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The ofďŹ cial newsletter of Unit Owners Association QLD

Management Rights Can be Fixed

Incorporated Policy: Rates for Apartments in Queensland

MAR 2012 MARCH 2011

Lot Entitlement Motion

With Thanks to Mr Tony Drake

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EST. 1978


UOAQ - Become a Member Today! From the Editor

The Unit Owners Association of Queensland congratulates the Liberal National Party on its tremendous win in

www.uoaq.org.au Unit Owners Assocation QLD 6th Floor. 333 Adelaide St, Brisbane Q 4000 E help@uoaq.org.au P 3220 0959 uoaq.org.au

Brisbane

P 3220 0959 or www.uoaq.org.au and request to communicate to a particular person Sue Ekert, Bob Boundy, Elle Young, Paul Cassels. Published by Unit Owners Association QLD Editor Paul Cassels

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Queensland on the 24th March. The unity of the members of the LNP and their strong commitment to good responsible governance for the people of Queensland reflects the unity and commitment of the members of the UOAQ committee to provide strong effective and responsible representation of its members, the unit owners. For far too long, the interests of the developers and service contractors and management entities have adversely affected the

affordability and sustainability of unit ownership and liveability in Queensland. The UOAQ will be seeking to inform the new government of the facts supporting its policy of maximum 3 year caretaking contracts and no extensions as soon as possible, together with many other relevant facts regarding unit ownership that require legislative change. The number of submissions received is really important if you want the Government to take notice of the views of owners. Visit the following link to access the government website to obtain a copy of the discussion paper http://www.fairtrading.qld.gov.au/ AboutUs/Management_rights_ discussion_paper_outcomes_of_ stakholder_final.pdf and as the lead article says – stop whinging and start writing – Closing Date 8th May 2012!

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Unit Owners Association QLD

Help for Members

Members of the UOAQ are welcome to contact committee members of the association for any help on any body corporate matter.

Disclaimer

Articles contributed to this newsletter are published as a service to members and do not necessarily reflect the opinion or policy of this Association. To contact the committee of the UOAQ for assistance with a body corporate matter please e-mail help@uoaq.org.au

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UnitNews March 2012

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Quick News

Management rights can be fixed Stop whinging and start writing The most oft heard complaint about unit living and body corporate management is that the caretaker/letting agent contract terms of 10 and 25 years are ridiculously long and dis-empower unit owners. In a nut shell, this is seen as the root cause of all Management Rights (MR) problems. The second major cause of unit owner and body corporate problems is the apathy of unit owners and lack of will to help themselves. To a large extent this apathy has been caused by the brick wall of bureaucracy. Unit owners write to Government and then get stone walled with stupid answers and no real action to change the legislation. The 2010 Annual General Meeting of the Unit Owners Association of Queensland (UOAQ) instructed the executive committee of the UOAQ to campaign for changes to Management Rights. (3 year MR contracts) Two years later and two weeks before dissolving Parliament for the election the Labour Government published a “MANAGEMENT RIGHTS DISCUSSION PAPER” with 43 questions about how to fix Management Rights. So what use is that? We hear the apathetic majority of unit owners cry out in unison. Well doubters! The UOAQ committee has been reassured by the Liberal Nation Party (LNP) that they will continue the reform of Management Rights – IF THERE IS ENOUGH INTEREST FROM UNIT OWNERS. This is a challenge to the majority of unit owners to STOP WHINGING AND START WRITING.The DISCUSSION PAPER can be accessed at:

http://www.fairtrading.qld.gov.au/ management-rights-in-community-titleschemes.htm Forty three long winded questions and answers can be daunting to the most committed unit owner; therefore, the UOAQ has developed a quick submission guide to make responses easier. This guide is on the next page. You can use the guide or, write as much or, as little as you like – but have a go and write something. It sure does help to vent your frustration, and you might even change your unit living world for the better. Please send submissions to Email: managementrightsreview@justice.qld.gov.au or Mail: Management Rights Review Marketplace Strategy, Office of Regulatory Policy Department of Justice and Attorney-General Locked Bag 180 City East, QLD, 4002

* Submissions will be received until 8 May 2012

UOAQ GUIDE TO A FIVE MINUTE SUBMISSION TO A FOUR HOUR QUESTION PAPER

(Answer only those questions that concern you or are marked #)

UOAQ POLICY POSITION The ills of Management Rights (MR) can be 99% solved by simple actions by the Government: 1. All new MR contracts must be limited

to three (3) years, and the unsustainable MR system of granting long term extensions (top ups) that unrealistically escalate the cost of Management Rights for both the Contractors to purchase (servicing debt on purchase loans) and Bodies Corporate (via levy contributions) must end.

