Forum Replies Created
-
Replies
-
There is no reason the committee cannot engage a broker direct to place your building insurance. And you should, as a matter of urgency, because if there’s eg an injury or large claim every owner is jointly and severally liable.
Just make sure you engage a specialist strata insurance broker like BAC Insurance Brokers or Strata Fair (flat fee service).
Then, if the errors were made by your strata manager and they are not responding to committee contact, leaving all owners seriously exposed, make a complaint to NSW Fair Trading – https://www.fairtrading.nsw.gov.au/help-centre/online-tools/make-a-complaint.
Cheers Karen
Hi Gary, you make a very good point. The Owners Corporation Network of Australia is best placed to advocate for this and the other tax bugbear … that non-levy income is taxable in the hands of the individual owners, not the owners corporation. Crazy stuff.
What with the increasing burden of fire safety and renovation regulations (the Design & Building Practitioners Act has cause significant time and cost blowouts for previuosly straightforward projects), owners need all the relief they can get!
Leave it with us, though we are focused on the upcoming NSW election at the minute. Check out our policy plan for climate ready, resilient and empowered communities living in defect-free buildings – http://www.ocn.org.au
Cheers Karen Stiles
OCN Executive DirectorFabulous news re the announcement of a new NSW Strata Commissioner, who can advocate on behalf of strata owners! Just what we need. Along with a hasty exit from NSW Fair Trading – lost amid broken toys, brothels, cemeteries and tattoo parlours – into a senior Ministry which can properly regulate the sector.
What an interesting debate. Thanks for the vote of support, Jimmy. OCN has indeed been very busy on this issue, too busy to respond to critics who don’t understand or refuse to work with political processes. OCN represents the interests of all strata owners, and therein lies a divergence of views.
So OCN chose to call for the democratic right of each strata community to decide how their community is managed. Just as they do with pets, parking, and strata renewal. Once we secured that outcome, we could work on the detail which would include how an agreed change of use should be managed ie building requirements etc.
The death penalty in the UK was abolished one crime at a time, starting with something like 99 crimes. The short term letting arena will evolve, and OCN’s goal is to secure the best outcome possible for the majority of owners and residents.
While also securing better protections for off-the-plan purchasers, working towards improved building quality, and a more appealing strata living and investing experience.
Where there’s sin, the devil’s usually not too far away so feel free to play advocate Jimmy! Seriously though, this is a very good conversation for us all to be having.
Without transparency, on any level, owners can be left feeling (and sometimes being) cheated.
Much better to have a system where owners corporations properly remunerate their managers for their expertise and experience, and pay a separate fee for service for their insurance which is not grossed into the premium (remembering that for our new large and sophisticated buildings this could be $100,000+ per year).
Let’s educate owners, who can sometimes focus on the bottom line rather than the value being delivered.
Let’s see all strata managers tendering on the same basis of a fair day’s pay for a fair day’s work, with a transition program that puts all managers on a level playing field viz renegotiating their fees at the same time.
Let’s see more healthy competition in the strata insurance market, once this playing field is also levelled.
Yes, some strata managers may choose to gracefully retire or to sell their business. But those strata managers who choose the transition will hold their heads high, as valued and valuable advisers on strata matters.
Cheers Karen
Yes, strata manager commissions are a sin. OCN sees the detrimental outcomes for owners corporations, and opposes this practice on the basis below. But let me emphasise that it’s everyone’s interest to work together constructively to support managers and owners alike through the inevitable transition.
- It is not transparent. We prefer a clear fee for service model.
- It is a conflict of interest (clear disincentive to obtain lower premiums)
- It denies owners the right to good advice *
- It denies owners choice (steered towards two insurers paying highest commissions)
- It restricts the market (a new insurer, ACE, was squeezed out, and other large and respected insurers cannot get a foothold in this tightly held market)
- It restricts competition which is a market-based driver of better cover and lower premiums
- It denies owners the claims management advantage that brokers, with their large buying power, can deliver
- Commissions can unfairly inflate strata management client income, for no extra work **
- Commission-inflated premium is then taxed – grossed up by FSL, Stamp Duty and GST.
