The great certification and reports rort

As a result of being active property investors we attend strata meetings operated by several different strata managers. This time of year is notable for the Strata AGM’s.

Now what is most apparent this year is the emergence of a remarkable similarity by Strata Managers claiming that we now need a whole range of “required” building investigations by “appropriately qualified consultants”, on all manner of issues, as a consequence of the new Strata Management Act. So they say.

The similarity of the alleged required review concepts, and the arguments advanced by Strata Managers supporting these ‘reviews’, makes one think that they have all attended some [secret] industry training course – which is of course illegal under the Trade Practices Act [ “arrangements and understandings in the restraint of trade”].

And it is not just that our properties should be subject to these reviews this year but, usually, every year. We also need to be ‘certified’ by these consultants. Further costs.

There is much media coverage on the costs and availability of housing. All of the excessive regulatory exercises [many of which have no legal basis ] must filter through into the costs of housing. Rental returns are down at 3% levels – some-one must eventually pay for all this.

Consider the following:

• Child safety window locks. Now required under Strata Schemes Management Act – however the Strata Managers [falsely] claim that these must be installed by a consultant / registered locksmith and ‘certified’.

Needless to say the cost of such window locking devices as offered by these consultants varies enormously-  often double and even three times [!] for what the same locks can be purchased at, say, Bunnings

• Engagement of Contractors. The requirements allegedly required for a trades-person are now extraordinary :
• Public Liability Insurance
• Professional Liability insurance
• Professional Indemnity Insurance
• Statutory Workers Compensation Insurance.
• Operate a recognised quality Management System
• Operate a Health and Safety Management system

Just think,  this applies to even the tradie that sweeps the leaves, cuts the grass, cleans the windows , etc.

One large strata manager claimed that they had some 125,000 ‘certified contractors’ on their books!! What they are doing is manipulating the whole tradesmen industry with consequent increases in prices for us all.

• Review of By-Laws. The revised SSMA contains a pro-forma set of By-Laws. Strata Managers are now saying that existing By-laws should be ‘reviewed’ by solicitor to ensure there is no inconsistency with the suggested pro-forma by-laws. More needless expense.
• Pest Control . The need for an annual pest inspection and eradication of any creepy crawlies by a certified contractor
• Termite Inspection – You can be absolutely certain that these inspectors will find “possible” termite infestations somewhere, and inevitably in places that your cannot access yourself without risking severe injury .
• If all their efforts fail there is always the fall-back position – they MAY be under the driveway. This means that holes must be drilled and insecticide poured in.

The report will be padded out with many pages about the sex life of termites and other alarmist scenarios while they are very careful to say that unless they conduct an intensive [read: expensive ] survey of your property it is only their best estimate [guess] at this stage. And of course this survey must be conducted each year

• Asbestos Inspection

As far as I can see, there is no obligation by a Strata to obtain an ‘asbestos report’ except for buildings that may contain loose fill asbestos.

An ‘asbestos report’ is, just like the pest inspection reports, not  a crisp / brief reports saying that the building is “free of asbestos”. The consultant, so called, heavily qualifies the report by saying that there may just be a chance that there may be asbestos, and unless the consultant damn near dismantles the entire property he could not be certain.

Such reports are worthless; indeed they can create problems for any owner attempting to sell in that they raise doubts, and the vendor has to obtain yet another report to satisfy the prospective buyer.

• In the ACT by way of analogy the building inspection reports, which are obligatory at time of sale, include an asbestos inspection report and a pest inspection report, and these are immediately listed on the Web for all to see. Unless you subsequently engage the appropriate rectification team to correct the alleged problems [which are invariably in such difficult to access locations that one cannot verify their truth] the consultant will not amend the damaging report that is on the Web.

It is simply extortion – but you have to live in Canberra to understand the bizarre activities of the ACT Government. They have a saying there:

“You do not have to be mad to live and work here– but it certainly helps”

• Sinking Fund and Long term Financial Plan – The requirement for a 10 or even 15 year Capital Works Fund Plan to be developed by, yes, a ‘certified’ financial planner. Again the report is padded out by template comments that would apply to just about any property
• Annual Fire Safety Statement [ by a ‘suitably qualified consultant’- of course]. Inevitably this consultant will find the need for fire extinguishers to be located on every floor, etc [and checked every six months], fire escape lights to be located everywhere, and waffling comments on the flammability of one’s carpets etc
• Work Health and Safety Report [by that consultant again]. If you thought that the previous surveys and investigations were excessive wait till you see what a Risk Management Consultant will find. You will be afraid to step outside of door again. Rectifications are eye-watering in extent and cost – and must be ‘reviewed’ each year, of course.
• A 2-yearly test of the switchboard for the building even though this only actually applies to high rise commercial buildings and factories, etc