Queensland Body Corporate Stakeholders Remain in Limbo


Tim Sheehan

Even with the result now declared, the outcome of the January 31 State Election in Queensland is causing uncertainty in the body corporate community.

The principal piece of legislation regulating the tens of thousands of strata schemes is the Body Corporate and Community Management Act. When the legislation was originally passed in 1997 it was acclaimed as leading the world in the regulation of strata. It was to provide for, and many believe it did allow, the best and most livable strata developments in the world to be created in Queensland.

Nevertheless, the Newman State Government had this legislation under a full review, with priority being given to the vexing issue of how to calculate and how to change the contribution lot entitlements.

Every apartment, townhouse and strata lot has contribution lot entitlements, and they are of critical importance to all lot owners because the contribution lot entitlements determine what share of the overall budget each lot owner must contribute. Lot entitlements matter because they directly impact how much each lot owner pays.

The area of lot entitlements has been controversial for some time and has been subject to several changes in law which might be said to have worsened matters. A plotted history of the changes include:

  • A system that existed from the mid 1960’s until 1997. The system was not perfect but the area was relatively uncontroversial.
  • The 1997 legislation regarding entitlements changed in 2 significant ways:
  • The way entitlements were calculated was altered
  • Owners were given an ability to have the existing entitlements changed from the old method of calculation to the new method. In hundreds of instances this allowed for owners who paid very high body corporate levies to reduce substantially the amount they paid. However, in the bodies corporate where there was a change, the rest of the owners were required to cover the short fall. A very small number of lot owners benefited on the expense of the other owners in their body corporate.
  • The law then changed again so that lot owners had additional limited rights to alter entitlements, and in those schemes where the entitlements had already been changed, affected owners had an automatic right to reverse the first change and to have the original entitlements reinstated.
  • A final legislative change under the Newman Government which “reversed the reversal”, taking away the right to have entitlements reinstated to the original, and to stop the whole process until the system was fully reviewed.

The level of change in this area demonstrates how emotive the issue became, and still is.

The Body Corporate and Community Management Act review process was outsourced by the Newman Government, to Queensland University of Technology (QUT) academics. I understand the portion of the review to do with contribution lot entitlements was completed and all body corporate stakeholders were awaiting a policy announcement. However, the election intervened in the final step, being new legislation, and the policy was not announced nor was the legislation changed.

At the time of writing this article the Electoral Commission has declared the result of the election, and all Queenslanders now know we have a new Government with a new Premier.

With the result of the election now declared, my personal view is that the final policy and legislation for contribution lot entitlements will be substantially different under the ALP government, compared to how might have been under the LNP government.

The policy questions which need to be answered include:

  • Should lot owners have a right to change the entitlements in their body corporate?
  • If the right is to exist, when should it be exercisable?
  • How should entitlements be calculated?

o   Using a system where all lot owners contribute roughly the same?

o   Using a system where more expensive apartments contribute more, because the owners are deemed to be more capable of paying?

o   Using a “user pays” methodology?

o   Using some other methodology?

We all need to know if the review of the Body Corporate and Community Management Act will remain a priority under the new Queensland Government, and if it is a priority, will the policy as to contribution lot entitlements be what is recommended by the QUT review panel?

It could be a case where having a final result, which is certain but imperfect, is a better result than having a system with constant change.

We wait to find out about the content of the new policy. When the outcome is known, SSKB will be across all of the detail for our clients. We will analyse the impact and provide each body corporate with a customised strategy which suits the needs of the owners. In the meantime, please contact your Community Manager if you require further information.

 



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Recent Comments

7 Comments

jason moore On February 24, 2015 | Reply

I would like to see change. My Lot entitlements were determined on advice to the 2000 originalDeveloper from BCS. That advice was to give my managers share of 31 lots a 2x share of liability and entitlement.

We never use the double share of resources supplied to the Body Corporate, the Local Government rating agency or the other Agencies which levy us based on our Body Corporate share in the Plan.

Can we have some fairness without a grossly expensive pathway to amend these arrangements please.

Scott John Kennedy On February 24, 2015 | Reply

All lot owners should pay body corporate based on the m2 size of their lot so those with bigger lots pay more & vice versa.

Carol Hall On February 25, 2015 | Reply

The current system is grossly unfair to owners of smaller units. It is not a matter of the owners of larger units being deemed to be more able to pay larger amounts, it is a fact of the size of each unit being relative to the amount of maintenance required. Obviously a 3 bedroom unit takes up a larger portion of the building than a studio or 1 bedroom so therefore the amount contributed should be greater. A three bedroom unit would have more occupants (usually) therefore more use of facilities, elevators, pools etc. To me it is a “no brainer” and Body Corps should be able to revert to larger pays more. P>S I have units in both categories so I am not being one eyed.

Laurie Alexander On February 25, 2015 | Reply

I believe the current system is ‘user friendly’& our complex of
89 properties has been finely tuned to suit our needs in the last
five years.

Philip Williams On February 25, 2015 | Reply

As a contracted Hi-rise building manager for past 7 years I know the cost of maintaining a hi-rise has virtually no bearing on the number of residents or lots. You can allow around 5% for that element of calculation. A building of one lot per floor will cost lot owners around 4 times as much per lot as a comparative building of 4 lots per floor. This is irrifutable and no honest and competent Judge, Specialist Adjudicator, Quantity Surveyor or Attorney General can dispute this on evidence. I suspect the honest and competent artisans in this arena must have left Queensland…..It is time to return.

Peter keys On February 25, 2015 | Reply

Body corporate Levies should be those I signed up for when I bought my unit. In buying a unit one does so based on one’s financial ability to meet contracted fees. The LNP’s changes to the Act turned that principle on its head and my levies increased by over 40%. Those LNP changes should be reversed.

Rick Douglas On March 1, 2015 | Reply

M2 should be the first criteria and then the next should be the level that the apartment is on ie 5th floor. A proportion, 10th floor a greater proportion

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