Owners conned thanks to Qld law loopholes

Queensland strata owners and buyers are being conned by developers, rental agents and management rights operators, claims the state’s Unit Owners Association (UOAQ), and it’s all possible because blocks are being approved as residential then run as short-term holiday let hotels.

Now the UOAQ wants to hear Queenslanders’ stories about how they have been let down by the laws intended to protect them.

“Management rights contracts are established by the developer, and in Queensland, should follow an established set of requirements outlined in the Planning Act, the Building Act and the BCCM Act,” says the UOAQ’s latest newsletter. “This is [often] not so, and is where the average owner gets conned.  Residential strata buyers beware.”

The problems are built into loopholes in the approvals system, says UOAQ, because development approval is easier to obtain and blocks are cheaper to build if they are designated residential rather than a tourist hotel. But once the building is complete, everything changes.

“The developer puts the building lots on the market as residential, to attract both owner occupiers and investor owners,” says UOAQ.  “However, the developer can sell the 25-year (never ending) management rights contracts under the accommodation module even if the building is not in a major tourist area.”

The UAOQ says there have been a number of successful court actions where a developer has been found to have misled prospective purchasers, and the contracts have been wound back to a 10-year contract. 

The issue at the heart of this is that Queensland Body Corporate laws don’t require the building to be managed in a way that’s consistent with the requirements for residential developments as defined by the Planning Act, or the requirements of residential buildings as defined by the Building Act.

“Owner occupiers get conned by buying a residential lot, and subsequently finding that they are living in a hotel,” says the UAOQ. “Compliance with the development approval is not required by the management rights contract or enforced by the local council.”

The result are myriad issues that all cost apartment owners substantially. They include:

• The increased costs of long term contracts locking owners out of competitively priced building services
• the increased costs of management rights being sold and resold
• added costs of increased wear and tear and loss of residential amenity from bus-loads of tourists

On top of that, residential lets are being converted to short-term holiday lets when letting agents and caretaker managers tell investors that they can make more money through short-term rentals, although the benefits are dubious.

The manager takes a 40% commission and the investor is responsible for the costs (capital outlay of the apartment, council rates, body corporate levies, linen & cleaning, replacements, electricity & gas, etc).

Queensland’s body corporate laws – including caretaker management rights – are being scrutinised, according to this report.

The UOAQ says it has brought this situation to the attention of the Community Titles Legislation Working Group, the Attorney-General, and the Minister for Planning and Local Government, but as yet has not received “any credible response”.    

So here’s where Queensland apartment owners come in. If you have bought into a residential apartment building only to find that it is managed like a hotel under the accommodation module, you can send your story to the UAOQ by clicking HERE.

And you can read the entire UOAQ report and find out more about the organisation HERE.