2. Management modules should be assigned by Building Code Australia (BCA) building class. Class 2 buildings should be Standard Module (SM) and class 3 buildings should be Accommodation Module (AM). 3. Class 2 buildings should be defined as 100% permanent residential. Class 3 buildings should be defined as short term or long term accommodation. Answers by question number: Q1. How else do we learn? # Q2. No. Other States do not have 10 and 25 year MR sales. # Q3. Body corporate owns the building and should own the MR. Q4. No. Arrow decision. Q5. No. Three year MR will fix. Q6. No. Three year MR will fix. Q7. Not needed with 3 year MR agreements. # Q8. No. Assign SM to class 2 and

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Quick QuickNews News

Hartley’s Body Corporate Management ‘Looking after all your Body Corporate Needs’

■ Financial Management ■ Agendas & Meetings ■ Administration of your Scheme ■ Maintenance ■ Dispute Resolution ■ Compliance

AM to class 3. Q9. Yes. Required for correct BCA class assignment. Q10. No. Should be penalty for incorrect regulation module. # Q11. Yes. 3 Year MR contracts. Q12. Should not be lot use restrictions within defined regulation module. Q13. No. KISS! # Q14. Yes. Policy 1, 2 and 3. Q15. Nil. Ban ownership by MR business. Q16. Yes. Limit license to restricted real estate. Q17. No. AM require tourism management experience. Q18. Yes. Limit letting commission. # Q19. Yes. 25 year contracts. Contract extensions. Q20. Yes. Limit to CPI. Q21. Yes. No open market tendering. # Q22. No. Developer sets price and BC is stuck with it. Three year MR will fix. Q23. No. Too general and unenforceable. # Q24. Yes. Stacking committees. Threats. Control of rental units. Intimidation. Assault. Denigration. Damage to property. Q25. No. See Q24. Q26. Yes. See Q24. Q27. Yes. Q28. Yes. But enforcement is a joke. Q29. Very seldom. Too expensive, too slow. Three year MR will fix. Q30. Yes. But enforcement is a joke. Q31. Very seldom. Too expensive, too slow. Three year MR will fix. # Q32. Why provide protection for financiers? No other small business has it. BC is disempowered. # Q33. No. Extensions must be banned. Three year MR will fix. # Q34. Yes. Transfers control to the BC. # Q35. Only difficulty is ownership of the building office. Must be on common property. Q36. No. Privacy laws allow crooks to hide. Q37. No. Three year MR will fix. Q38. Some advantage to BC. But Three year MR will fix. # Q39. No. Too slow and biased in favour of Caretaker/letting agent and BCM. Q40. No. Developers under estimate sinking fund contributions. Total caretaking contract cost not disclosed. Q41. Yes. Information is available from BC records. # Q42. Yes. See policy statement. # Q43. MR in Queensland is a failure. Regulators need to accept this reality and make changes.

consumer protection for unit owners 4

UnitNews March 2012

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Feature Quick News Story

With thanks to Mr Tony Drake

Unit Owners Association of Queensland Incorporated Policy: Rates for Apartments in Queensland Preamble The Unit Owners Association of Queensland alls on all Queensland Councils to remove differential rating including the height (view) taxes on the Gold and Sunshine Coasts and the Brisbane City Council parity factor. The Association urges Councils and Lord Mayoral candidates to adopt the following policy on rates for apartments.

Additonal Supporting Information Existing Charging for Residential Property Owners Property charges are now levied via two processes

Policy

• •

All rating initiatives that promote differential rating which penalises apartments such as height taxes and parity factor are to be repealed as these are inequitable.

Since the water and sewage services are consumed by all residents irrespective of dwelling type then these should remain unchanged.

Rates for apartments are to be set at a level below the rates for single dwelling blocks using the following factors:

Council rates should be changed to align with the proposed policy to recognize the following two key issues discussed in more detail below:

• •

Multi story complexes higher than 3 stories which require lifts: 70% of rates for single dwelling blocks Apartment complexes of up to 3 stories without lifts: 80% of rates for single dwelling blocks

Rationale There are two compelling reasons to provide reduced rates for apartments when compared with single dwelling residential blocks: • •

To provide an incentive to reduce the sprawl of cities and the consequent demand for and expense of extension of city infrastructure and services. To provide an offset for the costs incurred by apartment owners in running their body corporate organisations which are a required part of the amalgamation of multiple rate payers on blocks which would otherwise be used for single or low numbers of residences.

