Brake on forced unit sales

The whole question of whether a majority of owners can vote to sell their entire building, bulldozing the objections of those who would rather stay,  is the hottest topic in the proposed changes to strata  law.

It is also set to be the main target of the Labor opposition when the Bill gets to Parliament, with the fundamental principle of home ownership under serious scrutiny.

The spectre of aged residents being literally dragged kicking and screaming from their homes haunts every politician who has tried to deal with this issue, including our current Fair Trading minister Stuart Ayres and his predecessor Anthony Roberts, who started the reform process.

Opponents to the proposed 75 percent threshold have a point.  Many feel a three out of four vote doesn’t adequately protect residents who have a strong emotional attachment to their homes and communities.

However, the current requirement of unanimous approval encourages opportunist hold-outs in crumbling buildings that are desperate for the assisted suicide of the developer’s wrecking ball. Right now there is money to be made as the last man standing while a building falls around your ears.

But the 75 percent plan is not a free ride for speculators. What has gone largely unreported is the process proposed to prevent developers from turning up flashing chequebooks one day, and aged owners being forcibly evicted the next.

It goes something like this:

  • unit owners have to agree at a general meeting to consider selling their building
  • they then have to set up a committee to explore the options
  • the committee reports back to the owners with specific proposals
  • owners have a minimum of 60 days to consider the options
  • 75 percent of owners (by one owner, one vote – not unit entitlements) have to agree to sell
  • the chequebooks come out and the bulldozers roll in.

The committee stage is where owners can look for special deals with developers such as relocation expenses and first option on new apartments.  They can demand anything they want.  However, if their proposals aren’t economically viable for the developer, it won’t happen.

The one owner, one vote principle is important.  Most significant strata votes are based on unit entitlements – the bigger your unit, the more levies you pay and the more voting power you have. Making it one vote per owner means that those with the most to gain financially can’t easily outvote individuals whose emotional loss could outweigh their monetary gain.

Make no mistake, the main push behind this is from developers and government.  In the 10 years of the Flat Chat column’s existence – and that’s 12,000 posts and counting –  I can’t recall a single email or online post from owners desperate to sell their unit block.

But that doesn’t make this a bad idea.  There are buildings out there that are well past their use-by dates, weren’t particularly well built to begin with, and are costing owners ridiculous amounts to maintain and repair, which they MUST do, by law.

They are also often sitting in prime areas on underused plots that could house two or three times as many people in greater comfort, safety and security.

Also, where there are flaws in the law, you will find dodgy dealings, such as where a majority of pro-development owners force through ridiculously expensive upgrades which then have to be paid for by older residents on fixed incomes. These residents often have to sell at a knock-down price because of the impossibly high proposed special levies, and the sharks move in.

There’s a lot that has to be thrashed out when this reaches parliament – and don’t be surprised if that 75 percent threshold moves north to about 80 percent or even 90 to get it through the Upper House.

Leave a Reply

scroll to top