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The ofямБcial newsletter of Unit Owners Association QLD

MAY-JUNE 2012 MARCH 2011

DOES YOUR BUILDING SUFFER FROM TBS?

Become a Member Today Click to Join now www.uoaq.org.au

EST. 1978


UOAQ - Become a Member Today! From the Editor

Paul Cassels

DOES YOUR BUILDING SUFFER FROM TBS?

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

That was the conclusion reached by one of our members. The member innocently ticked off a number of points.

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

• • • • • •

Gold Coast

Wayne Stevens, Greg Carroll, Roger Dearing

Art Direction

Dan Hancock - P 3162 8823 E hi@danhancock.com.au

Web Development

John Connole - P 0439 879 740 E john@stickybeakmedia.com.au

The complex had management rights Had been converted from Standard to Accommodation Module The contract was for 25 Years The MR contract had been topped up twice Council Rates have gone through the roof The building is a Class 2 residential being used as overnight stay accommodation

The clarity struck like a bolt of lightning. These are the points that were addressed at the 2010 AGM of the UOAQ. The AGM endorsed the adoption of the UOAQ Sustainable Living Policy for Queensland. Our membership has growing exponentially and that the nature of the issues which the UOAQ offer assistance with are becoming increasingly complex, just as living in CTS schemes is also becoming increasingly complicated and contentious. We have an ability to train more office volunteers if you are interested please arrange for an interview send an email to help@uoaq. org.au in the Subject header please indicate that you are interested in becoming involved and please attach a resume and a short story of why you want to become involved.

Sponsors

We appreciate the support of our sponsors to help us do the work we do. To become a sponsor of UOAQ, please contact Paul Cassels on 3220 0959

yourstratamanagement.com.au

COMMUNITY LIVING SOLUTIONS

Quality Building Management Pty Ltd.

Strata Inspections and Reporting

Reducing Costs & Increasing Value for Unit Owners

CTS Management Suite 35, Level 6. “Northpoint” 231 North Quay Brisbane QLD 4000 Telephone 07 3211 4445 Fax 07 3211 4410 Mobile 0419 741 066 Email coralie.mott@ctsm.com.au www.ctsm.com.au

ORIENTATED { WEBRESULTS DESIGN & MARKETING }

Coralie Mott

(BA Dip Ed, Cert IV in BCM)

Director and Body Corporate Manager

www.stickybeakmedia.com.au

yourstratamanagement.com.au

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.

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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 May - June 2012

uoaq.org.au


Quick News

Short-Term Holiday Letting Mr STEVENS (Mermaid Beach—LNP) (3.39 pm): I rise today to again bring to the attention of the House the ongoing issue of short-term holiday letting in residential areas—or, in other words, the party houses—disturbing our usually peaceful and quiet communities. This is happening from Mermaid Beach, Burleigh and Currumbin right up the South-East Queensland coast to Noosa and beyond. The only difference from the times I have previously raised it is that today is my opportunity to address this issue from the government benches. I raised this matter with the Bligh government and it refused to do anything. It refused point blank to right a wrong in our Queensland communities. This out-of-control behaviour by people who hire these residential properties for short-stay holidays is not what we want in local communities. These unruly groups are the bane in the life of the neighbours who have to endure this unseemly behaviour day in and day out, week in and week out.

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

I met yesterday with the honourable Minister for Local Government, the member for Mundingburra, and the Assistant Minister for Infrastructure and Planning. I congratulate them on their determination to legislate a solution for this unacceptable behaviour in our communities. The Premier has, in his own words, pledged: ‘We will give them’—local governments—‘the tools to do the job.’ He has stated that local governments ‘are in charge of town planning here in Queensland but they need the backup of the state government to deal with the loophole issue to actually protect residents.’ He further stated, ‘We will give them the authority and ability to look after people across the suburbs of the cities and towns in Queensland.’ I have sustained the attack in my neck of the woods by highlighting the issue in the media and I instigated a task force to look into the issue of short-term holiday letting in residential areas which includes local and state representatives. The task force agreed that legislative changes were needed to regulate this new so-called party house industry. The councillors of the council at the time could not see the necessity to eradicate this unacceptable social behaviour. I hope the newly elected Gold Coast city councillors will see how important this issue is and act accordingly when this legislation empowering them to act is finally legislated through this House. My office has been contacted on many occasions and this abhorrent activity is increasing in these difficult economic times. This problem needs to be sorted out and I know that other members of the House in seaside electorates would agree with me and would be happy to support any regulation or legislative changes that the honourable Minister for Local Government introduces to help fix this problem once and for all. I assure all sufferers of party house mayhem that I will not stop in my efforts to rescue them from this intolerable suffering until party houses have been eradicated in our city once and for all. Quite clearly the issue has created communities that are in fear of going to sleep at night, with drunken boozy behaviour becoming the norm with groups of people constantly moving in and out of this type of holiday letting in residential communities.

