Qld laws blocking relief for flooded residents

Relief and compensation for apartment owners whose homes were destroyed by Queensland’s floods are being blocked because of outdated laws that prevent the sale of apartment blocks unless all owners agree. [See note at the end of the story]

Unlike NSW, where 75 per cent of owners can agree to collectively sell the whole building, in Queensland, 100 per cent of the owners must be on board. For residents at flood affected MiHi Grove, near Ipswich, it means they are stuck in limbo, unable to access financial help that would otherwise be available.

“Their homes have been uninhabitable for almost a year now,’ says Laura Bos, General Manager of Strata Community Association Qld (SCA-Qld), the peak body for strata professionals in the state.

She adds the the MiHi Grove dilemma highlights how critical body corporate law reform is to Queenslanders.

“We understand a super majority of owners – over 80%- wish for this [collective sale] to occur,” says Ms Bos, “but a few are either unable to be contacted or have issues which means they cannot or will not consent to the termination through buyback by The Resilient Homes Fund.”

“After being flooded last February, these residents have struggled to move on with their lives because of State body corporate legislation which means that the consent 100% owners is required to collectively sell and terminate their strata scheme.
“This scheme also endured catastrophic flooding in both 2011 and 2013. These residents have suffered enough and deserve to be able to get on with their lives.”
Ms Bos said this impediment to termination baked into State Legislation needed to change urgently whilst special attention needed to be given to this specific case.
“Mi-Hi Grove has 42 lots, and we understand that over 35 owners want to sell. Some cannot be contacted, and some don’t want to sell,” said Ms Bos.
“I urge the State Government to pull whatever legislative or regulatory levers available to solve the problem at Mi-Hi Grove and support the overwhelming will of the owners to move. Compensate these owners and let them seek new accommodation rather than leaving them in limbo.”
Ms Bos said there was widespread support for a reduction in the requirements for scheme termination.
“Scheme termination has become a particularly important issue in many Council areas where there are ageing, rundown six-pack developments that could be replaced by medium or high rise developments and house more people, but for that one lot owner in the scheme that holds the whole community to ransom.”
“The fact that 49 out of 50 owners in a scheme can vote to terminate or sell to a developer and one person can exercise a veto is nonsensical. It undermines the rights of the other 49 owners.
“This situation plays out frequently on the Gold Coast and also in Brisbane where Lord Mayor Adrian Schinner has been particularly vocal about the need for changes to scheme termination in order to deliver the housing supply Brisbane needs.”

Ms Bos also pointed out that there is another barrier to collective sales; due to Queensland’s unique (and borderline corrupt) pre-sales of management contracts, any block that wanted to extinguish their strata plan to sell the block for development would have to pay out management contracts of up to 25 years.

“Typically, these contracts are sold by developers to include exclusive caretaking rights for the scheme and often include a lot (apartment),” said Ms Bos. “This is a complicating factor which needs broad reform also.
“Management rights might be a revenue line item that benefits developers, but the reality is the home buyer ends up paying for them many times over. They pay for them in their contract to buy and then for the life of the contract.”

The current review of Queensland’s Body Corporate laws has been underway for about four years. Vested interests determined to hang on to the lucrative trade in management rights have thus far slowed and effectively blocked any significant reform in this area.

[The Queensland government announced this week that it plans to move ahead with legislation that will allow 75 per cent of owners in a scheme to agree to sell off an entire block where that would be a more viable option that repairing or maintaining it.]