stage of our round Europe tour and the next time we speak to you We’re going to be in Paris excellent on our way to Vietnam And we’ll talk about next time we should talk about the situation with apartments in Vietnam.

It’s really interesting Okay, that’s enough for me. Thanks Sue for taking time out from your busy travel schedule And you too Jimmy and thank you all for listening. Bye

Thanks for listening to the flat chat rap podcast you’ll find links to the stories and other references on our website flat chat Dot-com dot a you 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 rap 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.