Owners battle illegal lets and crippling contracts

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corruption concept ,The contractor provides special compensation to the authorized signatory to the agreement.

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Queensland apartment owners are ramping up their battles to regain control over their homes on two fronts.

One aspect is the fundamentally immoral (but entirely legal) practise of developers selling management rights contracts to caretakers for up to 25 years – meaning owners have no choice in who manages their buildings, or to whom those contracts can be later sold on.

The other is state and local governments’ repeated and systemic failure to enforce their own planning regulations which were intended to offer owners a choice between living in blocks with holiday lets and those without.

“Are you sick and tired of the Airbnb style short-term accommodation in your residential building?” writes Bradley Von Zanten, President of the Unit Owners Association of Queensland (UOAQ), in a recent newsletter.

“Did you purchase a residential apartment in a residential building and find that when you moved in, the building was being used as a hotel for holiday or short-term stays? Have you complained to your building committee or the Council and got nowhere?” 
 
The UOAQ is urging owners to contact the state government’s review of its Body Corporate and Community Management laws via the Community Titles Legislation Working Group.

They are seeking community feedback on a range of issues, including the requirements for disclosure of the reality of a building’s situation by the seller to a prospective purchaser.
 
“So far the government has resisted the disclosure to a buyer of the lawful use of the building i.e. residential or a hotel. This practice allows developers to build a residential building and sell the management rights to a hotel operator.

Parties ban

“They then sell apartments to both owners who wish to reside in the building, and to investor owners who allow the hotel operator to let out the apartments. 
 
“Some unit owners just put up with the disturbance and the noise of transient people in their hallways, lifts and car parks, and the additional damage caused by the holiday maker, party goers, room servicing trolleys, strangers in the pool etc. Others sell out and pass the problem to another uninformed buyer.
 
“Airbnb recognises the problem and have recently introduced a ban on parties,” says the UOAQ newsletter. “But our government is still in denial of the noise, mess and damage problems caused by short term holiday makers and party goers to our residential amenity.”

Neutral observers would wonder why short-term letting hosts would want to move into blocks where they are not welcome, when Queensland has so many holiday letting buildings available.

But the irony is that it is the qualities of a well-managed residential building that make them so attractive to holiday let hosts – not least that they can collectively choose their caretakers.

“These practices are contrary to the planning and building laws [but] are not enforced by local government,” says the UOAQ newsletter. “Unit owners need to tell the government that this unlawful practice is NOT OK. Click this link to tell us about your experience with short-term accommodation.”

Managers fight back

Meanwhile the UOAQ is also gaining traction with its petition asking the Queensland government to restrict caretaker-management contracts to five years.

Currently, management rights contracts for up to 25 years are firstly sold by developers – with no input or approval by apartment owners – and then traded from manager to manager. At no point do owners have any say in who manages their buildings, and those caretakers can have a profound effect on how those communities are run.

Over the years there have been countless tales of residents being driven out of blocks so that caretakers can earn more from rental commissions, and managers taking kickbacks from contractors before they can even quote for maintenance jobs.

When it comes time for renewal or extension of the contracts, to make them a more attractive prospect for on-selling owners in favour of the managers’ proposals get favourable treatment, while those against are treated appallingly. The irony is, of course, that the increased value of the contract is then factored into the fees the strata owners are compelled to pay.

Now, at last, a petition by apartment owners to bring queensland management contracts into line with the rest of Australia is getting serious traction, so much so that caretaker managers are organising a fightback.

A copy of an email that’s been doing the rounds has dropped on our desk, and it seems the caretakers are ready to step up the fight to retain their rights to buy and sell 25-year contracts.

The email warns that even if the restriction on the sale of management rights demanded in the petition is not passed, the “detrimental effect, that this had already had and will have on our investments and business is far too large to contemplate.

“Selling management rights will become impossible as we have bought in for 25 or 10 years for a huge financial investment and will not be able to sell this on.”

The email goes on to say that it “is it even more important than ever, that we as management rights owners, operators and everyone in accommodation industry stands together to support each other.”

It then calls for management rights owners to exchange email addresses and support the campaign by management rights lobby group ARAMA to prevent any restrictive changes in the law.

If ever there was proof required that Queensland’s caretaker managers don’t see apartment owners as stakeholders in the “accommodation industry”, it’s there in black and white.

Queensland strata owners and residents (and anyone who supports them) can read and sign the petition demanding the curtailing of management contracts HERE

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