If You Care About Management Rights, Read This!
One of the most enjoyable parts of my first year selling management rights on the Gold Coast has been meeting many of the resident managers who run our industry from the front line.
A firm believer in getting out of the office and speaking to people face to face, I’ve been lucky enough to have many long chats with RUMs about the state of our industry. Indeed, this is how I have learnt much of what I know today.
Always on the look-out for an interesting topic of conversation, I’ve recently been asking managers for their thoughts on a recent discussion paper put forward by Paul Lucas (minister for local government and special minister for state) entitled Management Rights in Community Titles Schemes. Much to my surprise, very few managers had heard of it, even less knew much about the content.
Let me provide a quick background to the paper. Many have heard of the Unit Owners Association of Queensland, an industry association that, according to its website, aims ‘to advance the interest of unit owners’. One of their principal areas of activity at present is the lobbying of government for a complete review of the management rights industry. In fact, some would argue that the UOAQ has been hijacked by a minority faction who takes issue with our industry and that the lobbying has become more of a vendetta than anything else.
Although no connection to the UOAQ’s lobbying effort is divulged, we are now presented by a paper put forward by a member of parliament that seems to point to exactly what they are looking for, namely a total reassessment of the principles that underlie the management rights industry as we know it. More importantly, rather than providing a balanced discussion of the industry, many feel that it leans heavily towards many of the drastic reforms advocated by the UOAQ.
There is insufficient space in this article to outline all of the views put forward in this paper but for the sake of catching your attention I’ll mention a few of them.
One of the most potentially damaging suggestions is that the length of current regulation modules (whether standard or accommodation) are unnecessarily long. It states that “some lot owners… feel ‘bound’ by typically long-term contracts”. In a summary of ‘stakeholder views’ at the end of paper, it states that, while some believe the regulatory framework to be ‘in balance’, some believe that major change is required such as limiting management rights contracts to three years. I’m sure there is no need to discuss the devastating impact this would have on the management rights industry.
Another ‘view’ is that the extension or topping up of contracts should be prohibited. It suggests that “bodies corporate grant such requests (for extensions) almost by default” and “that it is extremely rare for a body corporate to vote against such requests”. We all know that the reality of the situation is quite different. An extension is granted in a democratic way by unit owners who wish to secure and encourage the ongoing efforts of a good manager. Plenty of scope exists for owners to deny an extension should they not be satisfied with the services provided by the manager.
It also expresses concerns that “the extension of rights is often a prelude to the sale of the rights, resulting in a windfall gain for the resident manager”. The author of this paper clearly has little knowledge of the current state of the management rights market. In recent times there have been very few sales that result in a large capital gain for the resident manager. When this is the case, it can usually be attributed to an extremely hard working manager turning a poorly run complex into a thriving one. More to the point, extensions are a critical way of securing a substantial monetary investment and creating an environment where managers, owners and committees can work proactively together without fear of their relationship coming to an end.
Don’t worry; there is no need to start losing sleep just yet. At the moment this discussion paper is just that, a discussion paper. Those that have instigated it are a small minority and will undoubtedly remain so. There are many times more stakeholders who will oppose the reforms suggested in this paper – RUMs, solicitors, accountants, agents, politicians, financiers and unit owners themselves to name a few.
Nonetheless, it is important for everyone who has a vested interest in the management rights industry to read the paper, be aware of its content and respond to it. The nature of a discussion paper is to invite all “interested individuals and organisations to make a written submissions”. The paper and the submissions it receives will be discussed by people who may influence government policy. You can count on the fact that members of the UOAQ will be making submissions, please make sure you do too.
As a parting word, I’d like to push home the fact that the management rights industry in Queensland is something we should be proud of. Rather than having to endure misguided people pulling it to pieces, we should be showing it off to the world as the optimum model for how things should be done.
The discussion paper and contact details for submissions can be accessed at http://www.fairtrading.qld.gov.au/AboutUs/Management_rights_discussion_paper_outcomes_of_stakholder_final.pdf
Alex Cook
Resort Brokers Australia
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