How has apartment living in Australia changed in the past four years? The answer is a lot, but still too little.
This week, we celebrate our 200th column in the Australian Financial Review (and our 820th in all media).
And at the risk of being accused of self-congratulation, it’s a good opportunity to look back on what has changed and what hasn’t in the past four years and beyond.
It has to be said that progress has been slow and occasionally faltering, as we look at all the “hot” issues, such as dodgy building developers, the NSW Building Commissioner, pet by-laws, flammable cladding, short-term lets, sunset “clawbacks” and anything else that’s made headlines here and elsewhere in the recent past.
We also dive into the question of what represents a higher risk to apartment residents – allowing cleaners from West and South-West Sydney Covid-19 hotspots to travel, or not having the touch points in apartment block common areas professionally cleaned?
With more than 70 per cent of Sydney’s cleaners living in the “hard lock-down” areas, this is a dilemma that faces a lot of apartment blocks.
Needless to say, we both have solutions that will infuriate some and amuse others. It’s all in this week’s Flat Chat Wrap.
If you enjoyed listening to this podcast (or reading the transcript), please share it with your friends using the social media buttons at the foot of the page.
TRANSCRIPT IN FULL
It’s a bit of a landmark for Flat Chat, this weekend.
I just published the 200th edition of the column, in the Fin review.
Oh wow! Well done!
Thank you. So, we’ll be talking about that and the changes that have happened in the past four years. And, we’ll be talking about the dilemma over cleaners from the lockdown hotspot LGA’s in the west and southwest of Sydney. I’m Jimmy Thomson, I write the Flat Chat column for the Australian Financial Review.
And I’m Sue Williams and I write about property for Domain.
And this is the Flat Chat Wrap.
Well, happy anniversary, Jimmy. Gosh, that’s gone quickly; four years!
Four years, 200 columns. But, that’s only 200 in the Fin Review.
That’s right. Before that you were in the Sydney Morning Herald. How many years were you doing that?
Well, 620 columns.
That breaks down to what; about 12/13 years?
Goodness me and you still don’t seem to run out of things to write about.
No. I haven’t repeated myself that often. I mean, we do go back and update certain topics, obviously, because things do change.
And all your columns, are they all on the Flat Chat website?
Most of them are. That’s why we in fact, we started the Flat Chat website, to have a kind of repository for all the columns. And you know, I wouldn’t dig too far back, if you’re looking for information, because the laws have changed. But, I was amazed to find that all my previous columns are still online, for the Fin Review.
Oh, fantastic. And tell me, have things changed enormously in the last four years?
Some things have changed enormously; some things have not changed at all.
Okay, shall we look at the good news first?
Well, I think the biggest news (certainly in New South Wales), is the appointment of the Building Commissioner, David Chandler. He was appointed because things weren’t changing. Dodgy builders were building dodgy buildings, and then ‘phoenixing’ into other entities. You know, just shutting down shop, before the unfortunate purchasers of of their apartments could claim for the defects. And even if they did claim for the defects, they’d just shut down, and then disappear, with a slightly different name, but with exactly the same business address and exactly the same phone numbers.
And has the Building Commissioner changed an awful lot, or is there still a lot more to be done?
It’s hard to tell…There was a big burst of enthusiasm from him and for him initially, that he was saying “if you don’t build properly, then you will not get an occupancy certificate,” which, you know, meant that the developers wouldn’t be able to sell the apartments; that the apartments would run into their sunset clause period and people would be able to get their money back. The developers would be left with the crappy apartments, rather than the purchasers. But there was a story last week, about a development where they did have the orders that was going to prevent them getting the occupancy certificate, but now the orders have been changed. It sounds like the developer is going to be able to establish the strata plan, which their lawyer says “okay, that means we haven’t breached the sunset clause, so now you have to buy the apartments off us.”
And the purchaser was really quite upset, I think.
Bitterly upset, because they now know they bought into a crap building and it doesn’t sound like it’s necessarily going to be fixed, before they have to pay.