uoaq.org.au

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

May - June 2012 UnitNews

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Quick QuickNews News

Dear 2011 Griffith University Strata Title Conference Delegate Griffith University, in connection with the National Climate Change Adaptation Research Facility, is undertaking research that will culminate in a report providing recommendations directed to preparing strata titled complex management for dealing with the increasing potential of extreme weather event related building damage in a world of climate change. Following completion of an interview phase, we are now collecting

Click here to complete the questionnaire

quantifiable data via an on-line questionnaire survey. As a past delegate of the Griffith University strata title conference, can I encourage you to complete the questionnaire by clicking on this link: www.griffith.edu.au/climate-changesurvey The questionnaire will take around 15 minutes to complete. Upon completion, you can elect to enter a $200 JB Hi Fi gift voucher prize draw, to be made on 13th July 2012. Findings emanating from this study will be reported at our next Gold Coast conference, 4-6 September 2013.

“Performance Based� Management Solutions Our Professional Body Corporate Management Service includes:

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UnitNews May - June 2012

Suite 35, Level 6, "Northpoint", 231 North Quay Brisbane Qld 4000 Phone 07 3211 4445 Fax 07 3211 4410 Email info@ctsm.com.au

www.ctsm.com.au Proud Member of:

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Feature Quick News Story

Pooled Letting Arrangements Pooled letting arrangements are where all those owners who have signed letting agreements pool the income and specified expenses & the net proceeds are shared between the owners usually based on lot entitlement. These arrangements usually apply to hospitality/tourist accommodation. The Letting Agents are typically well known hospitality brands. These arrangements continue to be attacked due to their lack of transparency & accountability that would normally be expected in a typical owner - letting agent agreement. Some industry players, possibly in an indirect justification of the contract form, say in substance if you are part of a letting pool you are in practice a stakeholder/shareholder in a short stay accommodation business. Owners often don’t see it this way & end up confused & disenchanted because they consider a letting agent should provide a high level of disclosure in the manner of more tradition owner/letting agent arrangements. Pooled letting schemes are on offer & in place where very often a significant number of the lots could not stand up on their own right and justify the original off-plan asking price without being subsidized by other members of the letting pool. Obviously such pooled schemes are most common up and down the coast & experience large seasonal movements in occupancy with some lots obviously being more attractive than others due to views, aspect & similar factors.

have extensive disclaimers on these materials, but obviously are designed to entice buyers. There are many risks in short stay accommodation that relay on holiday/tourist support and many owners have learnt in the last few years that their returns have fallen well short of the spruikers guidelines! If you are now feeling nervous about this type of property remember costs/levies can be high. • • • •

If your project is on the coast you may be more likely to be exposed to extreme weather events. Short stay accommodation will have higher costs due to additional health & safety compliance. Maintenance will be higher due to higher traffic levels, annual refurbishments & the impact of salt & sea if you are on a coastal location. Short stay accommodation will usually have extensive facilities; pool(s), recreational facilities, conference rooms & foyer areas that have to be maintained via the Body Corporate Levies.

Governance in these complexes is often weak as many or most owners do not live in the area so putting a good Committee together is difficult. Letting Agent accountability id further diminished as few if any Committee members live on site to observe the day to day activities of the Caretaker/Letting Agent. These Caretakers/Letting Agents are often National or even International organizations so its a skewed playing field when a volunteer layperson Committee is dealing with paid professionals that have the backing of “Head Office” resources like Legal Departments.

So if you are buying into a property that operates a pooled letting scheme an immediate concern should the underlying value of your particular lot and what options there are to exist outside the letting pool if that were required. In many instances there is an perception that many lots are unable to survive outside the letting pool. A further trap for the unwary that on off-the plan sales and existing product many purchasers of this sort of project have had an eye on turning the property into an permanent retirement property only to belatedly discover that development approvals restrict use to short stay.

