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This topic contains 4 replies, has 4 voices, and was last updated by Jimmy-T 3 weeks ago.

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  • #40070
    Jimmy-T
    Jimmy-T
    Keymaster

    If crumbling buildings in Sydney and towering infernos in Melbourne are doing nothing else, they are drawing attention away from a sneaky scam that could cost new strata owners a small fortune over the years.

    The problem is “embedded networks” and they represent long-term owner pain for developer and service provider gain.

    The term initially came from deals …
    https://www.flat-chat.com.au/scam/

    #40071
    Sir Humphrey
    Sir Humphrey
    Strataguru

    Long-time maintenance or any other sort of service contracts are almost impossible in the ACT. They are generally limited to 3 years. From memory I think they can be a perhaps two years longer for the first five years of a new OC but nothing like 99 years.
    Also, I think an embedded network is something quite different and there are strong consumer protections around them already. The embedded network I am aware of is where the OC negotiates a better price for an energy supply, usually electricity, on behalf of the owners. Rather than each unit paying a separate account with a retailer, the OC has an electricity meter for the whole site and pays for that one supply. Then the individual owners pay the OC pro rata for their consumption. This requires the OC to read meters but it might be able to that at lower cost than the retailer and multiples of supply charges are avoided. If the OC has a solar electric system behind its meter, the common property of the building and all the lot owners are likely to consume the entire solar production, thereby avoiding the retail price of electricity to the extent the building generates its own. The benefit is shared by all the owners since they collectively only have to pay for their share of the import by the building and the common property electricity costs are lower too.
    The Australian Energy Regulator has strict requirements that enable people to opt out of such embedded networks if they feel they can get a better deal by signing up with a conventional retailer.

    #40072
    Jimmy-T
    Jimmy-T
    Keymaster
    Chat-starter

    Embedded networks were, indeed, originally all about phone services and energy supply, and sweetheart deals done with developers.

    Even though those have been pretty much closed down by consumer protection legislation, the term has stuck to cover anything that involves the developer getting a freebie while the apartment owner pays through the nose.

    the ACT does seem to lead the way on a lot of strata law;  the regulations on changes to lots that help the environment are about to be adopted by Victoria.

    Even so, it doesn’t prevent disasters like the Elara (??) complex.

    #40205
    Avatar
    brianpr
    Flatchatter

    Embedded networks?!? How crook are they?? We moved into a new 106-unit block in Sydney in early 2018. The nice young man said that it had an embedded network, but that was a good thing because the operator bought electricity at wholesale rates and would sell it on to us cheaply – the contract guaranteed cheaper power than any other that was commercially available.

    When we booked the day to move in, we were sent a contract via e-mail to sign and return. If we didn’t sign and return, the power and hot water would not be turned on and we could sit in the dark! We signed.

    The situation now is that the roof is totally covered with solar panels that are NOT common property but belong to the energy supplier. His (or her) workpersons have triggered three false fire alarms in six weeks. The panels power the lifts/fans etc. during the day and any excess is sold back into the grid, to the profit of their owner.

    It is not really possible to accurately measure the cost of energy to any one unit, as the system supplies electricity and gas and charges unit owners to heat their hot water for them. Disentangling these prices is very difficult.

    The alternative to the current arrangements is to install a whole new power and gas supply, which would cost many thousands of $$$. The meters, valves and piping all belong to the supplier.

    To be strictly fair, the gas that comes out of the bayonet fitting is a lot cheaper than the gas that heats the stove! We bought a gas heater and have been pleasantly warm all winter.

    My point is that we have no effective choice as to who supplies us and how much we have to pay.

     

    #40275
    Avatar
    Silly Cow
    Flatchatter

    Were you advised of this when you signed the contract to buy the unit?  I expect you were due to vendor disclosure provisions and/or a search of the strata roll.  If so, you could have chosen not to buy it.

     

    #40676
    Avatar
    brianpr
    Flatchatter

    I take it, SC, that you fully admit the points I have raised and also the general thrust of my post since you did not attempt to contradict them. Good. Thank you.

    To address what you did say – there was no hard information available from anyone connected with the sale as to how the arrangement would work out in practice. That sort of information is only available post facto from experience and sources like Flatchat.

    No-one who takes the plunge in the property market has any guarantee that everything will be just exactly as one would wish. Seek the perfect deal and you’ll rent forever.

    Great work, Jimmy! I hang out for your weekly smorgasbord. I ticked the box that asked if I wanted to be notified if my post was replied to, but didn’t get one. Hmm?

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