A presentation about 4 topics of interest to Victorian strata title stakeholders

1. A Strata TitleUpdate ROCKEND STRATA USERS SEMINAR 7 June 2011 Melbourne, Australia

2. Today’s Agenda A selection of strata issues 2 Stage Victorian strata law changes Compliance issues Existing & emerging trends in strata 50 years of Australian strata title Questions

3. 2 Stage VictorianStrata Law Reforms Some more Victorian strata law changes Consumer Affairs Legislation Amendment Act 2010 [CALAA] Consumer Affairs Legislation Amendment (Reform) Act 2010 [CALARA] Stage 1 started on 1 January 2011for everything except delegation to committees and proxies for committee meetings Stage 2 starts on 1 September 2011

4. 2 Stage VictorianStrata Law Reforms Registered managers and chairpersons can witness use of the seal for owners corporation certificates Delegations to committees can be made by instrument or by resolution Delegations (by instrument or resolution) must be by general meeting Delegations to committees end at next AGM Non valid delegations can be ratified

5. 2 Stage VictorianStrata Law Reforms VCAT can award costs in fee & charge recover actions VCAT costs can include professional & volunteer manager charges directly or indirectly relating to recovery Only lot owners can appoint proxies to committees Empowers police officers, CAV inspectors or other CAV authorised people to serve infringement notices under Consumer Acts

6. Compliance Issues There’s a lot of laws, regulations, rules or contracts in strata They apply to everyone in strata So, everyone in strata needs to comply with them But, there’s a lot of non compliance everywhere in strata Why does it happen? Why does it matter?

7. Compliance Issues Ignorance: People just don’t know what to comply with. Lethargy: People can’t be bothered to do what’s required Busyness: People are too busy in their other lives Miserliness: People won’t spend the money Arrogance: People simply don’t want to Corruption: What’s required is against their interests Civil Unrest: The rule or provision is actually inappropriate and should be ignored

8. Compliance Issues It may be okay for owners not to comply (for whatever reason) since the consequences mostly affect them But, one strata stakeholder can’t get away with non-compliance - the strata manager Strata manager contracts require the strata manager to operate the scheme according to all applicable controls other laws (negligence, trades practices and registration controls) require performance to strict competence standards There’s exposure to contract breach issues & damages claims Plus strata corporation & owner relationships will suffer

9. Trends The future of strata title will include more of the same But a few other trends will also influence strata over the next 10-20 years as follows Decentralised control away from committees Increasing owner empowerment on decisions& governance Hyper-regulation of strata scheme operations Degeneration of management into over-formality & processes - rather than outcomes Large scale owner apathy and ignorance Increasing operational complexity of buildings & systems

10. Trends Haphazard application of other laws to strata corporations leaving them out of sync with other property Effective strata scheme support services become more crucial to good management & operation but increasingly hard to find Rapidly rising operating costs to owners causing stress & conflict Debates over appropriate owner engagement to determine how much is not enough & how much is too much Debates over tenant status, their rights & responsibilities.

11. 50 Years of AustralianStrata Title A sparsely populated country with 7.6 million square kilometres, 22.5 million people & 8 major cities A strong culture of property ownership Stable banking & long term low interest mortgage sector Taxation incentives for residential rental investment property Enthusiastic property developers operating in boom-bust cycles Multi unit housing represents 25% of total Australian housing 51% of new housing in NSW in 2010 was multi unit housing

12. The Beginnings Apartments appear in the early 20th century The post war period see many more low rise apartments: mostly rented to younger couples saving for a home 1950s income & wealth levels of baby boomers lead to pressure to own apartments so a few innovators looked at apartment titling options Lend Lease (via Dick Dusseldorp) lobbies for & initiates law reform for strata title and a joint working committee of private & government lawyers develop new NSW laws The Conveyancing (Strata Titles) Act 1961 starts on 1 July 1961

13. The 1960’s & 1970’s First NSW strata laws have29 sections& 2 schedules The first Australian strata building still exists in Ashfield NSW Laws copied all around Australia and Australian laws copied in Canada, New Zealand, Singapore, South Africa, Indonesia, Malaysia, Fiji, Philippines, Cayman Islands, India & Hong Kong Major NSW law reform ofin 1974 with 200 sections, 4 schedules & separate regulations Pioneering times for everyone Negative gearing promotes strata rental investment A specialised strata management industry emerges

14. The 1980’s & 1990’s Major NSW law reforms: community title laws allowing estate subdivisions & 2 part laws (splitting development & management) Major QLD law reforms: creating core Act & Regulation Modules for different building types Steady growth in stratapopularity, acceptability & values plus the 1990s property boom adds massive growth in strata numbers Large scale foreign investment in strata property ownership Professional strata associations/groups emerge & strata managers regulated in 2 states Holiday apartment syndrome starts in QLD & long term (25 year) onsite management contract emerge

15. The Naughties Australian laws copied in United Kingdom & United Arab Emirates Proliferation of law reforms in every Australian state Over 33 separate strata Acts, with over 1600 sections, over 3000 regulations & more than 70 schedules Proliferation of legal decisions in Courts around Australia GFC puts pressure on property values & strata cash-flows Larger & more complex strata developments emerge Smaller sized housing units become standard in strata Strata manager business polarise with large oligopoly style operators & micro businesses

16. Conclusions & Questions What have we learnt? Where do we go from here? What are the next questions? Where do I find answers?

17. Contacting Me Contact me anytime about strata matters at … francesco@strataexperts.com.au And, follow my blog on worldwide strata matters at … www.francescoandreone.blogspot.com Find information about strata at my websites at … www.francescoandreone.com & www.strataexperts.com.au