Podcast: Victoria’s strata woes fall on deaf ears

OK, I admit it, I’m becoming obsessed with what is happening – or not happening – in Victoria. And I mean Victoria, Australia, not the capital of British Columbia, as the advertising bot on our podcast provider seems to think.

Apologies if last week’s podcast started with a noisy ad for Canadian radio. This is what happens when artificial intelligence turns out to be not as smart as it thinks it is.

No, I’m talking about our Victoria where I get a strong sense that strata there is in crisis – and many of the residents don’t even know it while the politicians and the media don’t care.

If being neglected, taken for granted and exploited is all you’ve ever known, then you think it’s the norm.

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LISTEN HERE

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This also makes me think it’s time our politicians standardised some strata laws.  There is no reason why they should be different from state to state.

If the way Queensland handles, say, strata committee elections, works better that how Victoria and NSW do it, then everyone should do it the way they do in the sunshine state.

There are so many other ways we could standardise strata laws – if only we weren’t all so damned parochial – and I canvass a few of them in the second part of the podcast.

And I want you to tell me what laws you think should be standardised – even if you don’t care which version we use – by writing to mail@flatchat.com.au with “standard laws” in the subject line.

If you enjoyed listening to this podcast (or reading the transcript), please share it with your friends using the social media buttons on this page.

TRANSCRIPT IN FULL

It’s Sunday morning… Sue is still in Europe; she’s in Paris, for the next few days. I’ve just watched the Socceroos get knocked out of the World Cup by Argentina (which, let’s face it, it would have been more of a surprise if that hadn’t happened). Argentina is one of the favourites for the competition.

We better get on with the show. A couple of things I want to talk about. One of them is the state of play in Victoria; we’re seeing reports… It’s pretty alarming there. So I want to talk about that.

And I want to talk about (while we’re looking at other states), what laws could we try to standardise across the states, just to avoid some of the confusion? That’s coming up.

I’m Jimmy Thomson, I write the Flat Chat column for the Australian Financial Review. And this is the Flat Chat Wrap.

[MUSIC]

Jimmy

Now, before Victorian listeners turn off (because we might be criticising Victoria), and New South Wales listeners turn off (because we’re not talking about you)…

There’s something happening in Victoria that affects all of us.

My attention was drawn last week, to a story on ABC Radio, about how the cladding remediation programme in Victoria, has exposed (literally), some serious building defects that have been neglected and means that some buildings are literally rotting from the inside-out.

Apart from the issue of cladding (which they’re dealing with in their own way); and this is flammable cladding, that everybody wants to have off their buildings.

So they’re ripping off the panelling there and they’re finding that the structure of some buildings, especially older ones, are absolutely rotten from the inside.

Now this has been caused; normally by water leaks in the building, which means the buildings’ have had defects that have not been fixed.

Okay.

At the same time, I got a copy of an open letter to the Victorian Premier, their Fair Trading Minister and the Commissioner, from some people in a building, who are saying everything in Victorian strata law is stacked up against the strata owners.

For instance, in Victoria, owners don’t have the right to attend committee meetings.

In New South Wales (certainly) and I believe in Queensland, owners do have the right to attend committee meetings, although they don’t necessarily have the right to speak at them (for fairly obvious reasons, because otherwise, chaos would ensue).

They can speak if they’re invited to. But in Victoria, you have to be invited to attend the meeting.

 There are other little quirks there, like the chair of the committee in Victoria, has a casting vote.

That’s a hugely powerful thing, especially if there is no one there who is not on the committee, to hear what’s going on and what’s being said.

If you are a chair, who is also the secretary, or the secretary’s on-side, you have a huge amount of control.

What has this got to do with building defects? It means that people who get control of committees in Victoria, can very quietly just say “let’s not fix these defects; let’s cover them up.

Let’s not tell people that there is a problem here, because that will affect our fees (what they call levies in Victoria), and we want to be able to sell up, before anybody finds out.”

So what happens is, there’s a turnover of maybe, two or three lots of people in the building, before somebody goes “hang on, this building is falling down and has been for years.” That’s the problem; it’s the lack of transparency.

Where does the strata manager fit into this?

