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Victorian Owners Corporation Act reforms fall short

We Live Here has been campaigning for years against blatantly unfair building and facilities management contracts. Many unconscionable contracts have opaque costs, embedded commissions and irrevocable terms of many decades.  The Financial Review reported this month a case of a 99-year embedded network contract! This type of inequity needs to be eliminated. The government has drafted a clause in the proposed draft legislation to prevent onerous long-term contracts that “benefit the applicant for registration of the plan of subdivision”, i.e. the developer. The huge loophole here is that the developer can offer a benevolent gift of a lucrative multi-generational contract to a “mate” who happens to be in effective control of an unrelated company or entity. Different company, different directors – too easy. Many of the unfair contract examples we are being sent by disaffected owners corporations show that the developers and contracted companies are well known to each other but legally unrelated. The reform required is simple: just limit the term of all third-party owners’ corporation (OC) contracts to three years, renewable at the OC’s option – regardless of who benefits. Otherwise the proposed reform will be just ludicrously simple to rort. This legislation needs to allow owners to seek a ruling from Victorian Civil and Administrative Tribunal (VCAT) on fairness and equity principles for all existing contracts of more than three years, not just new contracts signed since 2017. Many of these unfair “mates” deals for 25, 30 and 99 years obviously still have many years or decades to run.
CBC News
We Live Here

Small print shrinks state cladding fund

The small print in the recent Victorian Building Authority (VBA) report explained that more than half the headline-grabbing $300 million fund would be earmarked to fix the cladding on the government’s own buildings. Less than $150 million will be left over for ordinary folk living in combustible apartments. At an average remediation cost of $5 million per building, the fund is just enough to take care of the cladding on perhaps 30 buildings. That’s about three per cent of the 1069 buildings that the Victorian Cladding Taskforce deemed a “risk to life”.  This cladding fund seems to be scant propitiation for the government’s significant role in this whole scandal – having overseen the disastrous “self-regulation” regime.
CBD News
We Live Here

Towers of Trouble

This story was first published on December 1, 2001 The unfortunate events at Regis Towers, one of Sydney's newest and biggest apartment blocks started to unfold in January when Beryl Hardy Nisbett decided to sell. Things might have remained hidden for longer if the couple who wanted to buy her apartment hadn't insisted on bringing along a building inspector. The inspector produced a 16-page report which concluded that "reasonable habitation of the unit would be extremely difficult". Moreover the inspector, Dominic Ogburn, determined that the problems in the Meriton development were unlikely to be isolated. There were, after all, 554 other residential units in the three Castlereagh Street, Pitt Street and Campbell Street buildings that make up the block. Hardy Nisbett lost her sale but elements of the report found their way to Sydney City Council, which agreed to inspect a sample of 15 units. The council inspectors found 14 to be in breach of the Building Code of Australia and notices under the Environmental Planning and Assessment Act began to rain down on the owners' corporation.
The Sydney Morning Herald
Gerard Ryle and Harvey Grennan & Jane Burton Taylor

Building defects cost Aussie home owners an average $6,434

Australia’s homeowners have been forced to fork out $10.5 billion in the last 10 years to address building defects, with the average apartment defect bill hitting $6,434, new research reveals. And while the average bills were less than $10,000, 4 per cent of apartment owners have had to cough up more than $50,000 to address issues. While the sum is significant, Owners Corporation Network (OCN) executive officer Karen Stiles believes the average bill quoted by Mozo is conservative and that owners often face much higher fees.  And, she added, there are very few apartment owner protections. “There are almost zero protections for apartment purchases. You've got more protection buying a $10 toaster than you do buying a $1 million apartment, quite frankly,” she told Yahoo Finance. The OCN recommends buyers avoid purchasing property off the plan or buying in buildings with more than four storeys, as those have no home-owners’ warranty insurance. She said buyers should also think hard about purchasing apartments in buildings constructed in the last 10 years. “The total cost [of building defects] is incomprehensible in terms of the emotional, financial and physical cost to owners and it's never been factored in,” she said.
Yahoo Finance
Lucy Dean

