Ghost tenants make a myth of rental reform

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Resident owners paranoid about tenants taking over strata schemes don’t need to go to the barricades just yet. There’s a fairly massive hole in the government’s laudable plans to give tenants a voice in the running of unit blocks.

No, it’s not that they won’t have a vote, or that they can be excluded from discussions on anything “sensitive” such as financial statements, levies, debts, strata renewal proposals or any other financial matters listed in the regulations – although all of those conditions apply.

It’s the fact that a huge number of the people who help you pay your negatively geared mortgage don’t officially exist.

Some strata professionals estimate that half the tenants in strata are never officially registered,  and since tenant representation depends on 50 percent of  the residents of a strata scheme being registered renters, very few buildings will achieve the threshold.

Both the current and incoming strata laws require new tenants to be registered with the Owners Corp within 14 days or risk a fine of up to $550.

But it is one of the most frequently ignored strata laws, partly because private landlords and many rental agents don’t even realise it exists and owners’ corps don’t pursue breaches (if only because many of them are controlled by investor owners).

“Only about half the rental agents bother to register their tenancies,” a highly experienced strata manager told Flat Chat.  “And only about one in 10 private landlords do it.”

If those figures are correct, even schemes that have the vast majority of their units tenanted won’t qualify for tenant representation as they will need more than half of the units to be occupied by registered tenants.

“There won’t be a scheme bigger than 10 units that has tenant reps,” says the strata manager, bluntly.

Under the new laws, there’s an incentive to pursue landlords who don’t register their tenants. Owners Corps will be able to have fines paid to them, rather than the money going into the public purse.

But if the majority of owners are landlords, are they really going to vote to fine themselves?

The tenant representation plans could be one of the great wastes of space in strata legislation.

Even without the registration fiasco, who wants to be on a committee where you can’t even listen to the critical issues, let alone vote on them?

There’s more on this on the Flat Chat Forum. Also, are short-term lets in breach of tenant notification laws? See this post.

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