Podcast: Poor ratings – where’s the stars, Dave?

This week on the Flat Chat website we celebrate the launch of Sue’s new book about spray-on skin pioneer, Professor Fiona Wood.

What’s the link with strata? Well, if there ever was a cladding fire and someone was badly burned and … em … OK, Sue’s the link. Forgive us for indulging in a little self-promotion.

Elsewhere on the pod, we take a closer look at the much-vaunted (by us if no one else) iCIRT star ratings for developers and come away a little disappointed.

Basically, if a developer gets more than three stars, they’re on the list.  Fewer and they’re not.  But there’s no actual star rating on show (unless it’s on their advertising).

And what about developers who’ve been late in getting with the program or have decided it’s not for them?

Sue has a very pointed message for the backsliders and recalcitrants.

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Elsewhere on the pod, Jimmy takes a deep dive into some new strata laws and regulations and works out what the strange change in office bearer nominations rules is.

Most importantly, he says, why was it so hard to find it out.

And finally we talk about a council in Sydney that wants to curb short-term holiday lets by increasing their rates, and a group in Byron Bay that’s battling to prevent holiday lets there being restricted.

All that and more on the Flat Chat Wrap.

TRANSCRIPT IN FULL

Jimmy  00:00

It’s a long weekend everywhere else in Australia (I think), but not here, in the Flat Chat Wrap studio.

Sue  00:07

Yes, we never rest.

Jimmy  00:09

We never stop, as Ange Postecoglou says of his football team, Celtic. We are a bit annoyed this week; very annoyed, actually… Annoyed and disappointed. We are annoyed about the latest press release from New South Wales Fair Trading, about changes that have been made to the regulation. And we are disappointed about the iCIRT developer ratings thing, that we trumpeted (at great length) last week.

Sue  00:36

A bit disappointed; we’re not completely disappointed…

Jimmy  00:38

We’re not distraught; we are just a little bit, hmm…. We will be talking about that in a minute. I’m Jimmy Thomson, I write the Flat Chat column for the Australian Financial Review.

Sue  00:50

And I’m Sue Williams and I write about property for Domain.

Jimmy  00:53

And this is the Flat Chat Wrap.

[MUSIC]

Jimmy

Sue, you’re back from Perth?

Sue  01:11

Yes. That’s right.

Jimmy  01:12

What were you doing over there?

Sue  01:13

I just had the launch of my new book, a biography of Professor Fiona Wood, the burn surgeon; world-leading burns pioneer.

Jimmy  01:20

Is she the spray-on skin woman?

Sue  01:22

She is, yes. She became quite famous, because of the Bali bombings; that’s when we all started noticing her and then she became Australian of the Year. Amazing woman.

Jimmy  01:29

And it’s the 20th anniversary?

Sue  01:31

 It is next week, of the Bali bombing.

Jimmy  01:33

How did the book launch go?

Sue  01:34

It went fabulously, actually. There were 200 people in the audience and we signed 300 books. It was fun. You know, there was real love in the room for Fiona and maybe, a little bit for me. It was really good!

Jimmy  01:34

We don’t have any link between burns victims and strata, unless you count flammable cladding and we haven’t had any burns victims in Australia from that, yet.

Sue  01:59

No, fortunately.

Jimmy  02:01

But it does bring us to the question of the developer-rating system; the gold star rating that was launched last week. We are a bit disappointed with it.

Sue  02:14

Yes. Look, it’s a fantastic advance, really. I mean, it’s wonderful to know the developers are being really thoroughly vetted and rated; that’s great. But when you go onto the iCIRT website, the ratings have been done by the ratings company, Equifax… But when you go on and have a look at their ratings, they just give a list of the developers who have achieved three-star ratings, or more (this is out of five). So those developers which are listed, are considered good developers and…

Jimmy  02:17

Trustworthy.

Sue  02:24

You can rely on them, to deliver a good product. But I actually thought that originally, the idea of the ratings was that it would actually have the ratings of each developer beside them.

Jimmy  02:59

So you would have 3.5 for so and so…

Sue  03:03

But no, it’s just a list of all the developers who have achieved three stars or more, so they’re considered okay.

Jimmy  03:09

So, can we assume that the developers who are not on the list, have only got a two-star rating?

