Promoting and protecting the rights and lifestyles
of unit-owners in Queensland since 1978
All existing contracts remain in force until expiry, 25 years if necessary. That is if your current contract requires your caretaker to live on-site - that continues to apply. Current negotiated commission rates continue to apply.
The Act removes consumer protection and any semblance of a fair commission rate. The Act pits a collective of professional letting agents against individual unit owners. Many rental unit owners live interstate or overseas and have no concept of fair commission rates in Queensland. This places the balance of power in the hands of the Australian Resident Accommodation Managers Association (ARAMA). Letting agents have a vested interest in achieving the highest possible commission rate and, this is without the pyramid commissions applied by travel agents and letting agents where historically 12% legislated commission rates are jacked to 25%. This money comes from the pockets of unit owners.
Unit owners are further disadvantaged. If there is no regulation of commission rates, there is no recourse to the Office of Fair Trading (OFT) for unit owners to complain, and get protection under the law – there is no law!
The concept of resident letting agents was to provide 24 hour security and services to buildings, especially those residential buildings that provide tourist accommodation. In Queensland many class 2 permanent residential buildings are misused for short-term tourist accommodation without suitable modification of the fire detection and alarm system. That is the buildings are designed only for permanent residential occupation. In the event of a fire, without an on site letting agent or caretaker, there will be no direction of guests to the fire escapes or fire refuge areas. Moreover, many of the misused class 2 buildings do not have a direct fire alarm connection to the fire service. Therefore, a telephone call to the fire service is required, historically the responsibility of the caretaker/letting agent. Committees negotiating with agents to live off-site must remember their primary responsibility is to act in the best interests of the Body Corporate.
Real world experience has shown that in many cases it has been most difficult, if not impossible, to have a letting agent managing one building to perform in an efficient and cost effective manner. Experience has also proven that corporate letting agents managing multiple buildings are far more expensive to the Body Corporate and letting unit owners for commissions and maintenance of rental units. This is primarily due to the need to employ additional staff as the caretaker letting agent distributes duties such as reception, cleaning, gardening and maintenance to different personnel. The idea that the resident caretaker/letting agent moves to a management roll, at the expense of the unit owners, is repugnant to the original concept of resident caretakers. Also it introduces a further layer into the structure where unit owners’ funds are siphoned off to share holders.
The MR Industry is already actively seeking to exploit the PROPERTY OCCUPATIONS ACT 2014 (POA 1014) for their own benefit. Solicitors are already providing advice to caretakers on how to divest themselves of their units, but retain the letting office. Committees must understand that that when a caretaker requests to renegotiate his contract, the entire contract becomes open for negotiation. The committee is legally bound to act in the best interests of the Body Corporate and must negotiate reduced contract rates for reduced services if the caretaker lives off-site.
In addition to common property caretaking services, on-site letting agents provide: (or should provide)
In conclusion, clearly POA 2014 needs review and amendment to protect owner/BC consumers. Committees have a legislated duty of care to the Body Corporate, not caretakers, letting agents or body corporate managers. Any committee failing to observe this duty-of-care expose themselves to litigation from members of the Body Corporate.
1. Return on investment will be 1% or 2% (if you are lucky). Many make a loss.
2. You will not be informed the true gross amount that a renter has paid to occupy your unit.
3. You will be saddled with a 10 or 25 year escalating management right's contract that is almost impossible to terminate. In some cases the 25 year contract is unlawful.
4. You will be saddled with undisclosed uncontrolled letting commissions (may be 25% of gross rental) on the pretext that the commission relates to wholesaling rentals through a company associated with the letting agent.
5. You will be required to contribute to advertising for the letting agent’s business.
6. You will be required to pay cleaning costs including a mark-up to the letting agent that may double the actual cleaning cost, every time your unit is rented.
7. You will be required to pay for maintenance costs to your unit – plus at least 10% mark-up/supervision fee to the letting agent. (An average letting unit needs to be refurbished every 5 years due to damage caused by tenants).
8. You will not have any say in how your building is supervised. The Body Corporate and Community Management Act 1997 disadvantages unit owners and is biased against them.
9. Queensland local council rates and water rates are excessive (loaded for holiday rental units on the Gold Coast by an additional 125%, $801 to $1800).
10. Any capital gain on units in Queensland is eroded away due to the cost of ownership.
The Unit Owners Association of Queensland urges the Queensland Government and it’s Attorney-General to review Body Corporate legislation that permits developers selling 25 year Management Rights Agreements. Comparable provisions have been considered unenforceable by a NSW court and considered unconscionable in the USA. Such management rights sales also lead to the abovementioned outcomes.