QRAMA Professional - Extracts June, 2001

Under current legislation, the position for Resident Managers who wish to take annual leave is somewhat unclear. There is a pool of experienced managers who offer their services as relief managers. Relief managers are not licensed for the particular building given the short-term nature of their position. The Office of Fair Trading has usually looked the other way in such circumstances.

The Property Agents and Motor Dealers Act 2000 ("the Act") has detailed leave provisions. There are fines for breach of those provisions.

Most Caretaking and Letting Agreements also specify leave provisions, and those provisions will continue to also apply if they are more restrictive than the Act. For example, although the Act allows up to 12 weeks leave, the Caretaking and Letting Agreements may restrict this to 4 weeks.

Significant legislation to affect residential accommodation managers

By Office of Fair Trading

Residential accommodation managers across Queensland will be aware the new Property Agents and Motor Dealers Act takes effect from 1 July 2001.

Fair Trading Minister Merri Rose says the Act is a significant piece of legislation that contains changes reflecting modern consumer law and requiring agents and managers to treat consumers fairly with a high degree of accountability and skill.

The Act contains changes particularly relevant to on-site residential area managers and owners of property.

The Act introduces nine licensing categories relating to the property industry with one called a Restricted Letting Agent. This category licenses an agent to let property and collect rent in multi-dwelling complexes. Current holders of a restricted real estate agent’s licence (letting only) will have their licence automatically converted to a restricted letting agent’s licence when the new Act comes into force.

Any person wishing to obtain this licence must make an application to the Office of Fair Trading and meet the following criteria:

They must not be affected by bankruptcy
They must be 18 years of age or older
They cannot have a conviction within five years of making the application
They must not currently be disqualified from holding any form of licence under the Act
They must have satisfied the educational requirements, which will comprise six subject modules from a curriculum approved under the Australian National Training Authority.

The licensee must reside in the complex and can manage more than one building provided there is no public roadway dividing the block, and has the body corporate’s approval to manage each building. If the licensee does manage more than one building complex, they must reside in one of the building complexes under management. Managers appointed by the Licensee will also be subject to the same requirements and must be licensed by the Office of Fair Trading.

All tenants will now be given extra protection through the new Code of Conduct, which provides rules specifically for the conduct of Residential Letting Agents. Those who already act professionally and ethically should have no difficulty in complying with the new Code, which aims to ensure a consistent standard throughout the State.

Another new and exciting initiative within the Act is the introduction of an Internal Dispute Resolution process. Under the Act every licensee must implement a procedure for handling complaints. The procedure must be practical in application and readily accessible by residents. Any complaint received must be investigated and responded to within seven days. The manager may respond by giving a reason for rejecting the complaint or accepting the complaint and rectifying/making restitution within seven days or an agreed time period. If the manager decides on the latter then certain procedures must be followed.

As we all know electronic banking and computerised accounting procedures are increasingly popular. The new Act has introduced a capacity for trust accounts where monies can be received and payments deducted. However, the licensee must obtain written approval from the Chief Executive of the Office of Fair Trading before the account can be opened.

The Office of Fair Trading urges all agents to ensure they understand their new obligations under the Act and comply from 1 July.

Further information and details are available on line at www.fairtrading.qld.gov.au or from your local Office of Fair Trading. The Act and Regulations can be viewed at the website.

The Office of Fair Trading plan to have Form 20 (Appointments) and all other forms available at the website for completion online and saving electronically. Those steps are probably six months away. For the present, Form 20 can be downloaded but must be completed manually offline. Section 115 prohibits any changes or editing of Form 20.

Financial Returns on Investment Property - Research Project

Research Project

QRAMA has responded strongly to a research proposal that has sought to prove that property investment in strata titled holiday accommodation does not provide viable financial returns.

QRAMA Secretary, Mr John Anderson, was alerted to an expression of intent by the Collaborative Research Centre (CRC) for Sustainable Tourism, which is based at the Griffith University campus on the Gold Coast.

Mr Anderson has responded to the CRC, offering to work with the researchers, but to examine the broader impact of the industry’s activities, rather than just the investment issue. Similar research led to a general criticism of community title schemes as residential property investments.

