Last week, I explained why I believe that Body Corporate companies will come under the spotlight over the next few years.
This certainly invoked a huge response from you – our valued subscribers!
I’m still struggling to answer them all individually, but it seems that this article did strike a chord with many of you!
It only solidifies my theory that this is an issue that we’ll hear more about in the coming years.
I did provide a few examples in last week’s blog of how (in my opinion), customers were being charged exorbitant amounts of money for Body Corporate fees that were far beyond what was fair and reasonable.
Here’s another example…
Around 12 months ago, we listed a unit in the inner Northern Brisbane suburb of Alderley.
The complex was comprised of approximately 50 units and it was a traditional three-storey walk-up – in other words, no lifts or in fact, any communal facilities whatsoever.
This complex was all concrete and the only garden was a tiny offering right at the front boundary that was virtually maintenance free…and looked as though it hadn’t been touched for a long time anyway.
Upon investigation of the Body corporate Disclosure Statement (more about this in a moment), we found that the fees were almost $4000 per unit per annum.
Not surprisingly, the Sinking Fund was very healthy and held more than $200,000 (what do you spend money on other than new paint in such a complex?)
The ‘Admin’ portion of the Body Corporate fees was around $3200 per year.
Multiply this by 50 units and you have a figure of $160,000…other than some basic insurances, the majority of this money is going straight to the Body Corporate.
And how much work could possibly be made when managing a complex where there are no communal facilities and virtually no maintenance?
Four Body Corporate meetings a year, some basic correspondence to the owners…and probably not much else.
It’s certainly a gig I’d like to have (if it were a full-time job paying almost $160,000 per year).
I would think that it couldn’t possibly take more than 2-3 hours per week (on average) and I’d like to think that I have some idea of this given I have served on a ‘Body Corporate’ committee in the past for a complex that was (pardon the pun) a very complex situation as there were 3 distinct different stages (with in excess of 300 units in total) and somehow, there were two different Body Corporate companies involved at that time which created an enormous number of issues for everyone concerned.
My conclusion to the owner is that someone must be making a hell of a lot of money for ‘bugger all’ work (pardon the French).
My other beef with Body Corporate companies is their ridiculous costs involved for additional charges…such as an owner requesting something as simple as a Body corporate Disclosure Statement (which is necessary when preparing a contract for any property associated with a Community title).
Most Body Corporate’s will charge anywhere from $120 to $250 to provide you with this document…a statement that is required to be changed only once per year and in most instances, the person that issues the statement will do no more than type in the lot number, hit ‘save’ and email out to the sellers – probably no more than 5 minutes work at the most!
Can you imagine the backlash if a bank would charge $120 to $250 to print a statement for you and e-mail it to you…and still tell you that it could take up to 5 working days to get it to you?
Needless to say, there would be an outcry, and this topic would take ‘centre stage’ at any Royal Commission…so if the banks wouldn’t get away with it, how can Body Corporate companies?
Wouldn’t you think that amounts as high as $3200 per year would be enough to cover any work in administering something as simple as a ‘Disclosure Statement’? Apparently not!
As I’ve said, this issue will likely come to light soon…and my prediction is that you’ll hear more about it in the media before the New Year begins in 2020!
Until next week, Happy Listing & Happy Selling!