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2021 - a big year for apartment buildings

Tom Bacon

In many ways, 2021 was another annus horribilis for a lot of us, particularly in Melbourne.

Spending a large portion of the year in lockdown has meant that for many apartment dwellers, far too much time has been spent working, living and educating from home.

As we look back on the year that was, we can see that although a lot of progress has been made in the apartment sector, there is a still lot that needs to be achieved. Over the coming 12 months, there will need to be a concerted effort in lobbying to see an improvement in fortunes for those owners in the high-rise community.

First, we can celebrate the good that has come out of this Year. For starters, we have the new Owners’ Corporations and Other Acts Amendment Act 2021 commencing on December 1. This new legislation brings some important reforms that will improve governance for owners’ corporations (OCs).

We will see the end of “proxy farming” which will mean that committee members will no longer be able to obtain dozens of proxies and hijack the outcome of meetings. This important reform will also hopefully lead to greater turnover of personnel on the committees, and fresh faces, reinvigorated enthusiasm and new ideas that ought to be embraced.

We are also going to see the end of the widespread practice of developers entering the OC into long-term contracts (more than three years) with service providers. These long-term contracts never benefitted OCs, and only served to line the pockets of the developers. This was a very welcome reform and I’m pleased to see the Victorian Government embraces it.

The exception to this is where a resort or hotel management contract is proposed to be entered into by the developer. This is sensible, and because of the disclosure laws, all owners will be fully aware about these types of arrangements long before settlement.

Of course, the new legislation did not hit the mark in every respect. Victorians are dismayed that the government chose to protect builders and developers from being sued for building defects and cladding, by keeping the limits for a special resolution to be obtained before taking legal action if the claim is more than $200,000.

We are seeing more and more new buildings being completed with millions of dollars in building defects. Consumer protection for buyers of apartments is woefully lacking, and it is telling that Consumer Affairs Victoria was prevented from embarking on any serious reforms in this area. The joke is that in Victoria, a person has greater consumer protection laws if they buy a $50 kettle, but less protection if they buy a $1 million apartment.

However, the big news story of 2021 remains the funding shortfall of Cladding Safety Victoria. Hundreds and hundreds of apartment buildings with combustible cladding will not be funded by the CSV, despite qualifying for their program. The Victorian Government has prioritised its public buildings with the money that was announced for the OC sector. And now the CSV will wind up its program in the next 18 months and leave the rest of the sector high and dry, unless the Victorian Parliament steps in and replenishes the CSV’s funding program.

Expect this to be an election battleground •

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