Podcast: How to upscale your address for less

Flying (almost) solo this week, Jimmy looks at a Sydney Morning Herald story which reveals the posh areas in Sydney where you can upgrade your address without paying the multi-million dollar costs of buying a trophy house.

Karen Stiles, EO of the Owners Corporation Network (OCN) reveals the line-up for the upcoming Strata Matters conference.

And, as the backlash against his revelations of even more dodgy dealings in Queensland’s iniquitous caretaker manager contract system heats up, Jimmy admits that he is biased – albeit against organisations that rip off apartment owners, and the politicians who routinely fail to protect them.

That’s all in this week’s Flat Chat Wrap. 

Transcript In Full

Flying (almost) solo this week, Jimmy looks at a Sydney Morning Herald story which reveals the posh areas in Sydney where you can upgrade your address without paying the multi-million dollar costs of buying a trophy house.

Karen Stiles, EO of the Owners Corporation Network (OCN) reveals the line-up for the upcoming Strata Matters conference and possible cooperation with strata owners in Victoria.

And, as the against his revelations of even more dodgy dealings in Queensland’s iniquitous caretaker manager contract system heats up, Jimmy admits that he is biased – albeit against organisations that rip off apartment owners, and the politicians who routinely fail to protect them.

That’s all in this week’s Flat Chat Wrap.

Transcript In Full

Jimmy Thomson  00:00

Well, I am all on my own today. Sue Williams, my normal co- presenter on the Flat Chat Wrap podcast, is somewhere off the coast of Spain at the moment and is not easily contactable. Apparently, there’s a problem with the internet in Europe, believe it or not. Probably something to do with heat waves. So, you’re pretty much left to me, although I do have a special guest today, who is Karen Stiles, the executive officer of the Owners Corporation Network.

We’re going to be talking about the upcoming Strata Matters Conference; their annual conference, which is coming up on the 22nd of September. And we’ll talk about the best suburbs to go to, if you want an upgrade in your address (let’s put it that way), where you can buy an apartment for an awful lot less than you would pay for a house.

And finally, another look at the situation in Queensland, where people are getting very, very cross with me, because I’m saying bad things about their contracts… I’m Jimmy Thomson, I write the Flat Chat column for the Australian Financial Review nd this is the Flat Chat Wrap.

[MUSIC]

Jimmy

There is a really interesting article in the Sydney Morning Herald (and I’ll put the link on the show notes), by Kate Burke, who has written about how you can make a serious upgrade in your address, by buying an apartment in one of Sydney’s prime suburbs. And she’s done some analysis into the difference between the price of houses and the price of apartments in these posh suburbs. Some of it is-I was gonna say breathtaking; eye-watering, I think would be more appropriate.

For instance, in Bellevue Hill in Sydney, the median house price is $9 million and the median unit price is $1.5 million. So that’s a price gap (or a saving, if you like), of $7.5 million. The Vaucluse median house price is $8.55 million and median unit price is $1.35 million. In Bronte, the saving is nearly $4 million; Mosman, the difference is $3.65 million. In Rose Bay, the difference is $3.4 million to $5 million now, being realistic.

The median house price in these areas is based on properties which are probably quite substantial. The median apartment price might be based on properties that are substantially smaller. So we’re not comparing like-for-like; we’re comparing houses with apartments. We’re probably not even comparing like-for-like in terms of the amount of living space. Even so, if you want to have a posh address, and you quite like the idea of living in an apartment, you can get yourself into one of these very swish suburbs and make your address line on your letters look pretty posh.

The economic logic behind this is supplied by KPMG economist Terry Rawnsley, who says the biggest price gaps are in well-located, often densely-populated areas, where blocks of land commanded the highest premium and apartments tended to be an older block. So that makes sense. You’ve got some of these old blocks; the two-or-three storey walkups. They’re not fantastically architecturally designed, but they’re providing homes for six-or-eight times as many families as would be accommodated in one house on a similar size block. And that’s where the difference comes in. If you can get into a modern, large apartment in those areas, they’re going to be a lot more expensive. I mean, let’s not kid ourselves.

