10 minute read
ARAMA Report
ARAMA REPORT Truth, transparency and disclosure
our best weapons against fake news
An attack on term is an attack on the entire Management & Letting Rights Industry.
The Management and Letting Rights industry (MLR) is locked in a war in which we are being attacked by the deadly weapons of exaggeration, misinformation, lack of disclosure, hidden agendas, corporate greed and a need to exert power over other people, and fake news.
A tiny vocal minority is making a lot of noise trying to persuade the Queensland Government to cut the term of a MLR agreements from 25 years to three, or five or 10 depending on who you listen to. At the same time, they are also trying to ban short-term letting in Class 2 apartment buildings. With these constant attacks on the MLR industry, it has never been more important for resident managers to not only do a great job, but to market themselves within their complex, to let everyone know of the great work they are doing. rights faces a concerted attack from the opponents of long-term agreements.
If successful, the knockers will wreck the businesses of thousands of ‘mum and dad’ investors, and significantly damage Queensland’s tourism industry. They do not seem to care. The attack on term will see the death of a true ‘mum and dad’ business and place thousands of small business operators at huge financial peril.
Long term MLR agreements are in the best interests of the scheme as they save lot owners money for the general upkeep of the common area and deliver a better residential amenity via a more careful selection of tenants, more responsive service delivery and better management of guest behaviour.
Trevor Rawnsley,
CEO, ARAMA
ARAMA knows this because we deal in facts and not fantasy.
On almost every occasion when the remuneration paid for a long-term caretaking service agreement by an onsite manager, focussed on that single scheme, is independently tested against an outside service provider, they invariably find the onsite manager is underpaid, often substantially. Despite the misinformation being peddled by the knockers, most resident managers will trade off all or part of their deserved remuneration increase against an increase in term or a change in duties which more closely matches the needs of the scheme.
Long-term agreements equal long-term thinking
Someone needs to take a longterm view and act in the best interests of the scheme and not simply gouge their way to profit over one to three years. Conversely, short-term agreements equal short-term thinking and will result in increased costs for lot owners, which the knockers seem to conveniently overlook because it is an inconvenient truth.
It’s no surprise that the knockers cannot produce any independently tested evidence to prove that reducing the term of a caretaking service agreement magically reduces the costs to lot owners.
Because it is simply not true. ARAMA also knows that the vast majority of lot owners approve of long-term agreements because on the majority of occasions (85 percent) they keep getting topped up. Yes… willingly and via secret ballot. The knockers who really do wish to put their power over other people will argue and try to mislead you into thinking that lot owners are being bullied and controlled into voting yes for a top up or an extension. Voting for a top up or extension is not compulsory and is done in secret. No surprise that the knockers cannot produce any evidence to support these claims of bullying or voter harassment because it is simply not true. The MLR industry has been under attack for 30 years, and that’s why ARAMA was initially formed. We are a not-for-profit membership service organisation and advocacy group who banded together in the early 1990s to help government create better property laws that were in the best interests of the scheme and its lot owners.
Every five to 10 years government reviews its laws to make sure that they are ‘fit for purpose’. The MLR Industry has seen law reviews take place in 1992, 1997, 2002, 2008, 2014, 2020 and again now. But this time it is different. There is a concerted and co-ordinated attack on the MLR industry by groups and individuals who have a hidden agenda, are opposed to long term agreements and therefore the MLR industry. And they stand to make a huge commercial windfall from the demise of the MLR industry if they succeed. A study conducted by ResortBrokers recently estimated the total value of Australian MLR businesses at $4.8billion, spread across 3,679 schemes, with 250,652 lots. The MLR industry employs 33,000 people looking after $120billion in assets under management. All of this is now at risk.
We know that there are large interstate based commercial facility management companies waiting in the wings, who for years have been very keen to demolish the MLR Industry in Queensland, so that they can make a huge commercial gain but they know they just can’t compete with modern onsite management with long-term agreements. So, they have infiltrated organisations which claim to be acting in the best interests of unit owners to push their agenda. If term is reduced, they will very quickly jack up the costs just like they have in Sydney and Melbourne. Lot owners will be forced to pay higher levies and have no independent cost comparison (like there is now) to measure the true value of the caretaking service. MLR is now threatened by this tiny vocal minority who are proclaiming that long-term agreements are not in the best interests of a scheme, when clearly they are. And they have no facts to support their argument - just more arguments! We have reams of statistics and data to prove that long-term agreements work much better than short-term arrangements. They reduce costs, they increase value and they create a better community and better rental returns for lot owners.
Leading the fight against the MLR Industry are a couple of small but noisy mobs who exaggerate their own importance and claim to be speaking on behalf of their members, which they do not. We know that every MLR operator in this fascinating industry is behind ARAMA and supportive of our stance regarding long-term agreements. The same cannot be said about the other groups. You have to ask why the knockers are pushing to wreck long-term agreements. I see two main reasons.
