QLD Management Rights Supposedly Grubby - Industry News

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QLD Management Rights Supposedly Grubby

Published: 18 April 2011.

Contributed by Nick Buick of Refreshweb

We're a little surprised by Jimmy Thomson’s rental column on Domain last month which labeled Queensland’s management rights industry as ‘grubby’ with claims that Queensland's solid act and 20 year contract term are alarming threats to NSW tenants which should be avoided.

One consequence of the grubby practice of developers pre-selling management rights to their new buildings is that unit owners are locked into 10-year contracts, often paying excessive fees so that the managers can recoup the money they paid to the developers in the first place.
Those payments are inevitably sheeted back to renters.
North of the border, strata laws are pro on-site managers and encourage the pre-sale of management rights. Alarmingly there's a push from Queensland commercial interests to bring NSW laws in line with theirs, including revisiting the 20-year management contract.

What his article fails to mention is that there isn't a legal obligation in Queensland for owners to engage the onsite manager. It's a free market and the onsite manager has to be competitive in his management fees and service to ensure he retains a letting pool. The 20 year contract period Jimmy refers to is actually the caretaking contract, not the management of the units themselves. Most of the Management Rights currently listed on TPM disclose both the Remuneration (the caretaking income) and the Net Profit (the total income from management and caretaking) in the search results and it doesn't take long to see that the main revenue stream from Management Rights is almost always from management, with caretaking a very distant second place. Considering caretaking remuneration represents money spent maintaining the complex (mowing lawns, vacuuming halls, etc), it's an inescapable cost that the tenants would have to pay regardless.

Reply from: Nick Buick

2:07pm Tuesday, 19 April 2011

Just to clarify: I don't agree with Jimmy's view that the QLD industry is grubby towards renters. I think our industry is the best in the country with the most comprehensive legislation out of all the states, set up specifically to protect the rights of all parties: managers, owners, tenants, residents and land lords. It's a delicate balancing act and I believe QLD's act does well to deliver on all fronts. What do you think? How could our legislation be improved? Do let us know in the comments section here.

Reply from: Jimmy Thomson

2:43pm Tuesday, 06 September 2011

My opinion was based on the fact that system developed in Queensland is aggressively trying to gain a toehold here in NSW. The system may have been appropriate for building the tourist industry in Queensland but it's way off the mark for residential complexes here (and, I believe, up there too)?

If the system is so free and fair, why are Bodies Corporate locked into contracts sold by developers? Why is it so hard to get out of them when they go wrong? A recent case in Qld where even incompetence, corruption and bankruptcy were not deemed sufficient reason for cancelling contracts show how deeply flawed your system is. And how does this cosy arrangement between developers and on-site managers help resident owners who often find they are being forced out of their homes because resident owners don't provide letting revenues?

There's nothing wrong with the idea of on-site managers and I know there are plenty of good and responsible operators in Queensland - I have met them - but I also know this system is an anachronism. Down here in NSW we still get our lawns mowed and our floors polished and our buildings maintained without having to accept onerous contracts that we had no part in negotiating.

It's interesting that strata was excluded from the Federal Fair Trading laws brought in this year. Why was that? Is it because the provisions for unconscionable contracts cut right across Qld strata laws?

Reply from: QLD unit owner

2:40pm Tuesday, 17 January 2012

I am a QLD unit owner and am locked into a 25 year contract. The caretaker, who also has management rights, receives the energy bill, and sells it on to unit owners at a markup. I hadn't factored this extra cost into my outgoings and it leaves me feeling resentful towards the caretaker. i am currently battling to have more transparency with the costs we incur as unit owners. I am not sure how this compares with NSW or other states.

Reply from: Nick Buick

3:45pm Tuesday, 17 January 2012

No. The energy bill is the responsibility of the owners and for common areas, for the Body Corporate (also the owners), not the caretaker. They can't mark-up your electricity.

Reply from: Barry Teren

11:07am Tuesday, 24 January 2012

Terribly misinformed Unit Owner does not understand the concept of managers and management rights. The Body Corporate - to which the Unit Owner is part of, are the responsible for selling on electricity supply and legally are not permitted to profit from this. When purchasing a unit, you are free to choose where and what you buy. you also willingly bought into the complex, presumably aware of the of the caretaking agreement. your purchase contract clearly advises you to seek legal opinion. if you are not happy, look to where you erred.

Reply from: QLD unit owner

3:05pm Tuesday, 24 January 2012

Thank you Nick Buick for your helpful comment. I'm following that up. I just bought in and there is absolutely nothing in the paper work about energy bills, so it came as a surprise. The rest of the unit owners have accepted the situation, but I'm determined to get to the bottom of it.

Reply from: Barry Teren

10:25pm Tuesday, 24 January 2012

Speak or preferably write to your BC Committee Chair or secretary to get to the bottom of it.

they would be obliged to reply, in writing to you

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