But Kate Burke has done a great job on this article. It’s pretty interesting stuff. She goes to the other end, as well. If you want to know the areas where there is the smallest difference between apartments and houses, then we’re looking at Wentworthville at $500,000, Cabramatta at $505,000, down to Yagoona, at $526,000. It’s still a substantial difference. You’re still making a big saving by going into an apartment, but I’ll bet you that the difference in floor space on the apartments in those areas is a lot less than is in the posh areas in the eastern suburbs, where most of them tend to be.

But you know, if having a prestigious address is one of your aspirations, then it seems that you can do it, without having to become a dot-com millionaire. Check out the addresses in the show notes.

When we come back, we’re going to be talking to Karen Stiles of the Owners Corporation Network, about their Strata Matters conference. 

[MUSIC]

Jimmy

As I said before, we are talking to Karen Stiles, the executive officer of the Owners Corporation Network, about the Strata Matters conference, which is coming up. I just have to warn you, that we did this over Zoom and when I was recording it, it sounded like there was a bit of a technical problem somewhere in between us. I’ve tried to deal with it in the edit, but if there is crackling there, I apologise. That’s modern technology; it’s terrific when it works, and it’s really awful when it doesn’t. Here’s Karen Stiles. Hi Karen.

Karen  06:01

Great, thanks, Jimmy.

Jimmy Thomson  06:02

We’re here to talk about this year’s Strata Matters conference.

Karen  06:06

Oh, yes. Looking forward to it!

Jimmy Thomson  06:09

Me too! So first of all, when is it?

Karen  06:12

It’s on Friday, the 22nd of September. It’s 10am until 2pm and we throw in lunch. We’ve got keynote speakers and a couple of panels talking about topics dejour.

Jimmy Thomson  06:28

Okay, now, can you tell me who your keynote speakers are, or is that still under wraps? A girl has to be careful, Jimmy! I can… You can? Okay, good!

Karen  06:42

The Shadow Minister for Fair Trading and Building, the Honourable Tim James. And we’ve also got the Head of Policy at Customer Service New South Wales, talking about the building reform. Katie Harbon, Head of Policy in New South Wales Customer Service, to talk about the building reform journey, which some of us know has been an extraordinary three-or-four years and culminating in some great outcomes.

Jimmy Thomson  07:16

Right. Apart from the keynote speakers, what are the areas that we will be discussing, or hearing being discussed?

Karen  07:26

We’re going to talk about financial decision-making and cost-saving in tough times. And we’re going to talk about adaptation and renewal of ageing buildings. And very importantly, we’re going to be talking about emergency planning and disaster resilience.

Jimmy Thomson  07:45

Right. Are we talking about floods or fires? What kind of disasters are we talking about?

Karen  07:52

Which one do you want? It could be as simple as a power outage and that might not seem too bad, if you’re in a stand-alone house. It’s going to make a difference if you’re on the 100th floor of a high-rise building, getting in and out; it’s going to be tricky. It could be anything; right down to terrorism, of course.

Jimmy Thomson  07:57

Try not to think about that. I mean, I know that there was, in the early days of my building, somebody pointed out that we’ve got a road tunnel running right underneath the building, and we’d be prime candidates for terrorism, except nobody really cares about us. We wouldn’t be prime targets, I’m guessing. Now that I’ve said that, we probably are. I think I’m on a panel, I seem to recall, or have I been bumped?

Karen  08:47

Gosh no! You’ll be moderating a panel, as will the lovely Sue Williams. It’s going to be an action-packed day. We’ll have a special appearance from (we like to call him you the ‘Caped Crusader),’ David Chandler, New South Wales Building Commissioner. So you know, it’s all happening.

Jimmy Thomson  09:15

So how do people find out about this? Presumably, they go to your website?

Karen  09:20

That’s correct. Go to the Owners Corporation Network of Australia website and it’s on the front page. You can register very easily there, to secure your seat.

Jimmy Thomson  09:32

How much does it cost?