Well, wherever they want really, because the strata manager appoints the building manager and because the committee effectively appoints the strata manager, the strata manager (unless they’re a very unusual animal in the industry), is not going to say to the committee “hey, you guys are doing the wrong thing and I’m going to tell all the owners that you are not representing them properly.” Now, we all know what the result of that will be.

The strata manager will probably lose their contract at the first opportunity and the committee will bring in somebody who is a bit more kindly towards them.

 There are other issues in Victorian strata law; like their special resolution rules are so complicated…

You can propose a special resolution and it doesn’t reach the requisite 70% or 75% of vote (or whatever the threshold is), but if more than 50% of people at the meeting vote in favour of it, then it becomes a provisional resolution and then the other owners have 28 days to raise more than 25% of the vote against the special resolution.

If that doesn’t happen, then the special resolution stands (which I suspect I’ve probably got some detail of that wrong, because it’s so complicated).

It may be a good way of getting special resolutions through, when not many people turn up for meetings.

But I’ve got to say, if you lived in Victoria, why would you turn up for a meeting? I mean, nobody’s representing you.

You’ve got your committee (and I apologise to those committee members who work very diligently and very hard for their communities).

But across the board, the picture is one of lack of transparency, lack of engagement and quite clearly, the government in Victoria does not give a damn.

I mean, if you look at what happened when Airbnb came in to Victoria, Melbourne City Council and local residents put up a very strong case for limits on Airbnb.

The government just threw them aside. They allowed themselves to be obsessed with the ‘party flat’ scenario. So their legislation is something like ‘if you’ve had a noisy party in your Airbnb flat two or three times, then there may be consequences.’ It’s so vague.

What happened was, all these really good apartment blocks in the city centre and in and around Docklands; between a third and a half of the apartments were given over to Airbnb.

What then happened is you will get resourceful… Let’s say a football -supporter club. You know, they’ve got massive support, travelling all over the state there.

They come into Melbourne for a big game, somebody goes “hey, there’s a building here that’s got seven or eight Airbnb apartments” (and I’m using Airbnb as a generic term)….

“They’ve got two-bedroom apartments.

Well, we can get six or eight people in there.” And so you get a whole football club descending on one building.

And as was described to me by a strata manager, they don’t have a communal area for gatherings and parties in most buildings.

So people were coming home from work, and finding that the whole of their lobby had been turned over into a giant football party.

That’s exactly the kind of thing that was predicted.

It’s exactly the kind of thing that was ignored by the Victorian Government, who could not wait to let Airbnb in.

They had their Fair Trading Minister of the time (and I think possibly, the Premier), go over to San Francisco, which was the headquarters of Airbnb and they got a guided tour of the Airbnb offices.

What did they see there, that they wouldn’t have seen in any office, anywhere else? A bank of computer screens, a lot of young people in casual clothes, working away and this kind of information was supposed to inform how they were going to help the people of Victoria reach the right kind of arrangement for local people.

 The fact of the matter is (and now more than ever), governments want tourist dollars coming in to their states.

The fact that it’s only apartment owners who are going to be affected negatively by this, means it doesn’t really matter, because you’re only apartment owners and if you want a decent life, don’t live in an apartment.

That’s basically the message that the Victorian Government is sending out to people.

One of the problems in dealing with this, is parochialism.

As soon as somebody from New South Wales (like me), says “hey, things are really bad in Victoria,” Victorians go “well, they’re really bad in New South Wales as well, mate!” It’s so sad that we cannot take any objective view of how things are in our states.

It’s not a competition.

It’s certainly not a competition between New South Wales and Victoria.

It’s a competition between strata residents and the governments; the powers that be.

And in Victoria, you have got a system there that seems to be designed to keep you in the dark about what is happening in your actual home.

Now, this used to be the case in New South Wales, and we used to have exactly these problems.

I think maybe, people in Victoria  (apartment owners and apartment residents in Victoria), could just take a minute to go “what have you changed in New South Wales that has made your lives better?” A couple of things spring to mind.

Big-ticket things like, very early on, we realised that some big developers were saying ‘a condition of you buying our apartment is you’ve got to give us your proxy vote.’ Now, what that meant was developers were going into schemes and saying “yeah, you’ve got your committee and everything; that’s all very well, but you’re making decisions that we don’t like; decisions that don’t suit us and we are taking back all our proxies.

