Podcast: Training wheels and manager myths

The week’s podcast covers a wide array of topics, from your thoughts on strata committee training, and the ups and downs of the property market to common myths about strata managers.  And we’ll throw in a reference to photography as well.

We have a look at Amanda Farmer’s survey into strata owners’ thought on training for strata committee members.  We won’t do too many spoilers but it’s worth hearing what you, the owners and tenants really want.

Then we look at how volatile the building industry has become, with record number of small builders going out of business while the government’s housing targets seem to be as out of reach as ever.

Then we have a chat about some of the main myths about strata managers, as highlighted by Bobby Lehane, CEO of the Pica Group.

And we give a nod to a photograph that accompanied one of Sue’s stories about boarding house residents being evicted to make way for luxury houses in Sydney’s Paddington.

All in this week’s Flat Chat Wrap.

 

Transcript under construction

Jimmy

Everybody’s getting very excited about the idea of training for Strata Committee members.

Sue

Excited?

Jimmy

Well, I say everybody.

Sue

Some people were kind of thinking it’s great that everyone has training.

Jimmy

Yeah, as long as it’s not them.

Sue

Exactly, most of those are people who don’t need training really.

Jimmy

Well our good friend Amanda Farmer, her website interface thing called Your Strata Property, has done a survey of owners asking them questions about what they think the training should be, how it should be delivered, who should deliver it. So we’ll be having a chat about that. We’ll be talking about housing approvals which are, I think it’s fair to say, up and down.

And we’re also going to talk about what are the great misconceptions about Strata managers because the CEO of PICA wants to talk about what he thinks are the great misconceptions about Strata managers which, funnily enough, are very different from what I think they are.

I’m Jimmy Thomson and I write about apartments for The Guardian, if they ever run my piece 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 Melbourne Age, the Australian Financial Review and Domain.

Jimmy

And this is a Flat Chat Wrap. Amanda Farmer, who is a leading light in Strata, she’s a Strata lawyer, she has her own website, she has podcasts, she has a live streaming podcasting thing on a Friday afternoon. She is a great innovator and we doff our hats to her.

She’s recently done a survey of Strata owners in relation to training, this proposed training that the government says will be coming in at the end of this year, or at least they say the legislation will. She’s asked a lot of her subscribers what they think the training should be, who should deliver it and the kind of format it should take. The format it should take, yeah.

Sue

Interesting.

Jimmy

And 740 people responded, which is, I think it’s pretty amazing.

Sue

Yeah, that’s a fair.

Jimmy

That’s a lot of people. There’s a lot, there’s a huge chunk of people in Strata and it’s interesting to see what they think the training should be and who should deliver it and what they think the most important things are.

Sue

And the most important things are, drumroll, understanding maintenance and repair obligations.

Jimmy

Right.

Sue

Number two, Strata law and regulations, including how to comply with legislation and enforce bylaws.

Jimmy

Yeah.

Sue

And then in third place, legal responsibilities specific to committee members, including conflict of interest management.

Jimmy

So, we don’t want to take too much out of the survey. I think it’s good if people actually go on to Amanda’s website and get this for themselves. But you look at some of this stuff and it’s pretty basic.

You know, one of the comments is that the committee needs somebody who’s actually worked in Strata or lived in Strata and understands how it works. You know, it seems fundamental but you get people who move into buildings and they go, I want to be on the committee, I want to be the chair, I want to be the secretary. You say, okay, well, how many other buildings have you been in the committee for?

And they say, well, this is my first but I’m really keen to get involved.

Sue

Or even you have an owner who’s never lived in Strata and is now not planning to live in Strata because they’re renting their Strata out, who wants to be on the committee.

Jimmy

Yeah, but they want to be on the committee to protect their investment and to make sure nobody’s making any decisions that might affect that.

Sue

Yeah, which is fine.

Jimmy

I don’t know if it is fine.

Sue

As long as you maybe only have, say, two places reserved for investors. You have the vast majority of people who live there.

Jimmy

Yeah, so it’s interesting. The survey said, it was asked, who do you think should pay for the training? And the majority of people said this owner’s corporation.

The owners should pay for the training as a group, yeah.

Sue

Oh, I would have thought they’d say the government should pay.

Jimmy

Well, somebody said 25%, that was 38% said the owner’s corporation, 25% said a mixture of government subsidy and user contribution, and 23% said the government should pay for the whole thing. I’m with them. I think there’s such an important thing for our society and for our ability to get people living in apartments and not thinking it’s going to be a horror show every year when they go to their AGM.

