Management rights controls slum landlords

There was a program aired recently on Today Tonight concerning the existence and growing practice of dangerous “rental” overcrowding within some inner city apartments.


This is not new – many resident managers who run successful management rights businesses within some of Sydney’s largest and prestigious inner city residential buildings know all about this and it doesn’t happen in their buildings!

Why? Because under a management rights arrangement the owners grant the resident manager the “rights” to not only care take the building and its common areas and facilities, but also the exclusive right to be the only on-site real estate property manager. This means that the building’s owners, often through an empowering by-law, encourage all investor owners in the building to use the property management services of their in-house resident manager and not to use outside real estate agencies!

Is this legal?    

Yes, as long as individual owners still have the “right” to choose any agent they like, the owners (via the executive committee) can strongly encourage all investor owners to use the designated on-site manager who, after all, has to also live next door to the tenants he /she puts in the building. This is management rights in action.

No building facility management company can do the same thing. First, they are not licensed, secondly they don’t live 24/7 in the building and thirdly they are not qualified as property managers. A property manager of course needs to conduct the in-house property management rentals through an audited trust account. They also need to take continual training courses to maintain their property license.

So what is really happening out there in strataland?

Well, as Today Tonight reported, slum landlords often own or control a number of inner city, high rental demand apartments. Their motivation is money and overcrowding to them is a method to extract as much rent from a given property by renting by the room, or by renting by the week, day or month. This practice of offering extreme short term tenancy (often called ‘serviced apartments letting’) is yet another issue plaguing Sydney’s residential apartment buildings.

Management rights solves all these issues.

It positions an on-site residential manager, who actually has to buy into the building as part of his management rights contractual agreements, as the enemy of outside agents and the scourge of rogue investor owners who try to profit by many of the above-mentioned illegal letting practices. In the real world of inner city property management, these rogue investor owners will try to bypass the resident manager and use their own designated real estate agent.

An alert on-site residential manager will know this and he will be on the lookout for trouble. He will spot advertisements on websites and newspapers offering low cost “student” or “backpacker” accommodation especially ones that sound suspiciously like they might be targeting his building. So, when potential tenants show up at his building he corals them and their agent and reads them the act telling them, in no uncertain terms, how long the minimum lease needs to be, how many people are permitted in a certain size apartment and all the other rules and compliances that relate to his building.

He will also clearly highlight the measures he will go to on a daily basis to ensure that these rules are adhered to, and that he will constantly monitor who is entering the apartment and who is living there.

One resident manager, who owns a successful management rights in Pyrmont, made life so bad for tenants that he knew were trying to overcrowd a unit within his building, that in less than a week they all moved out. Every time a friend came to visit he asked for ID. Every time the tenants came home he asked for ID. At night his security team were primed to ask all persons entering “that” apartment to provide ID. In the end the tenants and the rogue outside agent just gave up – it was just too hard. So naturally they just went off and found an easier building.

So management rights truly does control Australia’s slum landlords.

Another win for management rights but, sadly, very rarely acknowledged in the world of strata.

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