And they were hoping to be able to get their money back, because a sunset clause was going to be…
Yes, just a few weeks away.
So, there’s still a lot to be done.
It’s just such a nasty (potentially such a nasty), industry down at that level, where you’ve got people who are; some of them are just basically crooks. They will do whatever it takes to gouge money out of people, without giving them what they promised to pay.
And some of them of course, are extremely good people.
But seriously, there are people like that and this new star rating thing (if and when it comes in), it’s just going to consolidate that idea, that there are good operators there.
And does it seem that there’s a lot of support by most developers across the board for this?
For the star rating? I haven’t heard any, to be honest. I’ve heard that some big developers have said that it’s a good idea.
And that they’re considering being involved? I suppose it’s early days.
Yeah and it’s a voluntary thing. So you basically put forward your building; “can you check that our building reaches all the the criteria to get five stars?” You know, the first developer who does that and only gets three stars, then the whole thing will fall in a heap.
And is there any good news for Victoria?
Look, it’s very different there. They have established (legally), that (long before it happened in New South Wales), builders have a 10 year warranty, that they’ve got to provide to the owners of apartments a duty of care, that has meant that a lot of the problems that we have in New South Wales, they don’t have in Victoria.
So why didn’t we have that in New South Wales?
Because, many governments were in the pockets of developers.
They’re are a really strong lobby force, arent they?
They were pumping money into the political parties and may well still be, even though it’s illegal.
Aren’t they doing that in Victoria, too?
Victoria is different. Victoria is weird, because I think the big issue (not so much now)… What we’re seeing (as we discussed last week), in Victoria, the hollowing out of the city center in Melbourne, where all these short-term rentals were just allowed to spread to a ridiculous extent. Some big, big buildings, have 1/3 of their apartments given over to short-term lets. Now those short-term tenants have gone; there’s no holiday. People who are doing staycations don’t necessarily want to go into Melbourne city centre, because of the potential for Coronavirus. People are heading out from the cities, rather than in.
Sure and if they do want to staycation in the city, it’s far nicer to go to a posh hotel, where they’re offering really good deals at the moment.
Absolutely. So that hollowing-out is very evident; what happens when (if), tourism starts to go back to normal, remains to be seen. I mean, those apartments, they can’t sit empty forever. The people who own them, bought them as investments, they’re gonna have to put people in them. They may decide that it’s just not worth the hassle of going back, especially since the holiday market could take another hit at anytime soon. Coronavirus, even once we get over this latest wave, is not going to go away. It’s gonna keep coming back for the foreseeable future.
And so what does that mean for platforms like Airbnb? I mean, you’ve written a lot about those over the last four years.
I sure have! Airbnb are actually doing quite well at the moment and the same goes for Stayz and other platforms. They’re concentrating on the rural areas (or they were; doing quite well, until we had the shutdown through the regions). They were doing okay, because of all those people who wanted to get out of the city. Airbnb is doing a big advertising campaign at the moment, which is quite cynical, I think, presenting themselves as being almost like a social service.
Like a savior for the regions?
Yeah. One of the things that has happened in the past four years (and this was quite recently)… A university (I think it was UNSW), study showed that areas that had a high incidence of short-term lets, rents go up and when the short term lets go away, rents go down, which has kind of kiboshed that ludicrous thing that Airbnb used to say, which was that their activity had no effect on residential rents. I mean, we all knew it was bullshit, but now, we’ve got the proof.
And there was a really funny column in Sunday’s Sun-Herald from Mandy Nolan, who’s a comedian. I met her a couple years ago; we both presenting at the show. She was saying that it’s really difficult at the moment with New South Wales (the whole of the state going into lockdown), because Byron Bay has gone into lockdown and yet there are so many homeless people there. The local council is really rushing to try and find places where they can stay, because they’re in lockdown, so they can’t not stay somewhere. But the problem is, there’s lots of Airbnb residences that are remaining empty at the same time. She’s saying, why do the owners of those properties (most of whom are from Sydney), not perform a real social service and say “we’re opening our doors to some of those people, because we realize that homelessness is such a problem there, and that we’ve contributed to it.”
