The good news: THE ACT IS NOT RETROSPECTIVE.
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 bad news: THE ACT:
- Deregulates resident letting agent commission rates.
- Removes the requirement for a resident letting agent to live on-site.
- Allows resident letting agents to manage more than one building.
- Removes the requirement for a resident letting agent to satisfy the chief executive that they have body corporate approval and that they will live on-site to be eligible for a licence.
- Consolidates and rationalises the licence categories.
Deregulating resident letting agent commission rates.
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!
Removing the requirement for a resident letting agent to live on-site.
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.
Allowing resident letting agents to manage more than one building.
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)
- Meet and greet service (book in and record occupation)
- Maintain a daily 'Guest Room Register List' accessible/available to the QFRS in the event of a fire, and emergency evacuation
- Explain building security and access to lifts and units
- Explain fire safety drill
- Check satisfaction with unit
- Provide information on building layout for location of spa, sauna, swimming pool, local shops for food and supplies
- Car park allocation
- Tourism interests and times and transport
- Explain By laws
- Make phone call to fire service in event of fire in class 2 building with no automatic fire alarm call service
- In event of fire help evacuate short term residents (Tourists)
- Monitor compliance by residents to By law operating hours and use of facilities such as BBQ, Pools, Gym and Function Rooms, etc.
- Proper conduct and dress of visitors (Parties in units – noise)
- Monitor security to ensure no doors are propped open to allow visitors or over-occupation of units
- Monitor over-crowding according to Local Law/Accommodation Regulations in Letting Units (no excessive numbers overnight)
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.