'Crisis point' for NSW building as clerk of works makes a comeback

Builders support the resurrection of an independent quality overseer or a "clerk of works" at construction sites in the face of NSW's building failures, the NSW parliamentary inquiry into defects has heard.
The Australian Financial Review
Su-Lin Tan

Building report author says NSW government should fund cladding fix

The co-author of a landmark report into Australia's building regulations says the NSW construction industry is in "crisis" and the Berejiklian government should fund a fix for flammable cladding. "My own personal view has been that governments need to pick up the tab. I agree with what Victoria has done," she said. "I think the federal government has just as much interest in the solution to this as the states."
The Sydney Morning Herald
Megan Gorrey

NSW government’s short-term letting reforms met with mixed reception

It could be at least another six months before Airbnb is regulated in NSW as the state government released its short-term letting reforms for public comment more than a year after reform was first announced. Owners Corporation Network director Jane Hearn said the policy had been watered down. “We are shocked that a loophole has already been introduced,” Ms Hearn said. “The policy has been revised … it means the true extent of short-term letting can never be monitored or measured.”
Domain
Tawar Razaghi

Australia's building crisis fix will cost $6.2 billion: report

The cost of fixing the unfolding national building crisis, including widespread residential apartment block defects and the use of dangerous combustible cladding, could soar past $6.2 billion, according to a new economic analysis. More than 3400 residential unit blocks across the country have potentially flammable exterior cladding, according to a report commissioned by the construction union. Those high-rise blocks take in about 170,000 apartments. In NSW, hundreds of buildings are potentially affected. Pressure is mounting on the Berejiklian government to provide more support and funding either to individual owners’ corporations, or to Sydney councils confronted with buildings that could need flammable cladding ripped off and replaced.
Sydney Morning Herald
Megan Gorrey and Jacob Saulwick

ACT Government needs to go after developers and toughen laws, say unit owners

The ACT Government was on the right track by putting property developers in its sights with a potential licensing scheme but it needed to go further if it was serious about fixing the building quality issue in the ACT, according to the ACT Owners Corporation Network. President Gary Petherbridge, commenting after Tuesday night’s Four Corners report Cracking Up that highlighted Canberra’s decade-old Elara apartments debacle, said the issues started with developers, who needed to be called to account, but licensing alone would not be enough. He said the Government needed to start excluding developers who they knew to be questionable from land purchases. “If they were serious they could turn around and say, ‘we don’t want to sell these properties to people who are proven to have some suspicious behaviour’,” he said. “So that way you could start to put the pressure on. Unfortunately, that means the Government might not get as good a price for these places as they want, because they’ll be limiting the market to those who are credible and won’t have any actions going against them.” Mr Petherbridge said self-regulation in the industry had clearly failed and while acknowledging the efforts of Building Quality Minister Gordon Ramsay and Access Canberra to clean up the mess, he believed tougher laws and a return to former regime practices were needed.
Riot Act!
Ian Bushnell

Four Corners 'Cracking Up'

From shoddy workmanship to lax laws, Australia's apartment building crisis is leaving owners out of pocket and in some cases homeless. Industry insiders reveal a litany of failures that could leave defects for years to come.
ABC Four Corners
Sean Nicholls

Advertisement Property Residential Development outrage Print article

When Christine Robinson bought a high-rise apartment in June 2017 she didn't know she was also buying a building manager's services - for 25 years. Robinson, a nurse, and her IT worker husband Chris also didn't know that they, and the other owners in the North Melbourne building, would be paying that building manager, CP Property Pty Ltd, an increase of 4 per cent after the first year and 5 per cent every year after that. This means the building management contract, worth an initial $172,000 before GST, would rise to $549,434 and a cumulative total $8.1 million by the end of 25-year contract. That's an average yearly rate of $325,301. For the 61-year-old Robinson, who could easily still be in the unit in 25 years' time, it was a shock. "My nursing salary sometimes went up 1 per cent in three years but we are paying this company 5 per cent guaranteed increase," she says.
The Australian Financial Review
Michael Bleby

NSW government scrambles for answers at building defects inquiry

The pain of NSW's building crisis was captured in Mascot Towers owner Vijay Vital's testimony at the inquiry, when he broke down describing the loss of his home. Mascot Towers was evacuated on June 14 due to cracks but engineers have yet to find the cause. "I stand here as a parent and my daughter asks me "when  can I go home?" he said amid tears. "I have done everything right and I shouldn't be accountable for this." The Owners Corporation Network (OCN) told the inquiry the question of "who should pay" needs to be addressed now. In the first instance, the government and building practitioners should pay for defects in buildings including those of Opal and Mascot Towers having received stamp duty and earned profits from development respectively, OCN said.
The Australian Financial Review
Su-Lin Tan

What Members Say

"The whole strata community owes a huge debt of gratitude to you and the OCN executive. Much appreciated."