Well, they have massively and that’s one of the reasons (in the new legislation that came out again within the past four years), that Byron Bay was allowed to carve out from the unlimited number of nights that people can put their properties on Airbnb. Outside of Greater Sydney, Byron Bay was also given the option, if they want; the local council can say “okay, we want to have the limit of 180 nights a year.” Now other councils have jumped on that bandwagon as well and they’ve said “well, we’re having the same problem; that our local people can’t afford to live in the local areas, because all of these properties are given over to Airbnb and they’re only occupied half the time, anyway.” You’ve got that thing of people renting for six months, or even nine months and then being told “okay, we’re coming into holiday season, off you go.” And holiday season is at the time when there’s most work in these towns, but the people who live and work in the town can’t afford to live in the town, because of all the people coming in. The government’s lack of urgency on this… I mean, we’re still waiting. They’re supposed to be, the law says, that New South Wales will have a register of short-term rental properties and a code of conduct; an enforceable code of conduct. You know, one of these ‘two strikes and you can’t rent your property or let a property if you behave badly.’
It’s still not come in?
No. People will say “well, look, COVID has put lots of things like that on the back burner.” It’s also an opportunity for the people who are devising the policies, to sit down and go “okay, we’ve got a breathing space here. Let’s do this, now. We’re already nine months overdue, on delivering this policy. Let’s get it done.” While everybody’s attention is diverted elsewhere.
I think in your last column, you argued that there should be something done now about embedded networks. This is a big problem and I think it’s been getting worse over the last couple of years, hasn’t it?
Yes, it has and this was a problem that we were alerted to by a strata manager. Basically, an embedded network is where, let’s say… I mean, the typical example is the stormwater drain that every large apartment block has to have. So you can imagine, you’ve got what was earth and grass, is now concrete. The rain comes down; where’s that water gonna go? Usually, in a big apartment block, there will be a tank (a hidden tank), which can collect the water and then feed it back into the stormwater drains at a reasonable amount. Some of the people who install these for the developer (and it’s a specialized part of the building,” they are saying “look, if you convince your new owners to sign up for this contract, this maintenance contract…” In one case that we were told about, it was a 99-year maintenance contract, with a fixed percentage rise every year, on top of a payment that was already ridiculous.So they’re saying “you get your new owners to sign this contract, and we’ll put it in for free.”
Wow! So the developer saves money on the installation. When you’ve got a building, you need the stormwater drainage system.
Normally, it would be part of; you’ve already paid for it. They haven’t taken that off the price, you know, of your apartment, they just think “oh, we can save money here.” So the developer then goes to the strata manager, because the strata manager comes in before the apartments are sold, to set up bylaws and things specific to that building. They present at the first AGM and this is where (under New South Wales law), all contracts have to be ratified at the first AGM, so you cannot take a contract into the first AGM and guarantee that it will continue beyond that. At the first AGM, the strata managers are being almost bullied into standing up and saying “this is standard practice; just sign this contract. You need this to be maintained. It’s all standard. Don’t worry about it.”
And the owners think “well, we need drains, of course. Obviously, we’re going to sign a contract for that.” It’s only later, when they become a bit more ‘cluey,’ that they realize they’re paying double (or maybe triple sometimes, I believe), the price that most other contractors would offer.
And they’re paying for something that they’ve already paid for. The strata managers are saying “well, we would rather not be doing this, but if we refuse to do that for that contractor, then we will never get work; not just with them, but with other developers.” They’ll just say “no, we’ll get somebody else to do our strata management.” That’s a big part of the strata management industry. It’s like conveyancing in solicitors; a big part of solicitor’s work is doing that preparatory work for people. A big part of strata manager’s work, that we don’t necessarily see, is the behind the scenes stuff that they do for developers. You know, the government could make it illegal
In Victoria… I don’t know if you know this; I’m sure you do, because you know, everything about strata… It was part of the new government’s election promise, that they would stamp out embedded networks. I don’t think they’ve actually done anything about it yet, but it was an election promise, so it’s likely that it will go forward.
