Owners’ Corporation Bill

Owners’ Corporation Bill

The long-awaited Owners’ Corporation (OC) Amendment Bill has been introduced into parliament.

The most significant change, and one we had been advocating for, is the creation of tiers of OC relating to the size of the development. The OC Act 2006 failed to distinguish between small and large developments, but now five tiers have been created with Tier One developments of less than 100 occupiable lots down to Tier Five a two-lot subdivision or a services-only OC.

While the roll of the developer at handover and financial governance has been addressed, disappointingly the bill still has no new remedies for the thousands of Victorian apartment owners saddled with patently unfair building management and facilities management contracts, with multi-generational tenures of 25 to 99 years. This rort must not be allowed to continue and we call on the state government to urgently introduce constraints on every type of contract. All contracts must be limited to a reasonable maximum number of years.

Another egregiously unfair clause that sneaked in is the “get out of jail” card for short-stay apartment owners. All an owner needs to do to get off scot-free is to give an overnight guest a copy of the OC rules and, just like magic, the owner is not liable for any breach committed by a short-stay guest! The entire Division 1A on short-stays is a travesty that strips residents of reasonable rights.


Lord Mayor plans community forum

We Live Here met with Lord Mayor Sally Capp recently to discuss two of the most pressing issues affecting apartment residents – cladding and short-term rentals.

On the combustible cladding issue, we had the opportunity to talk about the inconsistent information emanating from council, the Victorian Building Authority (VBA) and various experts.

The Lord Mayor said the City of Melbourne would organise a community forum, to allow council to provide accurate and up-to-date information. We welcome the forum proposal and we are certain it will be a very well-attended event.

We were also encouraged by the Lord Mayor’s acknowledgement that there needs to be proper regulation of the short-stay industry so there is a level playing field for all. At present, OCs have to bear the cost of increased wear and tear on their buildings caused primarily by commercial short-stay operations.


Government cladding fund will help “up to 40 buildings”

In last month’s column, we estimated 30 buildings could benefit from the government’s belated largesse.

However, information from the Victorian Treasury has revealed that the state government plans to help fund the removal of flammable cladding on “up to 40 buildings”.

The other 800-plus Victorian apartment buildings identified as having cladding that is a risk to life, will presumably not get any funding assistance at all.

The list of apartment buildings to be denied assistance includes more than 30 that are classified as posing an extreme risk to life and more than 400 classified as high-risk.

The state government’s May budget figures show that it had estimated that cladding-affected buildings would need an average of $11 million each for rectification works.

On June 16, the government pledged $300 million of state funds to address the cladding issue, following the release of the Cladding Taskforce June report. Of that $300 million, just over $165 million was officially earmarked in the May budget for state government-owned buildings such as hospitals and schools.

This leaves less than $135 million to help at-risk apartment buildings.

Premier Andrews’ request for another $300 million from the Commonwealth was immediately rejected both by Treasurer Josh Frydenberg and Federal Minister for Industry, Science and Technology Karen Andrews.

To make up the shortfall, the state government announced an increase in a levy on building permits for projects with works over $800,000.

If the government hopes to raise about $2000 extra per average apartment lot, it could take a very long time to raise $300 million. Let’s work it out: A new apartment project with 100 lots might raise $200,000 in additional levies – so Victoria will need 150 new such projects approved, starting now, for the requisite funds to roll in. According to building figures available at City of Melbourne’s open data platform, around 25 such projects will be completed in 2019. Even at that rate, which has been abating, it would take up to six years to raise the cash needed.

When or if the additional money is raised, the fund is supposed to total around $435 million. Based on Treasury estimates, that’s enough to help only about 40 buildings of the 1069 identified as having dangerous cladding.

About 32 extreme-risk buildings, 409 high-risk buildings and 388 moderate-risk buildings will not receive any assistance.

Using the Treasury budget estimates as a basis, the cost of fixing all 1069 affected apartment buildings could exceed $12 billion. Whether the government eventually contributes $400 million, which seems exceedingly unlikely, the contribution will be less than 5 per cent of what it will cost Victorians living in dangerously clad buildings.


While Melbourne burns …

In June, Daniel Andrews was reported as wanting a “national partnership” on combustible cladding and for the issue be “put on the Council of Australian Governments (COAG) agenda” at its August meeting in Cairns.

While a “national partnership” seemed to be a euphemism for mendicity – to beg alms from Canberra – our interest was piqued by the prospect of having all the Premiers confer on the cladding issue at the 47th COAG meeting.

How did it work out? Well, COAG’s tropical August meeting came and went and the cladding issue was not a hot topic. Cladding does not appear to have been a COAG topic at all, not rating a mention in the official “Communiqué”, the quaintly aggrandised moniker of the post-COAG media release. It is disappointing because the COAG meeting was claimed to be about “improving the lives of all Australians” – apparently with the exception of those living in dangerously-clad apartments.

Did Premier Andrews simply forget to raise the combustible cladding issue at the Cairns conflab? A subequatorial clime and its attendant refreshments could be distracting but surely our Premier’s minders could have remembered to slot in the cladding issue, ad hoc, under “business arising”.

What’s happening while Melbourne burns? Is Nero fiddling?


If you would like further advice on owners corporation management matters, We Live Here can be contacted by email at campaign@welivehere.net.
The contents of this article or website are only intended to provide a general overview of the topics discussed. The author of this article makes no representations as to the accuracy or completeness of any information and the information is not intended to constitute investment, legal or professional advice. You should seek professional advice before acting or relying on any of the content. This article does not contain references to any specific company, organisation or individual, unless expressly specified.
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