Sue  03:15

Well, this is the thing… We can’t really assume anything, because if they’re not on the list, maybe they only deserved a two-star or a one -star rating, so maybe, people shouldn’t really put their life savings with them. It could be developers who haven’t applied (because it’s a voluntary thing), to go onto the register. So they haven’t applied to be vetted and have all their processes and protocols and standards looked at.

Jimmy  03:39

Connect criminal connections…

Sue  03:41

Yes, and who their partners are; all that kind of thing. I mean, it’s a really thorough vetting process. But if the developers decide not to undergo that, then you know, who’s to say what kind of developer they are?

Jimmy  03:53

Is that a good indication in any case, that if they have failed to get the three stars, or they haven’t put themselves forward for checking; is that a reasonable indication that maybe, you shouldn’t be pouring your life savings into their properties?

Sue  04:11

Well, you kind of have to assume it is, really. And it’s unfortunate, because maybe, there are some developers out there who are excellent, but they just haven’t got around to undergoing the process. Or maybe, they’re still in the process. I think there’s sixty developers, who are still in the process now. Maybe, they just weren’t quick-off-the -mark. Maybe, there are some developers who are hanging back, because they feel ‘well, you know…We don’t want to do all the administration that’s going to be required.’ But in fact, it’s a fabulous investment, because if you get a good star rating… I mean, the only way you can tell whether somebody’s got a three-star rating, or an excellent star rating (like four-and-a-half-stars) is when the developers themselves advertise their own star rating. So for instance, TOGA was one of the ones who got the 4.5 stars (the top one) and they’re now advertising that they are a 4.5 star developer, as are Meriton. You kind of think, well, is it being left up to the developers to advertise? I think it’s a shame. I mean, there’s two things… When I talked to Equifax about this; you know, there may be regulations in place, where they’re not allowed to give the exact ratings and they in fact, say that that wasn’t one of the agreed things, but I kind of think it would be really important to do that.

Jimmy  05:29

I spoke to a developer more than a year ago, and asked if they were going to submit themselves for this check and they said they’d discussed it, but on balance, they felt they had more to lose, than to gain.

Sue  05:44

Well, they’ve got a lot more to lose, if they don’t go through it, really.

Jimmy  05:46

Well, if they’re not on the list, people assume (rightly or wrongly), that they’ve either failed in the rating, or they don’t trust their own product.

Sue  05:58

And really, to be honest, if a developer doesn’t have faith in their product… I mean, jeez, why should they expect a consumer to have faith in their product? You know, they could go in for the rating system and if they get a two-star rating, then that’s a great indication that they need to improve their company and improve their processes and the kind of homes that they’re building (I would have thought), so that’s a great shortcut.

Jimmy  06:22

So now that we’ve decided that the default situation is that if the name of the company isn’t on the list; let’s say within the next six months, you shouldn’t invest… We don’t need to know what their ratings were.

Sue  06:37

Absolutely. But it’s a shame, because… I said to Equifax “well look, say I was wanting to invest in an apartment, I would normally look at those developers and I would look for one that was 4.5 and think ‘okay, there’s these four developers so far, which are 4.5… I will look at the projects they’re currently developing, and I’ll buy an apartment in one of those.'” And they said ‘well no, but you can’t do that.’ Equifax were saying were saying, you’d be looking at location, and you’d be looking at the style of development and you would be looking at a particular development and then looking at the developer, then looking on the list, to see where they are, to decide whether to buy.

Jimmy  07:25

I disagree.

Sue  07:26

I think I’d rather cherry-pick the best developer, rather than choose the development first.

Jimmy  07:32

When there’s so many developments around; so many different developers… Basically, anything you can do that cuts down the search time… I mean, you don’t want to go and see an ad for a new development and think ‘oh, that looks fantastic…’ Go and look at the area; go and check the schools and the shops, and then it turns out that they can’t even get a rating, because they’re a crap developer. That’s a huge waste of time.

Sue  07:59

I think so too. I’m glad you agree. I mean, Equifax kind of… I mean, their hands might be tied by the regulations, I don’t know. But I was just a little bit disappointed that we couldn’t actually see people’s star ratings on their website.

Jimmy  08:14

Maybe they’ll change that; maybe once they get enough people through the door, they’ll start doing comparative, because it’s a big incentive… If you’ve got a three-star rating and you’re listed as a three -star rating (which means you’re okay), but all the developers around you have got four-and-half-star ratings, you’re going to think ‘well, we need to lift our game here,’ which is good for the consumer.