I think it should be the government who pays for the training.

Sue

Yeah, I think so too, because I suppose there is an argument to say if an owner’s corporation pays for the training, they’re going to be a lot more serious about it. They’re going to value it more because they’ve actually paid. So they’re going to have to attend whatever it is or read the papers, whatever form it takes.

But then again, it’s in the interest of government to make people have confidence in Strata, because they’re going to be building or they’re going to be giving development approvals for a lot more Strata to solve the housing crisis. So it’s in their interest to make sure Strata becomes a good place to live for everyone.

Jimmy

Yeah. One thing, one of the questions was if you could fix one thing, if you could wave a magic wand and fix one thing about Strata and Strata committees. I’m not going to give away the top three because I don’t want to steal everything that Amanda’s done.

But one of them was to eliminate personal agendas and bullying.

Sue

Well, that would be good, wouldn’t it?

Jimmy

Yeah. And bullying takes so many different forms. You know, it could, it can be out and out, you know, just being abusing people who come up with contrary views or people who don’t understand, you know, don’t understand how it works and ask questions which are then characterised as stupid questions.

There are no stupid questions in Strata. They’re just stupid answers.

Sue

Because some people do get really aggressive. I was talking to a friend the other day and they know someone who has a townhouse, which is Strata and their townhouse, I think it’s one of six, happens to have responsibility for the driveway. And the previous people who owned that townhouse and the driveway were having a huge row with a neighbour and threatening to put up bollards on their driveway so their neighbour couldn’t get access to her garage.

Jimmy

Oh my God.

Sue

And you just think, oh my goodness, this is so terrible that people behave in that way.

Jimmy

The problem with Strata committees is that they have people in them and people tend to react differently. It’s it and it all comes back to this thing of my home is my castle, you know, that people go, well, this is my home. I’ve paid for this.

I own this. I am entitled to X, Y and Z. And when somebody says, well, actually, you’re not entitled to Z and you have a responsibility for A, B and C, then people get their backs up.

You know, they feel under attack. But there are also people who and we know this personally, who believe that it’s my way or the highway people. You know, the typical one is the chairperson of a committee who says, I spend 20 hours a week on this.

I do all the work. I make all the difficult decisions for people. I present you with the decisions for you to make.

So don’t come in here with your stupid ideas and don’t ever dare to criticize what I do because you’re not you haven’t earned the right to do that, which is wrong.

Sue

You know, it’s a democracy.

Jimmy

Absolutely.

Sue

And that’s a very important principle, really. Yeah.

Jimmy

Yeah. So, yeah, there’s an interesting quote here. It says among the survey responses was they are incompetent.

They do whatever they like without regard to the law. They know nothing about property maintenance. And again, this comes down to the thing of people being on the committee to protect their investment.

And that for them, short sightedly for a lot of people means not doing anything that would raise levies. So you go to them and say, look, you need to maintain the driveway. As somebody called up on the radio yesterday when I was on the James Valentine afternoons with Michael Hing, somebody called up and said, look, our driveway is a mess and the pavers are lifting and somebody is going to trip and injure themselves.

And our owners corporation, our strata committee says, well, they don’t want to do anything about it. And I said, well, that’s not their choice.

Sue

They have to. They have to do much by law.

Jimmy

Yeah. And but the problem is, how far are you prepared to push that committee into doing what the law tells them that they have to do? And I think that’s that’s that awkward thing where people say, I don’t want to fall out with people.

I don’t want to upset people. I don’t want to be the bad guy in this. But sometimes you just have to say, look, you’ve got responsibilities.

If you’re not going to fulfil them voluntarily, then we’ll go to people who will make you fulfil them.

Sue

Sure. And the strata managers should be addressing those concerns as well, shouldn’t they? Really?

Jimmy

The strata managers, yeah.

Sue

Yeah, they should be saying, you know, you have to do this. This is important. There’s no choice, really.

Jimmy

Well, you have to make sure the trouble is. And this is something that is never really addressed properly. The strata manager is beholden to the strata committee way beyond the terms of their contract.

And it’s like the strata committee is going to nudge the other owners to make decisions. And every three years they have to make a decision about a new strata manager. Now, if the strata manager has been telling the committee, you’ve got to do X, Y and Z, and then the committee is going to say, you know what, their contract is up in a year.