Robert, Darlinghurst

"I am very pleased with my membership of OCN, the discussions through sharing emails is very valuable in increasing my knowledge of strata living, the laws and EC responsibilities. I think I am better armed to tread the minefield of the managing agent responsibilities and the necessary action of the EC to monitor the contradictory interests of the agent."

Jim, Wollstonecraft

"I so appreciate being part of the OCN email forum. It provides a great opportunity for sharing ideas and learning"

Ingrid, Neutral Bay

"I must say that I have enjoyed and found consolation in the discussions that have been part of the email chain (forum). I did attend one general meeting and found that it was informative and the people "running the show" were knowledgeable and dedicated to the tasks that had taken on. In short, well done. You and the committee have and continue to support the Strata Community in a very professional manner."

Greg, Parramatta

"Nothing is easy in Strata World and we have been in building defects “mode” for some years – hopefully almost at an end but that process has been most demanding and difficult but again – greatly helped by the experience and wise counsel of other members of OCN."

Pat, St Leonards

"Keep up the good work, as many (if not most) strata schemes need your help, advice and representation at all levels of government."

Jann and John, St Ives

"I belong to OCN because of its professionalism.  I have found the meetings I have been to extremely well presented, to the point, and of course very topical and informative. Speakers on the whole certainly know their topic.  My role of Secretary last year was certainly assisted with the coverage regarding TPG & other subjects. Member newsletters are also of benefit as the topics are specific to strata matters."

Graham, East Balmain

I have enjoyed attending the quarterly OCN meetings and the exchange of emails between other Executive Committee Members and think OCN is playing an increasingly important role as a voice for strata dwellers and representing us at Government level. I wish the organisation continuing success in the future."

Pauline, Kings Cross

"The [forum] response to my question was amazing and really useful.  The OCN community is wonderful so thanks."

Jenny, Killara

"I would like to thank you all for the important effort that you are all putting in to look after apartment owners and tenants. It is so valuable and you are heroes. I would not have been able to deal with my duties as a strata chairman without your advice and assistance." 

Angela, Mascot

"The OCN is invaluable – many thanks."

Bill, Surry Hills

"OCN is proving invaluable"

Sue, Neutral Bay

"Thanks to all at OCN for your continuing efforts to keep us up to date with current strata information and advice...it has been very helpful to us"

Kate, Coogee

"When my wife & I first encountered a problematic Executive Committee I heard that OCN was a great help (from a Strata manager whom I knew) so we both joined and have gratefully used the on-line information sources. We continued to happily rely on OCN’s assistance when we progressed to Committee status & later as Chair & Secretary of our Committee. I still use OCN in my current role as Treasurer."

Peter, Chiswick

"Thanks to OCN for being such a rich resource of trustworthy information about strata matters."

Peter, Chiswick

"I wanted to extend my personal thanks for the very informative & interesting event today. The OCN team did an outstanding job in the organisation of this event & I enjoyed it thoroughly. The quality of speakers, the flow of conversation & interaction from the attendees - first class …& of course, the amazing Jimmy T - always a delight."

Sue, Epping

"OCN does a great job in providing a really valuable service to Strata owners."

Lois, Wollongong

"I am sure my appreciation of your good works is echoed by many in the Stratasphere. Keep up the good work."

John, Elizabeth Bay

"The OCN is probably one of the best, most informed and most informative groups I have been involved with."

Alan, Maryville

"Once again, being able to discuss such things through this forum, helps clear the mind, puts things into perspective and helps one to understand their rights and to form a strategy if needs be. As a simple EC member trying to do what is in the best interests of lot owners, I truly value OCN and am grateful."

Pamela, Point Lookout