The development that delivers harmony

For many years, developers have been cookie cutting how townhouse projects are structured. Purchasers are usually forced to accept the products on the market as it is quite often the case that no alternative product is being supplied. Typically, developers tend to capitalise on the opportunity to create management rights in a townhouse project without giving too much thoughts to any other alternative arrangements that could be put in place in lieu of a caretaking and letting agreement. It is fair to say, it is quite “normal” for townhouse projects to have a management rights without any regard to the suitability of having one in place. This was viewed as an opportunity by Diligent Development to do something different and the creation of Millers Grove.

The Developer Diligent Development is a Brisbane based residential property development company formed in 2007. It specialises in providing good quality and economical housing with a specific target for owner occupiers in the Greater Brisbane market. This vision was evident to be a great success through one of its projects, Penarth Residences at Runcorn, where 90% of the freehold terrace homes were sold to first homeowner buyers and owner occupiers within a few months after the project launch. The project – Millers Grove

Diligent Development is behind a brand new 28 unit townhouse project located at Eight Mile Plains named “Millers Grove”. As part of Diligent Development’s vision to create a new community titles scheme targeted at owner occupiers, it engaged Kevin Pai, one of the Brisbane partners at Australia’s leading strata and property law firm, Bugden Allen Lawyers, to structure the project in a way that would align with the developer’s vision. In order to design a scheme that will be sustainable in the long term and to match the demand of owner occupiers, the developer was presented with two scenarios: the first being the “typical” structure where a management rights is put in place at a fee per unit per year for the next 25 years, and the second being a structure where no management rights is put in place and instead, the proposed body corporate can engage contractors on a short term basis to perform the grounds maintenance works required for the scheme.

The management rights for this particular project would have sold for around $150,000 but instead, the developer was agreeable to sacrifice the opportunity to create and sell management rights and decided to proceed the project without a management rights. Why? The budgeted administrative funds reduced by roughly 33.7%, and to put this in context, that would equate to roughly half a million dollars in savings for all the owners for 25 years (i.e. nearly $18,000.00 per unit).

Take away points Buyers are becoming more aware of the long term implications of owning a strata title property. It is important for developers to carefully consider (or re-consider) the structure put in place for new projects and the financial implications of those structures. Millers Grove is a perfect example where the developer was willing to go to that extra step to ensure that the project is properly structured in a fair and sustainable way. We trust the owners within Millers Grove will be well placed to create a harmonious community without having the need to read down on caretaking agreements and having to unravel the complicated agreement(s) that may have been otherwise put in place.

Article supplied by Diligent Development

Website diligentdevelopment.com.au/

Email info@diligentdevelopment.com.au