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Are these the worst strata laws in Australia?

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After last week’s column about the best by-laws other states have, it’s only fair to mention the worst – those you wouldn’t wish on your worst enemies.

Everyone in strata has their own opinions, usually based on their personal experience, but these are my least favourites.

In my opinion, by far the worst strata law in Australia is the one that allows the pre-sale of on-site building management rights in Queensland.

There the developer of a new building can sell a 25-year contract for the management of a block to a caretaker, often before a single apartment has been sold.

Then, when owners buy into the block, they discover they have to pay the fees for a contract into which they have had no input, which is almost impossible to terminate and can be on-sold to another entity without their permission.

Also, the strata levies will be inflated to help pay back the money that the managers paid to acquire the contract.

This system is so profoundly corrupt that it isn’t allowed anywhere else in Australia. In fact, other, less onerous pre-sale contracts are banned in Queensland strata too.

But, with free money pouring into developer pockets, and banks holding huge amounts in the loans needed to buy the contracts, management rights has a ‘too-hard’ basket all of its own that Queensland pollies are loath to visit.

One of the worst aspects of strata law in NSW has its origins back when it was assumed that anyone who was stupid enough to want to live in an apartment would have no idea on how to run a building.

In NSW, building facilities managers can have contracts for up to 10 years. And this is in an area where there is scant registration, qualification or licensing.

In the last update of NSW strata laws, strata managers’ contracts were trimmed back to one year in the first year of a building and three thereafter. The sky did not fall in. It’s time the outdated aspects of NSW building facilities management contracts were similarly revamped.

The worst strata laws in Victoria and Tasmania would have to be those that allow virtually unlimited access to apartment blocks to short-term holiday letting (like Airbnb).

As a result, holiday letting is out of control in both states and the detrimental effect as residential homes are turned into quasi hotels is all too evident.

In fact, people buying into some of the posher new blocks under construction in Melbourne have to sign a legally binding agreement that they will never list their apartments as holiday lets.  One law for the rich, eh …?

By the way, Victoria is currently reviewing its strata laws in preparation for a major shake-up.  Vic readers have a chance to read and comment on the proposals until May 10 by clicking on THIS LINK.

Meanwhile, the government in Tassie is offering landlords up to $13,000 a year to take their properties off holiday let listings and put them back in the residential market because of an affordable housing crisis there.

Back in Victoria, I commented last week that a requiring a special resolution (basically a vote of 75 per cent of owners) before legal action can be undertaken by the owners corporation has its supporters and detractors.

Count me in the latter group. Anything that allows a self-interested minority to prevent home owners from pursuing their legal rights is a bad law.  Imagine how the majority of owners in a block infested with holiday rentals would feel if their slender avenues of legal redress were blocked by this provision.

Regardless of where you are, bad strata laws are impossible to avoid, unless you choose not to live in apartments … and I would never recommend that.

This column first appeared in the Australian Financial Review.

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