* Case Study 1
Owners corporation (OC) insurance is placed by strata manager (SM). OC wins Home Owners Warranty claim, is ready to start $500,000+ defects rectification. Asks SM if they need to advise insurer (few owners corporations would realise that this is a critical issue). SM says they can’t give advice, refers OC to insurer. Insurer says it doesn’t give advice, refers OC to broker. Broker is not paid by OC to give advice.
OC is put at risk on two counts. Firstly, insurance policy fine print states building cover (all building cover) is voided if works are carried out over a certain figure (and makes it almost impossible to get capital works cover). Secondly, the executive committee members are personally liable if anything goes wrong and there is no insurance in place.
* Case Study 2
Complex of 5 villas, insuring via SM, were offered only one insurance option for a decade. They had only one claim for $220 in ten years. The claims history was only reviewed when the OC contacted a broker, when they received proper advice to increase their excess which reduced the premium. Until then they paid the SM 20% commission + $500 fee to the SM’s broker, but were denied choice, service, and advice. This cost them dearly.** Case Study 3
Nth Queensland insurance premiums increase up to 8-fold following catastrophic weather events. SM commissions increase accordingly, for no extra work. Does anyone think that’s fair?As Dorothy said in the Wizard of Oz “Toto, I have a feeling we’re not in Kansas anymore.” We’re not. We’re in a world of increasing sophistication and scrutiny that sheds light into previously dark corners.
Karen Stiles
Executive Officer, OCN Australia
@FlatChatFan said:Thanks for some sanity everyone.
The Owners Corporation Network of Australia was established by a group of Owners Corporations struggling to deal with defects. Its aim is to share information and improve legislation so strata living lives up to its promise. Check out our website. Tell us your stories. Information is power.
Karen Stiles, Executive Officer
Strata owners are indeed living the nightmare, Jimmy! Brand new buildings that are neither safe nor waterproof. Years of water running down loungeroom walls, bathrooms leaking water to the unit below, hazardous light installations, lifts that brake down constantly, lack of fire protection. The list of health and safety issues reported by our long-suffering members goes on … and on.
Strata owners need to be heard. Who out there in Flat-Chat world has lived in a defective building?? Tell us about it. Lift your voice above the shonky builders baying for bigger profits. And tell us about the good ones, who handed over a quality product. They need to be held up as shining examples of what’s possible.
Karen Stiles
Owners Corporation Network of Australia
http://www.ocn.org.au
@JimmyT said:It looks like the Fair Trading Minister has swallowed the developer lobby BS about what is depressing apartment building in NSW. Guess what – it’s not that some developers are putting up sub-standard buildings, it’s that Owners Corps are getting strata lawyers to force them to provide what they have been paid for.
Have a look at the Australian Financial Review’s story HERE and take a read of my response HERE. Basically the developers say they are going Interstate because they don’t have legal problems there – yet NSW’s drop in apartment building of 5% over the past year is half the national average while the only states where building is increasing are WA (mining boom) and Queensland (migration).
The problem isn’t the legal action – it’s the appalling building standards of some fast buck developers that have eroded public confidence in their product. Add in the GFC and the downturn in China and you realise the developers – opportunists by nature- are having a lend of the Mr Roberts whose MA in Commerce didn’t teach him that people will fight to protect their homes. Good developers are still building because buyers will go where they feel their money is well spent and they aren’t going to be ripped off.
We shouldn’t make assumptions but it seems the Minister is poised to remove the very last vestiges of consumer protection for new apartment buyers. Last year he cut the defects period for non-structural defects (like roof seals, the most common complaint in strata) to two years. So what now? You can’t pay your lawyers to fight their lawyers?
And here’s the nasty twist in the tail: when all is said and done and the dust has settled, only one group of people has a legally binding responsibility to maintain and repair common property and rectify defects – that’s us, the apartment owners.
If you want to make sure the Minister isn’t legislating to build the slums of the future, write to him at office@roberts.minister.nsw.gov.au or go to his website HERE where you will find all the contact details you need to let him know what it’s really like out here in Strataland – where we have to live with the mistakes he and his developer pals make.