QLD State Recap – Summer 2020

Flammable Cladding

At a recent meeting with the Minister for Housing and Public Works, Mick de Brenni, SCA (Qld) was informed that only 55% of affected buildings had complied with their Stage 3 requirements, even though the deadline (at that time) was only two days away. The figures came as a surprise, especially when the QBCC confirmed their resolution to enforce the fines stated in the regulation – $6,672.50 per scheme – unless the scheme provided a reasonable excuse. We worked closely with the QBCC to urge bodies corporate to engage and register a fire engineer, thereby fulfilling their Stage 3A requirements. Unfortunately, the QBCC has not provided any updated figures to us at this stage, but we hope this awareness campaign successfully prevented bodies corporate from further unnecessary expense.

In an effort to aid consumers, the Queensland Government was also active on two other cladding fronts. An amendment was passed which fixed fees for QFES Fire Engineers, with the significant reduction in the hourly rate being a positive step that should save money for lot owners. Unfortunately, the fee restrictions do not affect the amounts charged by non-QFES fire engineers for works under part of the Stage 3B process, but it is a start. Additionally, the new Queensland development code has come into effect, which specifically prohibits the use of aluminium composite panels (ACPs) with a polyethylene (PE) core greater than 30 per cent (by mass). While this is a significant improvement for future buildings and will have benefits in the long term for the safety of the strata communities, it comes too late for many existing strata schemes, who must fund the costly audit process as well as potential rectification costs.

North Queensland Insurance Crisis

The ongoing ACCC Northern Australia Insurance Inquiry continues to uncover worrying trends. In our response to the Second Update report, we included a number of member-reported statistics, all of which indicated that the northern Queensland insurance issue is at crisis point. In Queensland, a strata community must insure its common property, body corporate assets and any multi-unit building for full replacement value. If they can’t comply with this requirement, then they must seek the authorisation of the Commissioner for Body Corporate and Community Management for alternative insurance in a form that provides cover as close as possible to full replacement value. Member feedback suggests the reality is that market conditions have deteriorated significantly, and it has now reached the point that some strata communities simply cannot obtain any insurance, and the coverage being offered by the few insurers who remain in the northern market is quickly becoming unsustainable.

A small ray of light came at the end of November, when the Insurance Council of Australia (ICA) agreed to investigate the feasibility of a reinsurance pool. ICA reiterated this point to us during a meeting and, while we are aware that some providers still have reservations about the effectiveness of a reinsurance pool, we are pleased that they are open to considering the options.

This potential solution was then overlooked by the ACCC in the Second Interim Report released in December, where they expressed the belief that targeted affordability assistance will be the best method to increase rates of insurance in Northern Australia.

Queensland Property Law Reform

With regards to the ongoing property law review, SCA (Qld) completed submissions to all five draft modules as well as the BCCMA regulation and we look forward to seeing our recommendations implemented. Our submissions expressed concern that sections of the draft are overly convoluted, require specialised knowledge, and will decrease transparency, thereby resulting in further reliance on strata managers and lawyers as well as a greater burden on the Office of the Commissioner for Body Corporate and Community Management in the form of adjudications and dispute resolution applications. Thankfully though, the modules also include many sensible reforms that will do much to streamline and modernise body corporate procedures, reduce body corporate costs and enhance protections for unit owners. One very significant proposed amendment is to place limits on the number of powers of attorney that one person can hold.

The review is now entering its seventh year, so while we appreciate governmental efforts at consultation, we are intensifying our call to government to finally get to the heart of some of the more meaningful changes to the Act. We will continue to push this issue on behalf of our members as well as the strata industry as a whole.