Karen  09:33

$55 for members, and $85 for non-members, and we’re holding it at the Miller Hotel in North Sydney. It’s very accessible by bus, train, car, foot and ferry.

Jimmy Thomson  09:51

I don’t have my calendar in front of me; is the 22nd a Friday, or a Saturday?

Karen  09:56

It’s the Friday.

Jimmy Thomson  09:57

Okay, so you can skip work and go. It’s in the afternoon isn’t it?

Karen  10:04

10am-2pm.

Jimmy Thomson  10:05

It’s basically a long lunch.

Karen  10:06

A long lunch packed with great information and opportunities to network with fellow owners.

Jimmy Thomson  10:14

And how much does it cost to join OCN these days?

Karen  10:18

It’s $66 or just over $1 a week, to become an individual member of OCN. And we also welcome schemes to join, as well.

Jimmy Thomson  10:30

Okay, and how much are they charged? Does it depend on the size of the scheme, or is it one blanket fee?

Karen  10:40

We’ve got small and large scheme fees. It’s $225 for a small scheme and $450 for large, plus GST. It’s a great investment in savings. We have member offers, we tell you about upcoming grants. And obviously, the networking and all the supplier recommendations can really save schemes a lot of money.

Jimmy Thomson  11:08

And also, it gives you a voice, because you guys do have a seat at the table, as they say, when it comes to government policy formulation.

Karen  11:16

Yes. I’m meeting with the Commissioner straight after our little chat here, in fact.

Jimmy Thomson  11:20

Well, there we go. I have been doing a lot of digging around in Victoria, where (basically, unusually for me), I’ve been quite outspoken on this… I have been saying that apartment owners in Victoria are deluding themselves, if they think they don’t have any problems. The biggest problem, I think, is a complete lack of transparency there. For instance, apartment owners do not have the right to observe committee meetings; the whole minutes system there is basically, they send out an agenda before a meeting and then after the meeting, send out minutes saying “we spoke about these things.” They don’t actually have to say what they said. And it goes on and it goes on and it goes on. I’ve heard that you and the President of SCA Victoria, Julie McLean, and the organisation We Live Here. I read somewhere, that you three have been in talks about expanding ,or certainly helping them to get their message out there. How’s that going?

Karen  12:18

We’re certainly friendly with We Live Here, whose main focus is on short-term letting. There’s also a Docklands owners group down there, which is doing some great networking and educational work and really bringing in Melbourne City Council and the police to do with security and all of that. So we’re talking with them, as well as their SCA Victoria and SCA national, about how we can collaborate and strengthen a joint message, on issues of common interest. So that’s really great. It helps, when we’re all on the same page and singing from the same song sheet.

Jimmy Thomson  13:14

Right. And can we expect to see at some point in the future, an OCN Vic? is that possible, do you think?

Karen  13:22

I think we’ll see an OCN presence in Victoria, and Queensland and beyond. I like to think of us as the NRMA; it’s not NRMA New South Wales, or Victoria… it’s just one big happy family. The legislation might be different in different states, but the human side of it is the same.

Jimmy Thomson  13:45

Absolutely. I think our dream must be at some point, to have all the legislation in every state roughly the same. We don’t want all the bad things from other states, but maybe, they want some of the good things from our situation and we want some of the good things from theirs.

Karen  14:03

Yes, well Queensland’s looking at collective sale now and we’ve been talking with them about the traps to avoid.

Jimmy Thomson  14:12

Good. This is how it should work. Okay Karen, great to talk to you. I know you’ve got a tonne of things to do, apart from going and meeting the Commissioner. Good luck with that. He’s a nice bloke; he seems to know what he’s talking about.

Karen  14:27

Thank you. Well, there’s quite the plethora of Commissioners now.

Jimmy Thomson  14:32

We don’t have a Strata Commissioner yet though, do we?

Karen  14:35

It’s on the agenda.

Jimmy Thomson  14:36

Are you putting your hand up for it?

Karen  14:38

I thought you were!