Well, at least they’re aware of it.
Yeah and they see it has a really urgent problem. I think it’s kind of like a cancer, isn’t it? It’s spreading, you know. It’s stormwater drains, but there’s also electricity, there’s Wi Fi networks; it’s following lots and lots of different services. I know the strata lawyer, David Bannerman said, it’s almost like a new owner buys a bike and then discovers it doesn’t actually have any wheels on it. You have to pay extra for the wheels, which I thought was quite a nice analogy.
I spoke to Fair Trading about this. Actually, I spoke with Fair Trading about the resurgence of pre-sales of management contracts, which is happening in New South Wales now, on a similar basis. So up in Queensland, you’ve got this, what I call ‘legalized corruption,’ where the developer sells a management contract to the management firm and the management firm can sell that contract to whoever they want. The people who actually pay for this (who are the owners), don’t have any say in who their managers are, because it’s an opportunity for developers to make more money. This has apparently been creeping in, in northern New South Wales and on the same basis, where developers are getting their strata managers to go to the first AGM and say “hey, this is standard practice.” Because they’re so close to Queensland, a lot of people think it is standard practice.
Oh no. It would be awful to see that coming back again.
I don’t think it will; I think it will be snuffed out fairly quickly. But, when I raised that with Fair Trading, their spokesperson said, we’re having enough trouble at the moment, dealing with embedded networks. So they’re obviously on it; they’re thinking about it, but they haven’t found a fix for it, yet.
One of the subjects that always gets a lot of followers and lots of interest, is pets. Over the last four years, an awful lot seems have happened with pets and apartments?
We had the whole thing with challenging no-pets bylaws. First of all, they went to the Tribunal and the Tribunal said “yeah, these bylaws are not valid,”and struck them down. The buildings concerned, appealed and the Tribunal Appeals Board said the bylaws are fine. Then, the pet owners appealed to the Court of Appeal (which is the highest court in the state), and the Court of Appeals said “no, you can’t have bylaws like this. They’re just too rigid and there’s no flexibility in there. They’re invalid, because they’re unconscionable and harsh and discriminatory.” It’s funny, because the original lowest level of NCAT, got it right, which tends to be forgotten, that they got it right in the first instance. Their big, high, more experienced members, overturned that decision, but that has led to a lot of confusion. People think that their apartment blocks cannot have pet bylaws; cannot have restrictions on pets. That’s not the case. It just cannot be a blanket ‘no pets, no way.’ We discovered, I think a story that you covered about a couple who…
Wanted a dog in their apartment, but their apartment said “you can have any animal, except a dog.” Well, you couldn’t have a donkey, but you could have a cat or a bird. Because it wasn’t a blanket ban on pets, per se, it was judged that the bylaw was okay. So yeah, it is very difficult. It’s very confusing for people, but if they’re in a building where the building says there’s no pets, they basically have to go to NCAT and appeal it, don’t they, really?
Yes and that will gradually happen more and more. But we’ve also seen some of the buildings involved (and other buildings that weren’t involved in those cases), who were told that their pet bylaws were invalid, suddenly go to the other extreme. In one case that we know of, they’re allowing pets, but you’ve got to put a deposit of, I think, $1,000.
$300, I think.
Per pet, which is a lot of money, especially if you’ve already got a pet and suddenly, you’re having to pay $300, just to register.
Yeah, it’s ridiculous and that is something that will probably be challenged as well, in the future.
So I think some buildings who have been forced to allow pets, are now trying to make it really difficult for their owners to keep pets, in completely different ways. You know, like saying, you have to always be able to carry your pet over every single part of common property and that’s kind of hard for older people, who might have, you know, a big greyhound, or something. Some of those dogs are really heavy.
