Thursday, September 21, 2017
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Body corporate stakeholders remain in limbo

Even with the result now declared, the outcome of the January 31 state election in Queensland is causing uncertainty in body corporate land.

The principal piece of legislation regulating the tens of thousands of strata schemes is the Body Corporate and Community Management Act. When the legislation was originally passed in 1997 it was acclaimed as leading the world in the regulation of strata. It was to provide for, and many believe it did allow the best strata developments in the world to be managed to create the most livable communities in the world.

Nevertheless, the former Newman state government had this legislation under a full review, with priority being given to the vexing issue of how to calculate and how to change the contribution lot entitlements. Every apartment, townhouse and strata lot has contribution lot entitlements, and they are of critical importance to all lot owners because the contribution lot entitlements determine what share of the overall budget each lot owner must contribute. Lot entitlements are important because they directly impact how much each lot owner pays.

The area of lot entitlements has been controversial for some time, and the area has been subject to several changes in law that might be said to have worsened matters. A potted history of the changes is:
• There was a system that existed from the mid 1960s until 1997. The system was not perfect but the area was relatively uncontroversial.
• In 1997 the legislation as to entitlements changed in two significant ways:

  • The way entitlements were calculated was altered
  • Owners had an ability to have the existing entitlements changed from the old method of calculation to the new method. In hundreds of instances this allowed for owners who paid very high body corporate levies to reduce substantially the amount they paid. However, in the bodies corporate where there was a change the rest of the owners were required to cover the short fall.

• Then the law changed so that lot owners had very limited rights to alter entitlements, and in those schemes where the entitlements had been changed, affected owners had an automatic right to reverse the first change and to have the original entitlements reinstated.
• There was a final legislative change under the Newman government which “reversed the reversal” and took away the right to have entitlements reinstated to the original, and to stop the whole process until the system was fully reviewed.
The level of change in this area demonstrates how emotive the issue became, and still is.

The Body Corporate and Community Management Act review process was outsourced by the Newman government. It was being done by QUT academics. I understand the portion of the review to do with contribution lot entitlements was completed and all body corporate stakeholders were awaiting a policy announcement. However, the election intervened in the final step, being new legislation, and the policy was not announced nor was the legislation changed.

At the time of writing this article the electoral commission has declared the result of the election, and all Queenslanders now know we have a new government with a new premier.

My personal view is that the final policy and legislation might be substantially different with an ALP government, as it might have been under the LNP.

The policy questions which need to be answered include:
• Should lot owners have a right to change the entitlements in their body corporate?
• If the right is to exist, when should it be exercisable?
• How should entitlements be calculated:

  • Using a system where all lot owners contribute roughly the same?
  • Using a system where more expensive apartments contribute more, because they are deemed to be more capable of paying?
  • Using a “user pays”?
  • Using some other methodology?

We all need to know if the review of the Body Corporate and Community Management Act will remain a priority under the new Queensland government, and if it is a priority, will the policy as to contribution lot entitlements be what is recommended by the QUT review panel? It could be a case where having a final result that is certain but imperfect is a better result than having a system with constant change.

I wait to find out about the content of the new policy. When the outcome is known I will be across all of the detail.

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