Jimmy Thomson  14:39

Should I apply? Look, we’ll toss a coin. We’ll play rock, paper, scissors and whoever loses, gets to be the Commissioner.

Karen  14:47

Sounds good.

Jimmy Thomson  14:48

Okay, Karen, thanks. 

[MUSIC]

Jimmy

I mentioned at the start, that we’re getting a bit of heat from Queensland… We’re also getting a lot of interest from Queensland, because we once again have raised the issue of presale of management rights contracts. So there’s several issues at play in this… The first one is that developers are allowed to sell caretaker managers the contracts to manage buildings, before the owners have even set foot in the place. So this is money directly into developer’s pockets, for no benefit whatsoever, except the right to override what would be the case in every other state in Australia; the right to choose your own manager and the terms under which they are employed.

Now, that’s the other part of this situation (which I have called many times ‘legalised corruption,’ because it is written into strata law, in our body corporate law in Queensland, that developers are allowed to do this). So the other aspect of this is, you’re pre-sold a contract, and the owners cannot choose who their building manager is going to be. And they can’t set the terms and conditions and the KPIs, as they call the key performance indicators, for that contract. Okay, that’s one other bad point about this. Another thing is, that the caretaker managers can sell the contract to other caretaker managers, and the owners in the apartments once again, don’t have a choice about who those caretaker managers would be.

This is a trade in Queensland, that’s worth hundreds of millions of dollars every year. And it’s a bit like apartment owners being treated like cattle, really. You know, you have no choice; you just have to go along with whatever you’re given. Other aspects of this (which have been proven over the years), is that it’s very difficult to get out of these contracts… Almost impossible to get out of these contracts. It doesn’t matter how badly the manager behaves, when they get taken to court for non-performance, in just about every occasion that I’ve seen, the judge or the magistrate or the tribunal member, will find some way of not finding that the contract has been violated, including the wording being that somebody said they didn’t fulfil the duties by such and such a time.

The magistrate has gone “well, you should have said ‘at least such and such a time.”‘ I mean, it’s that ridiculous. Obviously, really unfair and biased against owners. There are two levels of contracts in Queensland for caretaker managers, one is a very generous 10-years per contract and the other one is an absolutely obscene 25-year contract. The 10-year contract is for buildings that are designated as standard module, which is for buildings where they expect most of the residents to be owner/occupiers. The other one is the accommodation module, which is basically a short-term letting hotel-type situation. What is happening (and there’s a lot of evidence about this), is that developers are selling their apartments as luxury accommodation for owner-occupiers, but getting a development approval for them as a short-term rental.

When they get that approval, they can then apply for a 25-year contract. The apartment owners have no say in who the caretakers are. They have no say in the terms of the contracts… They have no say in who those contracts can be sold to. Getting back to the 10-year contract… There’s stories coming through that as they start to get towards the end of the contract (around about seven years), caretaker managers are going to their committees and saying “okay, we need you to extend this by a few years, so that we can either continue in the job, or sell it to someone else.”  I’ve even heard of committees being warned by their caretaker managers that if they don’t extend the contract beyond the 10-years, they will be sued for restraint of trade.

As I have said many many many times, this is just wrong. It is obscenely wrong. It’s costing, according to the Unit Owners Association of Queensland, apartment owners in Queensland, $140 million every year, because they cannot get competitive quotes on management services, or those who provide services to those managers.

I’m being attacked for being unfair and biased. You know what? I don’t mind; I don’t care. I am biased in favour of people who are being ripped off. I am biased against any system that not only allows this to happen, but encourages it to happen and the people who should be looking after apartment owners in every state; local politicians in Queensland, they’re doing nothing. You’ll find more about this on the website, and there’s a link in the show notes. I’m going to go and calm down and hope that I survive long enough to talk to you again next week.

[MUSIC]

Jimmy

Thanks for listening to the Flat Chat Wrap podcast. You’ll find links to the stories and other references on our website flatchat.com.au. And if you haven’t already done so, you can subscribe to this podcast completely free on Apple podcasts, Google podcasts, Spotify or your favourite 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.