The detailed rationale to support these reasons is provided in the Attachment. Implementation Recognising that these changes have the potential to impact the city budget it is proposed that they be phased in over successive future rate rises. The phasing process would be to quarantine rate increases from apartments from all future increases until the targeted reduction margins are achieved and thereafter use the factors listed in the policy in setting rates. Wayne Stevens President

Council rates levied by the Brisbane City Council for city services and administration. Water and Sewage charges separately levied by Urban Utilities for water supply and sewage services.

• Containing City Sprawl • Recognition of Additional Costs Incurred by Apartment Owners Containing City Sprawl A key issue confronting our urban communities is the increase of city sprawl which generates very significant pressure on council budgets to provide additional infrastructure and extension to council services. This issue is clearly and explicitly recognised in (for example) the Brisbane City Council planning processes and city planning. New City Plan The BCC website indicates that the city plan is currently under review and advises: Developing the new City Plan The review of City Plan is required by the Sustainable Planning Act 2009 (SPA). The new City Plan will better address future challenges such as: • managing our increasing population • encouraging economic growth • the need for more sustainable living (such as minimising vehicle trips and improving access to facilities) • provision of housing choices to improve affordability • planning for resilience to natural hazards such as flooding It will state how and where development can occur and will include planning for the infrastructure necessary to support it. Find out about the different stages in the new City Plan preparation process. Formal advertising of the new City Plan for public comment is expected to take place in 2012. Existing City Plan Throughout the Brisbane City Plan 2000, accessed from the BCC website, there is recurring reference to improving environmental outcomes through increasing residential density and making better

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March 2012 UnitNews

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Feature Quick News Story use of existing infrastructure. For example in Chapter 2 ‘ The Strategic Plan’ at point “3.3 Land use and built environment” reference is made to:

“(b) efficiency – more compact, self contained, smart, networked communities that use and reuse land and other resources more efficiently and restrict urban sprawl.”

This specific element seeks to “Support the preferred pattern of urban settlement established by the Regional Framework for Growth Management for South East Queensland 1998.” The italicised sections above are direct quotes from the plan and are examples of the many, many sections of the plan where reference is made to increasing population density to better utilise infrastructure, avoid urban sprawl, reduce transport cost and time as well as ensure that the farming land adjacent to our city is not gobbled up by more urban sprawl. Coincidently these are all also factors that reduce the councils administration and service provision costs. Thus encouraging urban densification through apartment development reduces councils costs. Recognition of Additional Costs Incurred by Apartment Owners The rate base on a multi dwelling apartment site can be between 6 and 50 times the

rate base that would exist if these site were typical suburban single dwelling developments. However, there are significant additional costs that occupiers of units and apartments face as a result of the aggregation a large rate base on a site which could normally only support a few rate payers. To clarify this point, the Body Corporate Fees for a typical apartment are in the range $3000 to $7000 per annum per apartment - although much more expensive for some apartments. A significant proportion of these costs is associated with the amalgamation of multiple rate payers on this site and includes: • Administration associated with managing the body corporate (which in effect is the equivalent of another small unit of government below the level of Councils). • Cost of services to common areas including: lighting, ventilation and cleaning • Cost for other standard services necessary to facilitate multiple dwellings on the site including: • electricity and maintenance costs of lifts for high rise properties, • extending council mains and pumping for water supply to service all lots in multi story buildings, • fire system maintenance and

legislative compliance costs. These are costs that apartment owners bear that are not borne by suburban rate payers and are a direct result of having multiple dwellings on the one site. If we were to attribute one third of the average Body Corporate costs to these costs then on average apartment owners are incurring an expense of $1,666 per annum to organise to live on a site that generates a very significant additional rate base at only marginal additional cost for the council - noting that the key essential services of water supply and sewage are now separately billed. It is acknowledged a higher proportion of Body Corporate Fees could be reasonably attributed to the maintenance of the common areas and building structure – which is a cost faced by all property owners. No redress is sought for that part of Body Corporate costs. Past Practice Before rate changes in many councils in the mid 2000s, there was a previous recognition by councils of the extra costs to apartment owners. This recognition was reflected in rating systems which charged apartment owners at rates less the standard suburban rates. Thus the change proposed in this policy would in effect reinstate this previous recognition of additional costs faced by apartment owners.