These Projects in which pooled letting schemes operate typically have a large number of lots within them, often over 200 lots. The environment of the lack of governance/accountability is further supported by the fact that due to absentee owners & other factors some of these schemes have never achieved a quorum at their Annual General Meetings so decisions at these meetings are often made numbers only marginally greater than the Committee membership!!

In off the plan sales for this sort of property there are invariably some investment returns modeled. These of course usually

If the playing field is skewed against the Committee - it is certainly skewed against an individual participant in the letting pool.

BRISBANE - GOLD COAST - REDCLIFFE Continued from Last Issue Working with owners to create happy, healthy and harmonious communities.

CLICK HERE For a Quote Today

enquiries@capitolbca.com.au uoaq.org.au

www.capitolbca.com.au

CLICK HERE To learn about us

1300 55 10 19

May - June 2012 UnitNews

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Feature Quick News Story Owners report these Letting Agents generally unresponsive to requests for greater disclosure or other changes to the status quo. Letting arrangements are not the concern of the Body Corporate Committee so the individual owners perceive that they have little in the way of effective avenues to raise concerns and prospect of positive change is nil. So why are some Owners concerned about these pooled letting schemes? Generally its about a lack of accountability & transparency. A typical pooled letting scheme will amongst other things require the letting agent meet some “generalized obligations. Namely; • To use best endeavors to expand the resort business, • To act fairly & honestly & professionally • Use reasonable endeavors to maximize room rates. In this context the agent is; • Allowed to set room/letting rates without reference to the Owner • Let participating lots without charge for a certain number of nights per year • Has a generous allowance to spend maintenance money without reference to Owners. Certain services provided within the complex like conferences, food & beverage are not part of the letting receipts and so such revenue are for the sole benefit of the Caretaker/Letting Agent. The Letting agent will typically charge the owner; A Letting fee - 12% of gross receipts plus GST for letting the lot, ie 13.1% in all. A Lot Servicing Fee - 28% of gross receipts plus GST, in all 30.8%. This is a charge for;

• • • •

Cleaning & servicing the lot, Provision of supplies, primarily consumables Supervision of maintenance & repairs3 Advertising & promotion

The Letting Agent accounts monthly to Owners in the Letting pool. Formats of this reporting are often confusing because the format often means Owners can not make a judgment about the reasonableness of what is presented to them as you might do with any other business transaction. The data provided is typically very limited; • • • • •

Gross receipts Letting Fees Charged Lot Servicing Fees Maintenance & Replacement Costs Lot Pool Distribution.

Some Letting agents will provide additional data on average occupancy & room rates along with some general market commentary. However the consistency & quality of appears very mixed. It is no wonder owners in letting pools have a jaundiced view about this structure because they see their revenue stream dissipate to a few cents in the dollar. Letting fees swallow up 44% of revenue, body corp & rates another 25%, repairs & maintenance possibly another 10%. So when all costs are totaled this class of lot owners are often struggling to achieve a cash surplus, ... but in any case even in favorable scenarios the lot owners share of the revenue pie may be only 20%. Is this fair? Who can tell, because like many things in the strata world, Owners affairs are very transparent & public, but paid stakeholders hide behind commercial sensitivity. What is known is that some of these Caretaker/Letting entities achieve very respectable profitability. This can not generally be said of lot owners. The true picture for any particular complex is hidden by

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UnitNews May - June 2012

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EST.

1978

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Quick Unit News a mixed bag of structures with elements of cross subsidization. Caretaker/Letting agents derive their income in several ways; caretaker income, letting & lot servicing fees, internal maintenance income and other business activities like conferencing & food & beverage etc. In terms of more specific disclosure issues, common complaints from Owners in these Letting Pools include; • • • • • • • •

The data is presented in a confusing manner. There is no way for Owner to adjudge whether the data presented is accurate, reasonable & particularly in the area of maintenance of repairs value for money is being received. The data may not show how much of the repairs is being paid direct to the Letting Agent and how such charges are calculated. There is often no yearly consolidation of the monthly data along with suitable metrics so the “big picture” can be analyzed. There is no policy statement of how outside maintenance service providers are selected & under what circumstances quotes are obtained. The Lot Servicing Fee covers advertising & promotion but there is no apparent obligation to incur any cost in this area & there is usually no disclosure about how much is actually spent or how this component is budgeted for. There is usually no disclosure about how many free of charge nights have been provided & to whom. (In respect to this issue I have heard claims that the Letting Agent have used the “free nights” for their own internal conferencing purposes. The Letting agreements are typically so wide it may well be a justifiable purpose - but clearly Owners regard this with jaundiced eyes. In any case any Letting Agent “benefits” should be disclosed?) The extent to which Letting Agents with chains of Hospitality Projects have conflicts of interest & the management of the

