Looking back over that past 15 years or so of Flat Chat, it’s interesting to note the issues that have come and gone.
A couple of years ago, arguments about “forced sales” – whereby 75 per cent of owners in an apartment block could compel the other 25 percent to sell to a developer – were all the rage.
But when the new laws came in, in 2016 in NSW, not a lot happened. Yes, there were collective sales but they were often conducted in ways that would have satisfied the previous laws.
Perhaps erstwhile hold-outs looked at the hassle involved in delaying the inevitable and went with the exisiting law that already allowed a unanimous vote to dissolve a strata scheme, without all the delays, checks and balances that the new law provided.
Proxy farming was a huge issue for a long time. It was mostly used by committee members who were clinging on to power at all costs and would harvest as many proxy votes as they could muster – often by dubious means – to make sure they and their cronies (and only them) were elected at every AGM.
I recall one AGM of a large, prestigious building where it became apparent that the chairman had more votes in his back pocket than the whole of the rest of the meeting put together.
Despite loud protest from owners who realised there was no point in any of them being there, not only did he push through his whole agenda, he removed the only dissenting voice from the committee.
Thankfully, strict limits on the number of proxy votes any single owner can hold have been imposed in Queensland and NSW for a couple of years now, and similar measures are among the proposed reforms slated for Victoria.
Sunset clawbacks are also a thing of the past. That’s where developers, in a booming market, would deliberately delay completion of a building so they could invoke sunset clauses to rescind contracts with off-the-plan purchasers – then put the same units on the market at a much higher price.
That was stopped in NSW by a change in the law and has probably ceased to be a problem across Australia now that off-the-plan buyers are more likely to find themselves in negative equity than sitting on a property windfall.
We haven’t seen many “bonus” packages in apartment sales for a while. There was a time before the last property boom took off when off-the plan buyers would be given their first-home buyer grant back in cash, a $10,000 furniture package and their first year’s mortgage guaranteed.
The problem was that when they went to get a regular mortgage, they’d find that any rise in the market value of their apartment was offset against the value of the freebies they’d received, and their deposits long gone, they were seeking loans for more than their units were worth.
That all disappeared during the property boom but we are already seeing incentives and inducements start to creep back in. Potential purchasers would do well to remember there’s no such thing a free lunch.
Shape-shifting – where off-the-plan purchasers would discover their flat was smaller and sometimes even had fewer rooms than they’d been promised – has fallen by the wayside too.
Dudded owners would be given the opportunity to back out and have their deposit returned but the money they’d set aside would buy them a lot less real estate in a super-heated market.
As strata laws in different states evolve at varying rates, and fluctuating markets come into play, one thing never changes: in the property world, there’s always another controversy just around the corner.
A version of this column first appeared in The Australian Financial Review.