Let’s get a new strata manager who won’t tell us what we need to hear. And so the strata manager is, we tend to see it in terms of being in cahoots with the committee. There is a mutual benefit for them getting on with the committee and the committee getting on with them because the strata manager will help them to stay in power and the strata committee will help them to renew their contract.

And it’s a relationship which can be fraught at times and from the outside can look like it’s corruption. But it’s not. It’s just the way business works.

Sue

Yeah.

Jimmy

When we come back.

Sue

Good on you, Amanda, for doing the surveys.

Jimmy

Yeah, yeah, yeah. And look, I’ll do a piece about the survey on the website, but it will have the links to her. It’s free.

You go online, you register with her to get, you just send your email address and she’ll send you a link to download the survey. I think it makes really interesting reading. And yeah, as you say, well done, Amanda.

When we come back, we’re going to talk about what’s going up and what’s coming down in housing. Interesting figures talking about residential building approvals, which I was going to say some of them are up, some of them are down. All of them are all over the place.

What is going on, Sue?

Sue

Hmm. Well, residential building approvals fell by eight point eight percent in March.

Jimmy

Apparently they’re saying that month to month to month.

Sue

That’s right. But the biggest drop has been multi dwelling approval. So big kind of big apartment blocks.

Yeah. Apartment blocks and townhouses and things like that. Master plan developments and stuff.

There’s been a fifteen point one drop in approvals for those.

Jimmy

Fifteen point one percent.

Sue

Well, yes. So one has to think that developers just don’t have much confidence at the moment in bringing these DA’s forward for these big projects. And that might be because interest rates are still high.

So they worry that demand won’t be enough to to take up all the apartments that they’re going to be selling. Yeah, it might be. I mean, you know, we know that we need a lot more apartments, but they may not be able to provide them at the price point that consumers are prepared to pay.

Jimmy

Hmm.

Sue

So I suppose we’re all looking forward to interest rates going down, hopefully by May, and then we hope there’ll be a series of interest rate falls. But we can’t guarantee that really. But we’ve got a new government now and it’s a majority government.

So hopefully they’ll be able to to do things without being stymied so much by the Senate and the Greens. Yes. And the independents, I suppose.

Jimmy

Yeah. Well, you know, I mean, the last last parliament, they had a housing policy that was blocked by the Greens in cahoots with the Liberals. I mean, which is what is going on there?

Sue

So anyway, they’ve paid the price for that. Yeah. But now the path is a lot clearer forward.

Jimmy

Yeah.

Sue

So the government will be encouraging developers to develop and hopefully developers will have a lot more confidence for the next three years.

Jimmy

Now, you’ve got your finger on the pulse with this much more than I have. Is there a Trumpiness factor in this?

Sue

I think there is as well, because that’s really contributing to to to global uncertainty and supply chains, anything that comes from the states. We don’t really know how much it’s going to cost us. And everything just feels so shaky at the moment.

We’ve got India and Pakistan reigniting their long term hostilities. We’ve got Ukraine nowhere near. We’ve got Israel and Gaza.

Jimmy

I’m thinking more about the stock market in America. If the stock market is volatile, do people tend to invest more in property?

Sue

I think when when it’s volatile, they tend to invest more in gold. Right.

Jimmy

OK.

Sue

So it’s very difficult. I mean, you think, well, real estate should be a great, solid investment in times of uncertainty. But it’s not really because prices go up and prices go down.

Building materials change the prices of those. There might be shortages. And also, we’ve still got lots of construction companies going into liquidation.

Jimmy

Right.

Sue

And so people don’t have very much confidence in in builders now as well.

Jimmy

So these figures, they’re saying there’s been a record number of insolvencies and it’s mostly among small builders. And that’s because they can’t build houses at the cost that people are prepared to pay.

Sue

Well, also, a lot of them are going down because they quoted for fixed price contracts.

Jimmy

Right.

Sue

So when prices started rising, they were delivering houses for less, for much less than they were actually being able to sell them for. Because the supply of prices and materials were going sky high. Yeah.

And so therefore, suddenly they’re on fixed contracts and they were going to the people whose houses they were building and saying, look, I’m sorry, costs have blown out. Can you give us some more? And people were saying, no, that that was a contract.

So that can be really, really hard for them. And now there’s a real movement against fixed price contracts. And that makes householders even more nervous about going to have places built, really, if we’re talking about houses.

Jimmy

It would be naive to think that those builders could then move into apartment building.

Sue

Well, yeah. I mean, the apartment builders that are doing the best, really, are those companies that have their own builders.

