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Summit tackles escalating Management Rights contracts tension

Management Rights industry body says a change to 25 year term management rights contracts is likely to increase maintenance fees

After an intense day listening to a variety of solutions tabled to remedy Queensland’s housing crisis, the State Government has pledged it will fully respond to critical issues raised with Premier Annastacia Palaszczuk announcing the immediate creation of a plan, details of which are to be released in November.

Attended by a wide range of peak industry bodies, non-government providers and private sector stakeholders, issues addressed included unlocking land and housing supply, fast-tracking social housing, as well as the need for collaboration on housing by all levels of government and the private sector.

One of the issues to hand, and one that has seen tension escalating between Queensland homeowners and property managers, concerns locked-in management rights contracts lasting up to 25 years.

Read more about the threat to Management Rights HERE

AccomNews spoke with Australian Resident Accommodation Managers’ Association (ARAMA) CEO, Trevor Rawnsley who said a move towards short-term contracts would only result in more expensive maintenance fees.

“It’s an economic argument,” he said.

“There are owners associations who are arguing for three- year agreements, because somehow they seem to magically think that if agreements are reduced from 25 years to say three years, five or 10 depending on who you listen to, costs will reduce,” he said.

“But they won’t and we have plenty of data that says costs will increase.”

“The costs aren’t high because of building management – they’re high because there are costs, which escalate year on year.

“Everything has increased from electricity, power and water rates and insurance alone has increased by about 300 percent.

“What we do know is that long-term agreements are in the best interest of the scheme because they enable the operator to deliver these increased economic benefits,

Mr Rawnsley said the Unit Owners Association (UOAQ) was part of a small but vocal minority making a lot of noise about strata laws and had also been critical of the wages resident managers earn.

“Most of the time, there’s very little profit margin out of the remuneration that’s paid to the building managers because it’s spent on services,” he said.

“Long-term agreements are in the best interest of the strata scheme because building management is often delivered at a much lower rate than what would be offered by outside providers.

“The only thing that is less expensive for a scheme is if lot owners volunteer their time to undertake some of the tasks, but that usually doesn’t last long.”

And they’re far more able to communicate and manage tenant behaviour better than any outside real estate agencies can.”

The Management and Letting Rights industry (MLR), he said, is locked in a war in which we are being attacked by the deadly weapons of exaggeration, misinformation, lack of disclosure, hidden agendas, corporate greed, and a need to exert power over other people, and fake news.

“A tiny vocal minority is making a lot of noise trying to persuade the Queensland Government to cut the term of a MLR agreements from 25 years to three, or five or 10 depending on who you listen to. At the same time, they are also trying to ban short-term letting in Class 2 apartment buildings.

“With these constant attacks on the MLR industry, it has never been more important for resident managers to not only do a great job, but to market themselves within their complex, to let everyone know of the great work they are doing.”

Mr Rawnsley said the summit had proven very worthwhile, and attended by many “good and dedicated people”, including three layers of government, all working together to try and fix the state’s homelessness, housing and rental affordability.

“But many of them were throwing stones at developers and investors accusing them of price-gouging for their own greed, and people who live in glass houses shouldn’t throw stones,” he said.

“Without developers, you wouldn’t have anywhere to live, you’d living in tents.

“We need to stop demonizing the developers, stop demonizing the investors, and stop demonizing the building management industry

“Because otherwise, the developers, if they’re disincentivized, will stop building housing stock, they’ll build commercial buildings instead, or car parks or theme parks or something else. They won’t build housing.“

Strata Community Association of Queensland the peak body for the strata sector also attended the summit and has recently taken a strong and public position on the current framework for management rights, calling for change.

SCA (Qld) General manager, Laura Bos  recently told the management rights industry publication Resort News:

“Management rights service contracts have a place in the tourism industry in Queensland. But that place is not, in the view of SCA (Qld), in residential complexes far away from tourist precincts. And they are not (in any context) for a 25-year period,” she said.

“New South Wales and Victoria have maintained strong tourism and construction sectors for decades despite the lack of a widespread management rights industry. We believe management rights have a place where they are needed and responsive to the needs of their body corporate.

SCA (Qld) states it will “support existing managers who have bought in their rights in good faith and who perform their duties with skill, diligence, and care.

“But the time for the binding of owners, with no say in their scheme for decades, is up.”

Subscribe to the Management Rights industry publication Resort News HERE

Our latest AccomNews print issue is available now! Read it here.


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