Other issues that we’ve covered over the past four years; cladding… I think the second column was about cladding. We’ve just discovered that the registration for the New South Wales programme of remediation, which is where the government will give you a 10 year interest-free loan to fix your cladding and provide oversight, which will give guarantees, so that it will be insurable. That ends at the end of September, the closing date for applications.
So, people better hurry up!
Thus far, just over 40% of buildings (that they know are affected), have applied for this.
Do they just not know about it?
I don’t know. I think some of them are thinking well, is it worth the 10 year interest-free loan, if we have another authority coming in and saying “okay, we’re going to make sure it’s all up to standard.” Are we getting a Rolls Royce solution for a Toyota Corolla problem?
And it might be that some people are planning to fix it much more quickly, with a loan or a special levy, or something, because they just want to get it fixed. They don’t want to take a while to do it, because they want the value of their building to go up.
Yeah, so, that’s another issue. This is one that you were involved with very closely, which was sunset clauses. You wrote a couple of stories and we saw the end of that thing, where developers were (in a hot market, when prices were going up a lot, very fast), were delaying the completion of buildings, so that they could get to the sunset clause…
Cancel the contracts of buyers that had already bought apartments and then resell them at a much higher price to other purchases. That’s great, because that was just such an awful thing that was happening, wasn’t it?
It’s still happening in the ACT. I was reading a story the other day; there’s a development there, where they’ve all been told that their contracts have been rescinded, because they went over the sunset clause.
That’s awful, especially when prices are rising so quickly. You’re kind of out of the market for four/five years, while you’re waiting for your building to be yours and then suddenly, they’re canceling your contract and you have to raise a huge amount more money, to buy a similar apartment somewhere else.
That deposit has been sitting there; does it earn interest?
No, so that’s dead money and you get handed it back. It’s like you’ve taken a loss. I think the government in the ACT are now looking to end it there. I don’t know if Victoria has or hasn’t, I’m not sure.
Well, there’s room for me to be an advisor for them.
Yeah, very good, you would be, too! There’s one other thing… I’ve noticed a lot more people writing about strata.
You know, that’s true, actually. Yeah, there are a lot more.
It’s like people have suddenly cottoned-on to the fact that there are a million people in in Sydney, living in apartments. The fact that half of them (roughly), are renters, has always made it kind of a side issue, but a million people; that’s a million potential readers, for these newspapers. I think it’s good that more people are getting involved.
Absolutely, it gives you a bit of competition, Jimmy!
I could use it; keep me sharp. It’s been an interesting 200 episodes and an interesting four years, but I don’t think I’m going to run out of topics to write about, anytime soon.
No more’s the pity.
When we come back, we’re going to talk about cleaning and the conundrum of, how do you get your cleaners to come and make your building safe, when they come from an area which has been deemed not to be safe? That’s after this.
Sue Williams, you’ve been talking to Frank Boross of Havencab.
That’s right and he has a building management and cleaning company. They clean a lot of strata buildings around Sydney; some of the top buildings, as well. He is really angry, because he feels that… I mean, most of his workforce (I think, something like 80% of his cleaners), come from southwest Sydney, which at the moment is deemed one of those real hotspots, so people aren’t being allowed to leave there, to come to other parts of Sydney, to clean the common areas of apartment buildings.
Unless they’re in… Well, because they’re not designated, frontline workers.
That’s right. While construction workers are deemed essential workers, cleaners are not and he’s really upset about this. He believes that cleaners should be deemed essential, because they should be coming into strata buildings and cleaning all the regular touch -points of buildings, like the lifts and the buttons in the lifts and any gyms, or in the lobbies, or the front door… All the places that people are touching a lot, because it’s really important for those to be cleaned regularly and to be disinfected, to stop the spread of COVID. We’ve seen strata buildings being locked down, because they’ve been a few cases there. They’ve spread very, very quickly, because strata buildings (I think you’ve said before), can be petri dishes almost, for infection. He feels very strongly, that the government should be moving and saying those cleaners should be allowed to come into other parts of Sydney and be able to clean those buildings. Obviously, I don’t know if the same areas have the same problems in Melbourne, but it’s quite possible that the same situation is there, too.