Jimmy

Right.

Sue

And they provide the whole thing. You know, they provide the design, they do the groundwork, they build, they develop.

Jimmy

They’ve got the carpenters and the joiners and the brickies and the concrete pourers. And they don’t have to.

Sue

Yeah. And there’s real nervousness about those people as well, because we’ve got new immigration controls.

Jimmy

Yeah.

Sue

And, you know, everybody, well, all the parties campaigned on some kind of platform of restricting immigration.

Jimmy

Yeah.

Sue

But the trouble is we really need tradespeople. We’ve got huge shortages of tradespeople. And without people coming in from other countries, we’re going to be suffering as well.

We just need those people to build homes.

Jimmy

Yeah.

Sue

But if we’re restricting immigration, that becomes a real problem.

Jimmy

I thought we’d get a backlash last week because we suggested that they should be camps for migrant camps. And I thought, you know, would be maybe people were distracted by the election, perhaps.

Sue

Well, maybe they thought it was a good idea.

Jimmy

Maybe they thought it was a good idea. OK, when we come back, we’re going to talk about misconceptions about strata managers. That’s after this.

I got an email from the PR people for PICA, which is a big, giant, huge strata management and building management group. And they’ve got a very active CEO, Mr. Lehane, who basically wants to talk to anybody who will talk to him about misconceptions about strata managers. And he has listed four.

I may have misconstrued this in my newsletter. These are four misconceptions that he feels people should be aware of. And they’re not necessarily the most significant.

The four are that strata managers have complete control, that levies directly benefit strata managers, that self-managing is always more cost effective and bylaws are unchangeable. OK, bylaws are unchangeable. Strata managers, really, is that a strata manager’s thing?

Is that just not a general ignorance about living? Yeah, levies directly benefit strata managers. Yes, people think that.

People say, I am paying X amount in levies every year to the strata manager, which is true because they get that’s where the money goes. They collect the money and they think that all that’s a fee. In fact, it’s all go.

Most of it goes to pay bills. And in fact, strata managers right now are getting somewhere between 300 and 350 per unit per year dollars.

Sue

Yeah.

Jimmy

Yeah.

Sue

So it’s not really very much at all.

Jimmy

No. And if you’re in a small building and you can’t understand why your strata manager doesn’t pay you an awful lot of attention, if you’re in an eight unit apartment block, the strata manager is getting two thousand eight hundred dollars a year. Why would they even pick up the phone?

That actually feeds into the other comment that he’s made, which is self-managing is always more cost effective. Well, I think in small buildings it often is.

Sue

And we do know a large building that became self-managing at one point. They had a very active chairperson of their executive committee who went off and did got some qualifications as a strata manager, and he took over managing the strata and that was fine for a while. But when he left, of course, it left a huge vacuum and then they had to go back again to a strata company.

So maybe it is more effective if you do have somebody who’s really good and really who’s perhaps retired and has an awful lot of time to devote to it. But sometimes it’s better just to have professionals in there right from the very beginning.

Jimmy

There are some people who think you should have professional strata committee members.

Sue

To pay them.

Jimmy

Well, not just that. Somebody who doesn’t even live in the building, but comes in and their job is to help run the building, who are not the strata managers.

Sue

Well, that’s kind of interesting. And I’ve often thought that would be fantastic. Who don’t have any allegiances and just see the building as a building and it should be run for the benefit of all its owners.

Yeah. And that could be really excellent.

Jimmy

A bit like a hotel manager.

Sue

Hmm.

Jimmy

You know, they don’t have they don’t particularly have a huge allegiance to anyone except the person who’s paying their wages.

Sue

Yeah, sure.

Jimmy

Which in this case would be the owners corporation. I think it’s a terrific idea. And but it’s so fundamentally against what the way that the strata has developed in this country.

I can’t see it happening anytime soon. You never know. There’s nothing to stop people doing it.

Sue

Yeah. I mean, you could have an extremely talented building manager. Yeah.

Could fulfill that function, really.

Jimmy

Yeah.

Sue

But often building managers are people who, you know, they’re good at.

Jimmy

The nuts and bolts people.

Sue

Yeah. Electricians. And, you know, they put on their overalls once a week on a Friday and fix a few things that need to be fixed, which is great.