Sue  08:35

Yes, absolutely. I award them six stars, out of ten.

Jimmy  08:42

The website; the iCIRT website?

Sue  08:44

Because it’s a fantastic idea, and it’s a great progression, but it’s not quite there yet.

Jimmy  08:49

Okay. When we come back, we’re going to talk about an announcement of new regulations for strata managing agents and for elections of committee office-bearers. That’s after this.

[MUSIC]

Jimmy

So last week, somebody said to me ‘oh, have you seen these new regulations,’ and just forwarded me an email from Fair Trading. Basically, it was about a completely new set of regulations for strata managing agents and some tweaks to strata laws, especially in relation to voting. So I had a look at this and look, the strata managing agent’s stuff is complicated, and complicated even further by the fact that the regulations that cover strata managing agents, covers all agents; stock and station agents, real estate agents, travel agents… Secret agents (maybe not secret agents). It’s all muddled in together and you’re reading the thing, and it’s telling you about ‘oh, this is at an auction. This is the number of bids by the vendor that they can make…’ And then you read half a page later, and it’s telling you about the penalties for stealing cattle. But, you know, one of the major things in it, is that real estate agents have to be a bit more considerate when they lose a gig and they have to hand over all the documents, either to another real estate agent, or to the strata committee (maybe they want to self-manage). We’ve heard stories for years, about people changing strata managers, and the old strata manager just sits on the documents, for months and months; just out of pure bastardry… Just to  punish people for not wanting them.

Sue  09:54

Yes, we had a similar situation. We ended up having to go physically into their offices and they said ‘well, okay, if you can find the documents, you can have them.’ So we had to sift through piles and piles of documents, all over the place, to try and find our documents. So yes, absolutely. Oh my goodness!

Jimmy  11:13

There is that thing, that if they don’t have the documents readily to hand, then it shows there is a level of incompetence there. I do recall that that strata manager was paying other buildings’ bills, from our account; that’s how bad they were.

Sue  11:28

They only had one trust account for everybody. So every building was part of that trust account, which is illegal. It certainly is now.

Jimmy  11:35

And all the receipts were in shoe boxes. So they’ve tidied all that up and that’s great. But then I got to this thing, and it said ‘we are changing the rules on voting by Zoom; electronic voting.’ Okay, yes, that’s fair enough, because we’re coming out of the COVID-19 measures. But some of the things that were brought in, are actually quite good, because they fast-tracked the whole idea that you can have Zoom meetings, without having to have a general meeting, to approve the idea that you could have Zoom meetings. So that’s all been taken care of. But then, there was this thing (and it mentioned it a couple of times; there will be changes to the way you can nominate and elect office bearers on committees. I thought ‘oh, this is interesting,’ so I looked at the next link, and it says again, there will be changes to this.  Eventually, I found the Act, which details what the changes are….You cannot pre-electronic vote for somebody on a strata committee election; that’s one change. So you cannot send an email saying ‘I want to vote for Jeff.’ You’ve got to actually be actively involved in the meeting, even electronically; remotely by phone, or Zoom, or whatever. So that’s one thing. The one that really amused me was, you cannot orally nominate someone, unless they are in the room, or there by Zoom. You think well, if Jeff is in the room; has to be in the room, before somebody can nominate him, why doesn’t Jeff just nominate himself?

Sue  12:01

Good point!

Jimmy  13:29

I tried to work this out; I came at it in the other direction. Why would anyone nominate Jeff when he’s not in the room, without Jeff having written a thing saying ‘I want to be nominated for it,’ because you can send a nomination in advance, in writing. And here’s what happens… Somebody goes along and says “who’s going to be treasurer? Nobody wants to be treasurer,” They say “oh, Jeff; Jeff will be treasurer.” “Well,  Jeff’s not here.”  “He’ll be here next week; he’ll be fine. Jeff will be treasurer.” And then, Jeff gets a phone call, saying “oh, by the way, you’ve just been elected treasurer.” He’s like “oh, great! I’ve got enough on my plate. I don’t want to be doing this.” So I think that’s what it’s about, but it took me a long time, to dig out that piece of information. But you know, people think ‘well, that’s ridiculous. That’s never going to happen.’ I know somebody who was elected to our committee. He’d just bought into the building and he was told ‘oh, there’s a vacancy on the committee and you’ve been elected.’ He hadn’t even asked to get on the committee! So maybe, you do have to make sure people are in the room, when they’re nominated.