Let me play devil’s advocate for a moment. Okay, you won’t be able to come into apartment blocks to do cleaning, but they’re coming from areas of high infection rates; where where do you balance the risk?
Yeah, it’s very difficult, isn’t it? I know there are some people who believe that if people are vaccinated (maybe, they’ve had their double vaccination), they should be perhaps allowed to leave those areas and come into the apartment buildings in other areas.
Or, if they’ve tested (recently tested), to be negative. I think that would encourage people to a. get the vaccine and b. get tested, because these areas also have a high incidence of vaccine reticence, because they’re getting bad information from their own communities and from some media sources, telling them that they shouldn’t get vaccinated and it’s dangerous and all the rest of it.
On the other hand, where most of a city is locked down, should we respect those lock downs and just say well, construction workers are a special category, because they keep the economy going.
I think that’s the worst possible reason, for making them a special category.
Well, that’s another debate, but we’re just talking about cleaners here. Maybe, because everything’s locked down, we should say “well no, those cleaners shouldn’t be allowed to leave that area and strata buildings should take responsibility for their own cleaning.” You know, if you’ve got a small building of, say, 12 apartments, why can’t you just draw up a little timetable and everybody takes a role every other few days, of cleaning the main touch-points, the railing on the stairs and things?
You’ve just reminded me of when I used to live in Glasgow, in a tenement block. A very nice one, I have to say. Once a week, there was a roster for whose turn it was to wash the stairs.
Wash the stairs! We don’t have to go to those extremes, but we could clean the bannister.
Yeah. Well, you know, it could be a roster for anyone who’s interested, to clean the lifts and stuff like that.
In bigger buildings, you will have some people who have been thrown out of work. They might quite like (they might not, but they might quite like), to be able to do a little bit of cleaning, for some cash in hand.
Yeah, absolutely. Some people seem to be dancing around these restrictions, from what I’ve heard. You said there was a building?
Yeah, there is one building we’ve heard about, where someone was coming in and cleaning windows. You kind of think, what’s so vital about having windows cleaned? I mean, it’s very nice to have your windows clean, but at times like this; this is a really critical time. We shouldn’t be allowing strangers into buildings to clean windows; it’s crazy!
I think I know the building you mean and obviously, they’ve just relaxed the restrictions on cleaners, because it suits some people in the committee, I think. There’s always a bit of to-and-fro on this.
Yeah, because I know cleaners now, are allowed into apartment buildings, to clean individual apartments.
Provided they’re not from…
From that area and I kind of think that’s bad, too. I had to write a story for the Herald this week, on lockdown cleaning. When you can’t get cleaners anymore, what sort of things should you do, because lots of us have forgotten how to actually clean our homes. That was quite an interesting thing; it made me feel so bad after I’d interviewed all these people, that I actually went and cleaned our apartment too, which hadn’t been cleaned for ages. My mother phoned me and said “your dad’s just said, ‘can you believe Sue’s writing about cleaning? Have you ever seen her clean anything?'”
You’re giving people a very bad impression of the way we live! We are happy to share our income with cleaners who would come in here and do a very good job. Sue has rediscovered cleaning. She’s sitting here with her mop and bucket in one hand, her headscarf tied around her head. She’s ready to run and if anybody wants a cleaner, she’s here. She’s good to go!
I need the headscarf, because my hair is so terrible at the moment, without a hairdresser.
Well, I think that’s quite enough from us, for one week and for 200 weeks. Thanks very much, Sue and we will talk to you all again soon.
Thanks for listening to the Flat Chat Wrap podcast. You’ll find links to the stories and other references on our website flat -chat.com.au And if you haven’t already done so, you can subscribe to this podcast completely free on Apple podcasts, Google podcasts, Spotify, Stitcher, or your favorite pod catcher. Just search for Flat Chat Wrap with a W, click on subscribe, and you’ll get this podcast every week without even trying. Thanks again. Talk to you again next week.