Management Rights Submission

In our recent Member Update we advised members that we recently made a submission on the issue of management rights to Government. This submission advocated for significant reform of the legislation concerning management rights. At the outset, SCA (Qld) acknowledges the value of caretakers and the role they play when appropriately engaged - for the right reasons and on the right terms. SCA (Qld) is supportive of facilities caretaking (and the concept of management rights) in their appropriate context. However, this context has been somewhat blurred over the years and has resulted in a sub-optimal experience for many people living in these schemes. Like many pieces of legislation, the unintended consequences come to the fore over time and as a result, there needs to be a review to have the consequences rectified and reform the policy to reflect modern times. Specifically, SCA (Qld) put to Government a reform package based on the following pillars:

• The total term of new service contracts, including for management rights, should be limited to 3 – 10 years, depending on the regulation module that applies. IMPORTANT: Limits on the total term of service contracts should not apply retrospectively to existing contracts.

• The BCCM Accommodation Module should only apply where the lots in the scheme are predominantly short-term accommodation lots. This would be consistent with the original intent of the Accommodation Module being for schemes used predominately for holiday letting, serviced apartments or hotels.

• Bodies corporate should be empowered to decide the terms of any service contracts for the maintenance and management of their common property and building. Consistent with the position in other Australian states and territories, there should be a restraint on an original owner / developer imposing a long-term service contract on a strata community.

• The extension, renewal or replacement of a service contract, including existing contracts, for a term of more than three years should be authorised by special resolution of a body corporate. The value and interest held in service contracts should be respected, but strata schemes and lot owners should have better protections.

In arriving at this position SCA (Qld) wishes to share with members the important issues that the Board and legislation committee considered.

• SCA(Qld) consulted as widely and as feasibly possible. The Legislation Committee – which has a wide array of voices – has been talking with members and deeply considering the SCA (Qld) position for 8 months.

• SCA (Qld) recently held a Strata Hackathon with senior members including managers, lawyers and other sector interests of all types. All owners of SCA (Qld) member businesses, life and fellow members were invited to attend. Throughout the day there was a free-flowing discussion of ideas for reform to better the sector. The number one issue raised as causing problems for schemes and the industry more holistically was the current management rights framework. This submission reflects many of the solutions offered by the group to improve the management rights framework.

• SCA(Qld) is not an organisation that exists to only represent strata managers. We are much wider than that and have been for a very long time. We represent the industry. As such the submission has appreciated the concerns and impacts of this legislative change on the sector broadly.

• Strata owners are a critical part of our sector and should not have their property rights diminished because they have chosen to own property in a scheme arrangement. SCA (Qld) is a promoter of positive scheme arrangements in all their forms; schemes that make the sector attractive to owners, more liveable for all, and easier to manage. Honouring the role of the body corporate and empowering the body corporate to act in their own best interest enshrines their property rights.

• SCA (Qld) has a balanced and measured position which equally protects all stakeholders.

• We have taken a position which is for the betterment of the sector as a whole; with extensive consultation taken.

• IMPORTANT - SCA (Qld) is not advocating the writing down of existing contracts in any way. People who have purchased management rights should have their contracts honoured.

• It is worth remembering that strata managers and other services contractors in the sector only have a maximum term of three years, and very few contracts (if any) can be found in other sectors of the economy that are as rigid and lengthy as many strata management rights contracts are.

We can assure you that every effort was taken to listen to as wide an array of voices as possible. As stated above, the SCA (Qld) team worked in conjunction with the Advocacy Committee and Legislative Committee, along with the SCA (Qld) Board for many months on this issue.

The SCA (Qld) team are more than happy to speak with any member about this issue and invite you to reach out to us at advocacy.qld@strata.community