We are voting you all off the committee.

We are now the committee, and we are going to do what we want.”  A case in point was at Breakfast Point (funnily enough).

There was a building there that was kind of like the elite building in that whole huge complex, and they had their own little private marina and they were told that this would always be their private marina.

Then suddenly, boat parking on Sydney Harbour became a big issue and it was very much in demand.

There was one big marina, I think, in Rose Bay that had been rejected by the council.

So suddenly, the Breakfast Point managers decide “hey, we could make a fortune if we turned this into a commercial marina.”

So they put up their proposal and the people in that building, who actually had the marina, said ‘we don’t want that.’ And they wrote to the local council and said ‘we don’t want that,’ and they wrote to the state government and said ‘we don’t want this; we don’t want this to be turned into a commercial marina,’ for obvious reasons.

What happened then, was the Breakfast Point managers came to a meeting and said “we are using our proxy votes to elect a committee and the committee will have one member and it is the manager of this scheme.” Having done that, they then wrote to the local council, and said ‘hey, we think this marina is a great idea. On behalf of the residents of this building; the people who are most directly affected by it, we think it’s a great idea.’ 

Now, I wrote a story about that in the Sydney Morning Herald. It exposed the whole thing. Government changed the policy, because it was so obviously wrong; it was so obviously bad for the residents.

Another example was sunset clauses.

I remember telling Victor Dominello, that Sue (my co-host here), was about to write a story about sunset clauses and how a builder had been deliberately delaying the completion of a building, so that the sunset clause would kick in, so that they could just give people back their deposits, put the apartments back on the market, and sell them (because this was during a boom), at a much higher price.

It was so obviously immoral, that Victor Dominello said there and then “I am going to do something about this,” and he brought in a provisional law and then got the law changed.

Now, if a developer wants to go to their owners and say “look, this building has been delayed.

We want to give you your deposit back,” they have to go to the Supreme Court to get approval to do that.

They can’t just do it as part of a business plan and that’s an improvement.

The point I’m making here is, unless you speak up and say “we’ve got problems, and we need to fix them,” nobody will fix them.

They don’t happen organically.  That thing about the proxy votes being part of a contract; that’s now part of Victorian law. It’s part of Victorian law, because we got it changed in New South Wales.

You have different problems in Victoria. You need to approach and deal with your own problems your own way.

I’ve got a correspondent who regularly writes to us on the forum, and he’s based in Melbourne, and his opinions and his advice, are on the money; absolutely on the money… Really invaluable.

I was talking about this on the forum the other day, about how we need to change things and he came back and said ‘oh, look, this is the way it is and the way it always has been.’ I didn’t want to jump on him, because he’s a good bloke, but I thought that’s how things stay the same.

Politicians will not make decisions unless they have to.

Doing nothing is always easier than doing something, because if you do something, you might get it wrong.

If you do nothing, at least you can say “well, that’s the way it always has been.” So I’m reaching out to people in Victoria…

Come onto the Flat Chat forum. Come and tell us what your problems are. Let’s get things happening.

Let’s get an OCN branch or an equivalent in Victoria, so that the government can stop ignoring apartment owners.

Which brings me to my next topic… After this, we’re going to talk about which laws should be the same in every state.

[MUSIC]

Jimmy

And I’m back. I just want to talk about standardising some strata laws, because by looking at the Victorian laws, you think well, how hard must it be, for people who are travelling from one state to another (moving from one strata system to another strata system), to even know what’s going on? For instance, as I’ve said previously, in Victoria, you have no right to attend committee meetings.

In New South Wales, you have the right to attend committee meetings, but you don’t have the right to speak at them, unless you’re invited to.

Look at elections…They kind of have changed the law, about committees in Victoria. It used to be that the maximum size of a committee was twelve. Recently, they’ve decided the maximum size of a committee should be seven.

So they brought in the law saying ‘the maximum size of your committee should be seven, unless you decide that it should be twelve.’ Well, okay, yeah, great. Maybe it’s baby steps in that regard.

