Owners’ corporation law – time’s up

The state government is under increasing pressure to amend the outdated Owners Corporation Act 2006.

Its long-awaited review of the Act is now more than a year overdue, based on its own promises. The government’s self-imposed target date to release an “exposure draft” is now June this year.

We Live Here hopes that the draft is released soon because the issues that the Act fails to address are critical.

A spokesperson for Consumer Affairs Minister Marlene Kairouz said: “We’re committed to working with the public to ensure the views of stakeholders and the community are carefully considered.” If only this had been the case for the past two or three years. Up until now, the government has been consulting in private and only with commercial groups – businesses that make money from strata residents and owners. 

How about the forgotten stakeholders – the residents and owners? It’s time we had a voice.

We Live Here will be representing the interests of residents and owners and we hope to have a big impact on the reformation of the outdated legislation that, to a large extent, governs our lives. We have several recommendations:

Reflect today’s landscape. The current Act is a “one size fits all” piece of legislation that fails to distinguish between 50-storey skyscrapers and suburban blocks with two units for example. The legislation needs to be far more nuanced;

Control proxy-farming. Many owner-occupiers are simply overruled by commercial interests who corruptly exploit proxies to rip-off owners. The unethical practice of developers colluding with strata managers to lock in long-term contracts must be stopped. The government should also introduce retrospective clauses that restore justice to owners who have been lumbered with 25-year management contracts disgracefully awarded to mates of the builder on the eve of settlement.

Make a level playing field. Short-stay operators are being protected by the Residential Tenancies Act even though some of them are multi-million-dollar businesses. 

Multi-tiered lot liability. Short-stay operators also increase maintenance costs for all owners. Expert opinions of quantity surveyors and engineers in documents tabled in the NSW Parliament provide evidence that short-stays push up costs significantly. There is a strong argument to allow a higher levy rate for lots used for short-stays. The single-tier lot liability system simply does not work. For example, security costs will continue to rise with the increase in short-stays. Even Victoria Police has had to create a special squad to deal with out-of-control Airbnb parties. And if wild parties were not enough, the increase in home invasions and burglaries linked to Airbnb bookings has been the subject of many media reports.

Restore powers. Justice Riorden’s 2016 Supreme Court judgement took away self-determination powers of owners’ corporations. These powers need to be restored.

Clarify who pays for brigade attendance. Owners are being hit with massive fire brigade bills often caused by short-stay guests. VCAT has a record of ruling in favour of short-stay guests, forcing innocent owners to cough up thousands of dollars to pay for the stupidity of others.

Who pays for cladding? The owners!

We Live Here was invited to comment on the state government’s cladding rectification agreement (CRA) – the loan scheme touted by the government as a solution to funding the costs of cladding remediation. We offered feedback that the government appears to have declined to take on board.

The CRA scheme is onerous for owners’ corporations and owners. Every owner in a building must be assessed financially for the CRA loan. If a building has one owner who is not strong financially, or an owner who does not provide financial data in time, the loan application stalls. Coupled with the special resolution required to get the loan accepted, it is difficult to see how this scheme could work. Plus, it has the potential to create an STD – a sale-transmitted debt – because, when the property is sold, the new owner would inherit the debt.

Is Planning Minister Richard Wynne still scratching his head wondering why nobody is taking up the offer? 

We Live Here has been told by some buildings that a line of credit is far easier to obtain.

Of course, this debate about how to get a loan ignores the real injustice in the cladding debacle – why are owners paying for the incompetence of others? The government had a hand in this fiasco every bit as much as the builders, architects and building surveyors. It was the government’s regulatory oversight that allowed the flammable cladding to be installed.

Our reminder: All high-rise apartment buildings must implement a fire risk management plan NOW. The plan should set out all the management steps you have implemented to make your building safe while the assessment is being carried out. 

Campaign donations

As a not-for-profit organisation, donations from individuals and buildings keep our campaigns going. To register as a supporter of We Live Here or to make a donation please visit our website at welivehere.net

We Live Here does not accept donations from commercial tourism interests. 

We welcome your comments and feedback and invite suggestions for topics you would like us to address in this column.

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