Sue  14:06

Yes, sure.

Jimmy  14:39

When we come back, we’re going to (briefly) talk about Airbnb and a council that wants to ‘put a lid on it.’ That’s after this.

[MUSIC]

Jimmy

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Jimmy

In the papers today, Sue Williams, there is a Randwick councillor, who wants to increase rates for people who are running Airbnb. Randwick is traditionally an area where people go on holiday, and it’s near the beach and all that. Do you remember Michael Costa, the odious former treasurer?

Sue  15:45

 Yes, the Police Minister, as well. 

Jimmy  15:46

Well, he was the one who drove Peter Ryan out, or helped to do that. I remember him being on Alan Jones and they were talking about how Randwick Council was trying to limit the number of holiday lets, or strata schemes were bringing in rules to stop people from letting their apartments for holidays. This is way before Airbnb ever happened. I remember him saying “well, I’ll be putting a stop to that.” Yeah, like, “families have got to be able to come into the city and stay in apartments and these people who live in apartments…They’ve got no right to stop people from coming and doing that. ” Well, it turns out that what he said was prophetic, because we don’t have the right to stop people from renting their apartments, if they normally live in their apartments. But this thing has come up, where Randwick want to increase the rates on properties that are let on Airbnb, but they’ve also said (and this is the thing that really piques my interest)… They say there are dozens of properties in Randwick that are being let as holiday lets, but are not listed on the government’s holiday letting register. So what’s being done about that? Is anybody checking up on this? Is anybody at Fair Trading? Fair Trading won’t do anything about holiday lets. If they can just park it somewhere and forget about it, they will happily do so.

Sue  17:15

Because it is up to the local authority, isn’t it, to make sure that all of the Airbnb are registered?

Jimmy  17:19

Or is it?

Sue  17:20

Or is it up to Airbnb?

Jimmy  17:22

No. If Airbnb have been told a property hasn’t been registered, they’re not supposed to list them on.

Sue  17:30

Okay, but they need to find out first.

Jimmy  17:31

There are other agencies as well. There are people who just do it through the local real estate agent, or whatever. But if this is true (and I believe it is true); somebody in Randwick should be looking at the listings of holiday lets and saying “is that on the register, and if it’s not on the register, can we start fining people please, because that’s the only way we can control this.” Otherwise, it means the whole holiday letting register is just window dressing, which I think a lot of us suspected it was, anyway.

Sue  18:05

Maybe you could get hotel receptionists, in their spare time, to go through some of their registers?

Jimmy  18:12

They’re sitting there at night; nothing to do, on their computer.

Sue  18:14

Yes, because it would be in the interest of hotels, to make sure there’s a crackdown on people illegally doing Airbnb’s.

Jimmy  18:20

And the other thing that came up last week; I got an email from business people and residents of Byron Bay, who say that their lives are about to be destroyed, because Byron Bay wants to put a 90-day limit on the number of days you can rent out properties up there. So they’re presenting themselves as these poor, benighted people and you know ‘we could lose all this money and hundreds of thousands of jobs will be lost.’ They’re just people who are on Airbnb… You know, they’re just people who’ve been coining it for months and months and years and suddenly, somebody is saying “hang on, people need to live here. The people who are coming and making your cappuccinos for you; the people who are doing your yoga classes on the beach… They need to live here. You can’t have all the properties given over to holiday lets.” So, don’t send me any more emails, people in Byron, who are in favour of unlimited holiday lets.

Sue  19:20

You won’t get much sympathy here.

Jimmy  19:21

You’ll get no sympathy here; not interested. Alright, Sue, after last week’s marathon, that’s a nice short dish, and short podcast. Thanks and good luck with the book.

Sue  19:36

Thank you very much. It’s called Under Her Skin.

Jimmy  19:41

 Who’s the publisher?

Sue  19:42

Allen & Unwin.

Jimmy  19:43

Here is me pretending I don’t know anything about this book and all I’ve heard about for the past year and a half, is how the book was progressing in the other room. This is part of show business, folks. It’s all an illusion. Thanks, Sue.

Sue  19:58

Thank you, Jimmy. Thank you to everyone listening.

Jimmy  20:01

Okay, and talk to you all soon.

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, Stitcher, 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.