One reason is that some people and some corporations stand to make a commercial gain from the reduction of term by picking up the facility management in that scheme.
The second reason is that it gives some of the unit owners who sometimes force their way onto a committee and hijack the agenda (a very small but noisy number) a chance to push their ‘power agenda’ and feed their appetite for control over others. Some of these people want to exert their power and influence over a scheme and they don’t care who they run over in the process. When they have a resident manager with a long-term agreement in the way they feel that their power is threatened, and they willingly spend other people’s money to advance their negative and destructive agenda.
Australian Resident Accommodation Managers Association is the peak industry body representing the interests of people who are involved in management rights.
For membership enquiries: national@arama.com.au | www.arama.com.au 1300 ARAMA Q (1300 27 26 27)
Those who oppose long-term agreements can provide no factual evidence that a reduction in term would benefi t a scheme. In fact, it’s been proved again and again that the opposite is true. No one has produced any real facts to support their argument that reducing term is in the best interests of the scheme. So now it’s time for the knockers to put up or shut up. Show us the evidence or let us all live (and work) in a peaceful and harmonious scheme.
The Unit Owners Association of Queensland (UOAQ) currently have an e-petition before the Queensland Government, which in our opinion is somewhat misleading. They are busy conducting surveys and creating whatever opinion pieces they can, to support their argument to reduce term, however they cannot show any facts that would support it because there are no facts to support their claims. ARAMA has the facts to support our assertion that a reduction in term will result in an increase in levies.
No, we don’t think so, however this is what will happen if the UOAQ gets their own way. The UOAQ is also advocating to outlaw short-term lett ing in Class 2 buildings which is where the majority of MLR businesses operate including almost every serviced apartment complex on the Gold and Sunshine Coasts and Far North Queensland. They cite unproven claims about compromised fi re safety and grab hold of any old argument that might strengthen their point. Banning short-term lett ing in Class 2 buildings would decimate the tourist accommodation industry in Queensland, now and in the lead up to the 2032 Olympics. It would also put an end to the very popular pastime of a unit owner being able to obtain a good rental return on investment on a lot owners’ holiday unit when they are not staying in it themselves.
No, we don’t think so. However, this is what will happen if the UOAQ gets their own way. Unit owners need to understand that those who are promoting these att acks on the MLR Industry are self-harming as it is supposed to represent unit owner/investors as well as unit owner/occupiers.
And what about AirBnB?
If AirBnB is a problem in your scheme, then MLR is the solution. Just ask the unit owners in Sydney, Melbourne and elsewhere who are overrun by AirBnB and other outside agencies. The knockers of short-term lett ing in Class 2 buildings are trying to convince the Queensland Government to force people with investment units to move into them fulltime, rent them out full time or leave them locked up. That would be a horrible outcome for the people of Queensland, which is aft er all, a state which relies on and generates a huge economic benefi t from tourism.
These ideas have already been tested in diff erent courts around the country and failed. The knockers of MLR use very emotive, even hysterical language to continually try to sway public opinion and the government. They are now saying that using Class 2 buildings as short-term accommodation is unsafe and that there will be another Grenfell disaster, that another building will erupt in fi re like it did in London. That’s a horrible analogy and so misleading. Thankfully, the vast majority of unit owners in Queensland do not agree with their views. The truth is that the vast majority of unit owners like long-term agreements. It’s obvious. Top-ups and extensions, which are part of the management rights model, have been agreed to on 85 percent of occasions. That’s clear evidence that unit owners acknowledge resident managers are doing a good job and want to extend the length of their term. We continue to ask ARAMA members to do the very best job they can, and to market their business and show everyone that the business model of management and lett ing rights is in the best interests of their scheme. We encourage all resident managers and unit owners who want to deal in facts to undertake a time and motion study, completed by an independent expert, to prove conclusively that the work the onsite manager does would cost far more if outsourced to separate outside service providers.
In the last several years there have been hundreds of these reviews completed and 87 percent of them showed that the onsite manager was in fact being underpaid, sometimes by as much as 40 percent. If the knockers get their way a resident manager will not be able to extend the agreement for good performance and for saving a scheme hundreds of thousands of dollars.
That’s a shocking outcome. To counter the att ack on term, we need more people to join ARAMA as soon as possible. We are fi ghting for our industry’s future, and we need the safety and strength of numbers. We also need all our existing members to promote ARAMA to those yet to join our association.
ARAMA is now calling upon every person or corporation directly involved as an operator, or service provider to the MLR industry to join ARAMA and encourage others to do so. This is your call to action so that ARAMA can be properly resourced to expand its research and continue to fi ght for the industry to which you have committ ed your time, money, and energy.