CONSUMER PROTECTION FOR UNIT OWNERS Your Details. Join Today Title

Membership Details I enclose

Name of complex

Name Phone

Total units in Complex

Mobile Email Address Postcode Postcode

6

State

help@uoaq.org.au (07) 3220 0959 Level 6 / 333 Adelaide Street Brisbane Q 4000 GPO Box 2359 Brisbane Q 4000

UnitNews March 2012

State

$60

$55 (If over 60 years and you live in a unit)

Membership Type Building Format Plan

Standard Format Plan

Direct Deposit/EFT: Bank MACQUARIE BANK BSB 182-512 Account 9 6135 3547 Name UNIT OWNERS ASSOCIATION OF QUEENSLAND INC

Join Now

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EST.

1978

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Quick Unit News

Lot Entitlement Motion to revert the Contribution Schedule The following flow chart was drafted by a UOAQ member. It is published in the interests of providing a forum for the sharing of the varied opinions in the matter of lot entitlement amendments the BCCMA. Procedure to Revert thetoContribution Schedule TIMELINE

1

2

3

The start

< 2 mths

No timing

4 3 mths after 3

REQUIREMENT

ACTION

Body Corporate Committee

ACTION

ATTACHMENTS

Lot Owner

An lot owner has the right to submit an adjustment motion to the committee if: 1. an adjustment order (as defined) was made and the CMS effecting the order was registered prior to 14/04/2011; and 2. the owner owned a lot prior to the adjustment order being made and is required to pay a proportionally greater contribution as a result of the adjustment order.

Receipt of a motion by the committee proposing adjusting the Contribution Lot Entitle ment Schedule to the "pre-adjustment order" entitlements . There is an extended definition of what constitutes an "adjustment order" (S 378).

Within 2 months of receiving the motion the Committee must: 1. identify the pre-adjustment order entitlements. If there is more than 1 adjustment order the entitlements immediately preceding the 1st order apply. 2. give written notice to each owner. 3. If there has been a lot subdivision post the adjustment order obtain a registered valuation of the subdivided lots.

The Committee's written notice to each owner must: 1. state a motion has been submitted; and 2. state the committee's proposed adjustment of the contribution schedule ;and 3. invite owners to make submissions as to changes to the committee's proposed entitlements . This must be done within the period stated in the notice which cannot be less than 28 days.

An Owner may make submissions to the Committee in relation to what (if any) changes to the pre-adjustment order entitlements should be made because of : 1. a lot subdivision post adjustment order. 2. a lot amalgamation post adjustment order. 3. a boundary change to a lot post adjustment order. 4. a material change to the scheme post adjustment order.

The Committee, having regard to any submissions made by owners, decides what (if any )changes to the pre-order entitlements should be made because of: 1. a lot subdivision post adjustment order (S 381). 2. a lot amalgamation post adjustment order (S 382). 3. a boundary change to a lot post adjustment order (S 383). 4. a material change to the scheme post adjustment order (S 384).

The Committee can ONLY decide on adjustments (if any) to the preorder entitlements pursuant to section 381 to 384 NOT to the preorder entitlements generally. The decision should be by way of committee resolution recording the adjustments made or that no adjustments are to be made. The Committee MUST within 7 days after it makes its decision regarding the adjustments give each owner written notice of the committee's decision.

An Owner may within 28 days after receiving notice of the committee's decision apply for an order of a specialist adjudicate or QCAT for an adjustment of the contribution schedule to reflect the preadjustment order entitlements subject to changes under S 381 to 384. The applicant (owner) is responsible for their costs. For the avoidance of doubt the Body Corporate is the respondent.

The Body Corporate MUST, within 3 months after the Committee makes its decision under step 3 (above) lodge a request to record a new CMS with the pre-adjustment order entitlements subject to changes (if any) decided in step 3. For the avoidance of doubt the Body Corporate need NOT consent to the recording of the new CMS (Section 54(2) does not apply). The Body Corporate is responsible for all costs.

The committee should pass a resolution to affix the common seal, witnessed in accordance with the Body Corporate's requirments to the CMS incorporating the change to the contribution schedule lot entitlements. Cause the CMS to be registered.

I/We, The owner/s of Lot No. which we purchased prior to the increase of our contribution entitlements ordered by a Specialist Adjudicator on submit the following motion (pursuant to Section 379 of the legislation) for consideration by the Body Corporate Committee for :

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Sample Motion

Sample Notice

Sample Motion Sample Notice

Sample Motion

We propose that the Body Corporate adjust the existing contribution schedule for the scheme to reflect the pre-adjustment order entitlements for the scheme subject to Sections 381 to 384 of the legislation.

March 2012 UnitNews

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