Beautiful One Day Debating the Next

It’s been another tough couple of weeks for the Qld management rights operators.

A large mixed residential and holiday letting townhouse complex on the Gold Coast knocked back a grab for a new 25-year caretaking and letting contract. The mega tower Q1 withdrew its termination notice at its AGM on Monday but only after coming to a confidential agreement with the manager after mediation.

The case for and against management was hard fought in both bodies corporate and in both cases those opposed to management narrowly carried the day. There was a lot of intense lobbying and by the look of the Qld governments legislative reform agenda there is a lot more lobbying about management rights ahead.

The Qld government has confirmed it is undertaking a review of the laws about long-term management rights.   The anti management rights lobby want three year terms to replace the current laws allowing up to 25 years in some cases.

As the debates rages both in the upper echelons of government and at the coalface at increasingly complex and acrimonious body corporate meetings, both sides would do well to take head of the sage words of Lobbyist Peter Cullen quoted by John Warhurst in ‘Behind Closed Doors; politics, scandals and the lobbying industry’ (2007 ) University of New South Wales Press –

‘…if you want a favorable decision you must couch your arguments to appeal to those you are trying to persuade. Far too many interest groups lobby on the basis of what is good for them without in any way trying to demonstrate that what is good for them is also in the public interest’

In this round of debate about the future of management rights the unit owners will be arguing that public interest is not served by security of tenure for an industry that’s not performing for those it’s meant to serve. In the 2010 summer newsletter of the Unit Owners Association (Qld) Garry Maynard writes of his own experience where two holiday letting unit are returning less than 1.5% net on prices he paid six years ago. He quotes another case in far north Queensland with this sad history –

1993 2008
Body corporate levies $1 800 $4 500
Council rates $1 000 $2 600
Income $ 10 140 $11 673

The proponents of management rights will need to show how they will drive up income to keep pace with expenses. In a system that pays managers on the gross room rate not the net profit to investors, this is unlikely to happen.

Those opposed to long term lock-in contracts for caretaking and letting will need to show that the alternative systems of employed managers and off-site letting will not result in anarchy. They will point to Victoria where towers are managed by building managers employed by the owners’ corporation and offsite real estate agents arrange letting. Melbourne seems to be doing fairly well under this system. The Melbourne property market is surprising everyone. New York and Europe operate without lock-in contracts for managers and building there don’t seem to be falling down either.

If the debate is about public interest and not vested interests the management rights lobby is going to need some hard numbers to win and they just don’t seem to be available.

 

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