Jimmy

Now, I’m going to send a set of questions to Mr. Lehane about what I think the big misconceptions are in strata management. But there’s one here that really triggered me, which was strata managers have complete control, he says, is a misconception. Well, I can think of some strata management companies who demand complete control, some strata management companies who say sign this contract and give us delegated authority to to act on behalf of the owners corporation.

And we’ll often say, look, it’s just a thing that we do. You know, if everything falls over, if the strata committee doesn’t can’t work or whatever, we step in. But then they go around making decisions.

And why wouldn’t people think that strata managers have complete control when they do?

Sue

Yeah.

Jimmy

So I’ll be asking him about that. And what can strata managers do to get around that problem? So, yeah, I think the problem with strata managers is it’s the same thing as I keep saying about the first AGM.

Who is going to advise the owners not to sign certain contracts that have been presented by the developer when the strata manager has been involved in organising those contracts for the developer? The weirdest thing, it’s like a magic trick. You know, that thing that they do in magic tricks where somebody goes in and they hold up this curtain and then they drop it.

And it’s a completely different person. That’s the strata manager at your first AGM. Strata manager turns up your first AGM and goes and says, well, they don’t say this, but what they’ve been doing for the previous months is working for the developer.

And then they pull up the curtain and drop the curtain. And suddenly it’s going, hey, I’m working for the owners. And if the developer and the owners had exactly the same priorities and needs and they were all totally in conjunction, that would be fine.

But it’s not. And it never is. And it cannot work like that.

So that’s a misconception about the strata manager is working primarily for the owners. That is not and cannot be the case. Any strata manager is working for his or her strata management company.

They’re bosses, the people who pay their wages. It’s not the owners corporation who pay their wages. The owners corporation pay the strata company.

Sue

Yeah, sure.

Jimmy

So that’s their first allegiance. Their second allegiance is often and quite wrongly to the developer because that developer is going to give them more work in the future. And strata managers will tear their hair out when they hear me saying this.

But if that’s not the case, why is the government brought in legislation to stop it?

Sue

Yeah.

Jimmy

And then number three, the owners. So now there are plenty of strata managers around who will go, well, yeah, I do have an allegiance to my boss. I have to do what my strata management company does.

And that’s OK because they’re good people. And no, I don’t have any allegiance to the developers. And how dare you suggest that?

And number three, yes, I do have. Then having taken care of my bosses, my strata management company, I do have to look after the owners, and I’m very happy to do so. There are plenty of strata managers who do that.

But anybody who thinks the strata manager should and or is taking care of the owners first and foremost is living in cloud cuckoo land. And finally, I love it when we do things that don’t sound as if they’re in any way related to strata, but it turns out they are. And in this case, it’s photography.

Sue Williams.

Sue

Yes. Well, I did a series of stories earlier this year on a boarding house in Paddington in Sydney. Yep.

Where a developer had bought the boarding house, which is made up of all tiny little studios, studio apartments. And he decided he wanted to evict everybody, knock it down and build some luxury houses there instead. And the local community were really surprisingly, really helpful to the boarding house residents and really trying to support them and actively campaigning against the developer, saying these guys have been part of the community because the boarding houses were there since the First World War.

Yeah, these guys are part of the community and we need diversity in our community and we want them to be able to stay. And it was a long campaign. And I wrote a series of stories.

And sadly, they lost in the end and everybody was evicted and they were all found different places, but often a long, long way away from each other. And the community is effectively broken. But in one of the stories, we had a fantastic photographer from the Sydney Morning Herald, Dion Georgopoulos, who did a great photo of one of the residents, John Patmore, in his tiny little cave of an apartment in the boarding house.

And he’s now a finalist in the National Photography Portrait Prize Awards. So that’s fantastic. Good luck, Dion.

So that’s going to be announced quite soon who the winner is.

Jimmy

But can people vote for it or is it a panel?

Sue

No, it’s a panel. Yeah, it’s a really well qualified panel. But it’s a beautiful photo.

And it really showed the desperation, the kind of other side of the housing crisis, really, the misery and the wretchedness. And it was just such an incredible photograph. And he’s such a talented young man.

Jimmy

We might see if we can put that on the website.

Sue

Oh, good idea. Fantastic.

Jimmy

All right. OK, Sue, that’s terrific. Thank you so much for coming down the corridor.

Sue

OK.

Jimmy

It’s been a long one today. We had a lot to talk about. And you’ve got another appointment you have to dash us for.

Thank you all for listening. And we will talk to you again soon. Bye.

Bye. Thanks again. Talk to you again next week.

 Transcribed by TurboScribe.ai.