In Queensland, when they have committee elections, they elect the chair and the secretary first, and then they elect the rest of the committee, I don’t know if that’s a good thing, or a bad thing.

I think it might be a good thing, because, for instance, if you’ve got a dominant character who’s the chair of your committee; then that person is always going to get elected to the committee, but the owners, generally speaking, don’t like the way they behave.

Maybe they find them too bossy; I don’t know.

It’s a chance for the owners to say “we want that guy to be on the committee, or that woman to be on the committee, because they work hard, and they’ve got experience.

We don’t want them to be chair anymore.” In New South Wales, if that person gets elected to the committee, they’re going to get elected as chair, if that’s what they want, because that dominant character in a smaller group can really dominate.

Because then people have to be answerable, in a smaller group.

When they say “well, we don’t want you to be chair anymore,” they’ve got to put up with the personal consequences of that.

Whereas, at a general meeting, the majority of owners can make that decision first.

That could be something that could be adopted in every state.

 Another thing that I really worry about, is that in some states (like Victoria), the chair has casting vote.

That’s a lot of power to give to one person, to be honest.

I think it’s better to elect odd numbers on your committee, so that you never have an even split of votes.

I believe in Tasmania, the committee can create bylaws.

Now, in New South Wales and Victoria (and in Queensland), you have to have a special resolution at a general meeting to create a new bylaw, or change existing bylaws. In Tasmania, the committee can do that. I don’t think that’s a good thing, I really don’t.

We need a definition of ‘nuisance.’ I mean, what is nuisance? Is noise a nuisance? How much noise is a nuisance? How do you deal with that? What’s the process? We should have common Airbnb rules, because from state to state…

You know, some of them, like Victoria, it’s just open slather. ‘We will wait until you or your guests have screwed up three times and then maybe, we’ll do something.’ Whereas, in contrast, in Sydney (not New South Wales, generally), owners corporations can decide not to allow Airbnb, or their equivalents in their buildings.

And that principle of local needs, is also applied to some extent, to areas like Byron Bay, where local people can’t afford to live there anymore, because all of the houses are given over to short-term holiday rentals.  Rules on smoking… Can you ban smoking on a balcony? Is it enough to say “I know this person smokes on their balcony; the smoke comes into my apartment? They’ve got to stop doing it,” because in some places, you’ll find that you have to prove that it’s harmful.

We’ve got a case on the website, with a link to a case where the tribunal said “well, you’re assuming that smoking is harmful, but you haven’t provided any proof.” Yes, I know! It’s like, it’s 2022, folks! Wake up and smell the tobacco! And the other thing I think all states could do with (and especially in New South Wales), is to have strata laws that actually have teeth.

If you say strata managers have to provide all owners with all records of what’s going on in the building, there has to be a penalty for not doing so and it has to be an immediate penalty.

It’s got to be something like, you apply and if you haven’t been given access within 14 days, then you’d go straight to the tribunal and not only is there a fine on the strata manager, but there is a black mark against that strata manager’s name.

 And here’s another thing; strata managers… I mean, the SCA (that’s the Strata Community Association, I think it’s called these days, I’m not sure. It changes)…

SCA, they’ve done a great job in New South Wales. They’ve consolidated the rules. They’ve got a Code of Conduct. They’re now a professional organisation for strata managers and service providers.

They’re doing great work, but there’s still a lot of really crappy strata managers around; either people who are still living by the old laws, or they never understood the laws, anyway and all they’re interested in is getting their fees and not doing any work.

These people need to be weeded out.

They need to be weeded out in New South Wales, they need to be weeded out in Victoria and Queensland…

Wherever there are strata managers, there needs to be a clear set of criteria of how they should behave.

 Okay, you’re probably sick of the sound of my voice by now. Next week, I promise Sue Williams will be back.

Everything we’ve spoken about here, is available on the Flat Chat website, www.flatchat.com.au. You can read some other people’s comments and chip in with your own on the forum.

And if you want to suggest rules that you think should be standardised across Australian strata, just write to me at mail@flatchat.com.au  I’ll collect everything together and you can do it anonymously, if you want, I don’t really mind.

I’m just interested to hear what you think should be standardised across Australia, if anything.

Thanks for listening.

We’ll talk to you again soon.

Bye.