Letting Agents wider interests do not necessarily carry any positive synergies for particular owners. The debate around all this comes back to the general perception for some that a letting agent in a “trustee” capacity has a high duty of transparency and disclosure which is not met by most pooled letting arrangements. The counter to this is that; a) participation in such schemes is akin to being a stakeholder in a business operation, and b) disclosure beyond current levels gets into commercially sensitive areas and so it is self defeating & often not practical. The rub with all of this is even if you accept the stakeholder option the metrics and reporting to the “outside stakeholders” does not usually meet any standard you would usually associate with reporting to outside financial stakeholders. On the other side of the coin if you consider the spirit & intent of more traditional letting arrangements - even with adjustments for this particular structure the arrangements also seem to fall short of what is fair, reasonable and what might be considered modern day best practice. Perhaps this is closer to a business operation than a letting arrangement, but if it is its quite strange that the Letting Agent (or any other business operator) would be paid on the basis of gross revenue rather than some metric a bit further down the Revenue Statement. This gives raise to some Owner complaints that there is little alignment with some Letting Pool Agents & their Owners. Some Owners worry that occupancy and room rates can be managed to maximize gross letting revenue and other revenues not covered by the letting agreement at the cost of their bottom line. When looked at by modern day standards and its entirety & context this letting pool stuff looks Dickensonian , and its certainly not sustainable, ....

Strata Info & Services Search strata information Share your thoughts and experiences Ask questions Find strata specialsts Our online community forum lets you search for answers to common questions and share your views about the daily challenges within strata.

Management Rights | Levy Collection | Dispute Resolution Community Management Statements | Review of By-laws Establishment of Schemes | Construction Defects Lot Entitlement Disputes | Exclusive Use Conveyancing

BODY CORPORATE MATTERS? ENGAGE THE BODY CORPORATE LAWYERS

To join the conversation or to search for strata information go to

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T: 07 3393 0433

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mail@herdlaw.com.au www.herdlaw.com.au

May - June 2012 UnitNews

7


Quick News

2 Part Series - Continued next month A very quickly summary of the Regulations follow. 1. 2. 3. 4. 5. 6. 7.

Any workplace constructed prior to 2004 must identify all asbestos on site. Where a complex has any commercial component including short term rental accommodation, they are classed as workplaces. An Asbestos Register and Asbestos Management Plan must be developed when asbestos is identified. A review of the Management Plan and the condition of the asbestos materials are required at least each 5 years in accordance with the recommendations based upon a risk assessment of the asbestos materials. Where strata complexes contain only long term residential units, there is no requirement to undertake an asbestos audit. All legal opinion recommend that all strata complexes comply with the Regulations even if they only contain long term residential units. QBM strongly recommends that all strata complexes comply with the Regulations even if they only contain long term residential units.

Most people are now fully aware of their obligations and the legal recommendations to obtain and asbestos audit on all complexes. However, there is much debate over the need to take samples to proved if a material actually does contain asbestos.

Below is a summary of the implications of not taking samples to proved if asbestos is present.

ASBESTOS SAMPLING Comparing Apples with Apples

There still seems confusion within the Strata industry concerning the new Model Work Health and Safety Regulations introduced on 1 January 2012. This is more so for the asbestos regulations.

Presented by QBM w p

qbm.com.au 1300 880 466

1. 2. 3. 4. 5. 6. 7.

If samples are not taken then all materials that could contain asbestos MUST be assumed to contain asbestos. If asbestos is present of assumed, an Asbestos Register and Asbestos Management Plan must be produced. The Register and Management Plan must be held on site. There is no legislative obligation to take samples as long as all suspect materials are assumed as containing asbestos. By not taking samples, material that is highly unlikely to contain asbestos must be assumed as containing asbestos. The cost of maintaining a complex that contains asbestos (or assumed to contain asbestos) is much higher than if there is no asbestos present. Ongoing costs of re-assessments and updates to the Register and Management Plan are incurred even though the materials assumed to contain asbestos is actually clear.

Everything Covered? For Professional, Friendly assistance and quotes call

Sinking Fund Forecast Insurance Valuation Builders Warranty Condition Assessments Safety Risk Reports Asbestos Reports Fire Safety Reports And much more

1300 880 466 inspections@qbma.com.au www.qbm.com.au

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