Management Rights Term Issue – Where are we now?

20 December 2022

As readers will be aware, as part of its wide ranging review of the community titles legislation, the Queensland Government has established a Community Titles Legislation Working Group (CTLWG) to provide advice on key community titles related issues. Part of that advice will include guidance on something that is dear to all of our hearts – the term of caretaking and letting agreements.

It will not have gone unnoticed by most readers that there has been significant debate and public comment on the topic. Unfortunately some of the more extreme arguments have served to cast significant doubt in the minds of some management rights operators and buyers about the future viability of management rights businesses.

I am not going to go into the various arguments here, but it’s probably fair to say that while some of what has been said has been fanciful and one sided, overall there has been some thoughtful and well balanced comment and input. For that reason I’m confident that a resolution will be reached that balances the interests of all of the stakeholders involved. Unfortunately it’s going to be some time before we get there. Currently, submissions are still being made to the CTLWG with a report to the Government likely to be some time away. Various interest groups are also making representations to the responsible ministers and others in Government. That means that any changes to the legislation may well be 1 to 2 years away.

It’s a state of flux that none of us are happy with but one we will have to live with for the time being.

While there is never any certainty in dealing with the Government I am hopeful that the outcome will look something like this:

Existing buildings/agreements

Given the devastating financial impact that a reduction in the term in such buildings would have, it is hoped that any agreements relating to existing schemes would remain subject to the current rules of the module that applies to them. That would mean that existing buildings which can have 25 years would continue to be able to have 25 years indefinitely. Those buildings restricted to 10 years would continue to have 10 years.

New buildings

(a)  Few if any changes to standard module buildings, so continuation of the maximum 10 year term.

(b)  Tighter controls over what buildings the original owner/developer can place in the accommodation module.

(c)  For accommodation module buildings, a likely maximum initial term for any caretaking agreements authorised during the original owner/developer control period to be 10 years (potentially longer for letting agreements), but with the potential to extend that to up to 25 years once the developer no longer controls the body corporate.

(d)  If a developer has entered into an off-the-plan lot sale for a scheme that is yet to be established when the new rules come into effect, the existing rules of the module and agreements disclosed as part of that sale will apply.

Of course, no one can be sure that the above will be the final position but at the moment that is my best guess.

As managers there are a couple of things that you can do. The first is to do the best job that you possibly can. Buildings with excellent managers work for everyone/everything involved, from the owners down to the building itself. The second thing you can do is to join and support ARAMA. If you weren’t already aware, ARAMA is part of the CTLWG and is your voice in that group.

As I mentioned above, we are currently in a state of flux, however I am quietly confident that when everything is said and done an outcome will have been reached that equally balances the interests of all those involved, provides appropriate protection for owners maintains the value of existing businesses and ensures the viability of new businesses.