“QRAMA believes that many of the industry issues have not previously been well-researched and that many aspects of the industry’s role have grown,” said Mr Anderson.

“QRAMA has offered their support for the research project and indicated ten areas that could be considered in the project, and we hope that it will be progressed by the CRC,” said Mr Anderson.

QRAMA has suggested some areas for review in the CRC’s research, which include financial returns on investment property:

Investment Issues

The CRC proposal appears to aim at an evaluation of the effectiveness of strata title type accommodation as an investment, a role addressed in part by the Managed Investments Act and particularly by ASIC's Policy Statement 140.

The researcher needs to be aware that investors generally need to assess five areas when considering the effectiveness of an investment in strata titled holiday property:

net financial return from holiday letting
potential capital appreciation, a factor that has diminished significantly since 1990 but one that agents often highlight to buyers
benefits of the use of the property for family holidays, both from cost and convenience viewpoints
possible taxation benefits from a "negatively geared" investment
"lifestyle" and expected prestige benefits from owning such a property.

Investment Objectives

QRAMA is concerned that the present CRC research proposal may confirm the “profitless volume” of some buildings, without considering the investor's objectives and other benefits sought.

We suggest that any study should consider the forces in the industry that determine financial returns, including a review of the spread in the effectiveness of investments and the factors that cause that spread. Such a review would include five identified issues:

	*Extracts from*	June, 2001
	*QRAMA PROFESSIONAL*

	Property Agents and Motor Dealers Act Update Appointment of Relief Managers Significant legislation to affect residential accommodation managers Financial Returns on Investment Property - Research Project

Property Agents and Motor Dealers Act Update by Alan McKernan - Senior Associate Kinneally Mahoney Holidays and appointment of relief managers Under current legislation, the position for Resident Managers who wish to take annual leave is somewhat unclear. There is a pool of experienced managers who offer their services as relief managers. Relief managers are not licensed for the particular building given the short-term nature of their position. The Office of Fair Trading has usually looked the other way in such circumstances. The Property Agents and Motor Dealers Act 2000 ("the Act") has detailed leave provisions. There are fines for breach of those provisions. In summary, the position after July 1, 2001 is as follows: The Office of Fair Trading does not need to be notified of the holiday arrangements if the leave is for 30 days or less. The relief manager must be over 18 years of age. The appointment of the relief manager must be in writing and state the period of the appointment. If the licence requires insurance to be held, the relief manager must have their own insurance or be covered by the manager’s insurance. Evidence of the preceding 2 items (written appointment and insurance) must be held at the licensees office, i.e. generally on-site. If the leave is for more than 30 days, the Resident Manager must apply to the Office of Fair Trading, pay the appropriate fee, provide evidence of the matters set out above, and also provide enough information about the relief manager to enable the Office to decide whether the relief manager is a suitable person to hold a licence and is sufficiently qualified to perform the licensee’s activities during the period. There is a 12 week limit on the appointment of an unlicensed relief manager. This can be extended in certain circumstances with the approval of the Office of Fair Trading. There are fines for failure to carry out these steps. Most Caretaking and Letting Agreements also specify leave provisions, and those provisions will continue to also apply if they are more restrictive than the Act. For example, although the Act allows up to 12 weeks leave, the Caretaking and Letting Agreements may restrict this to 4 weeks. Significant legislation to affect residential accommodation managers By Office of Fair Trading Residential accommodation managers across Queensland will be aware the new Property Agents and Motor Dealers Act takes effect from 1 July 2001. Fair Trading Minister Merri Rose says the Act is a significant piece of legislation that contains changes reflecting modern consumer law and requiring agents and managers to treat consumers fairly with a high degree of accountability and skill. The Act contains changes particularly relevant to on-site residential area managers and owners of property. The Act introduces nine licensing categories relating to the property industry with one called a Restricted Letting Agent. This category licenses an agent to let property and collect rent in multi-dwelling complexes. Current holders of a restricted real estate agent’s licence (letting only) will have their licence automatically converted to a restricted letting agent’s licence when the new Act comes into force. Any person wishing to obtain this licence must make an application to the Office of Fair Trading and meet the following criteria: They must not be affected by bankruptcy They must be 18 years of age or older They cannot have a conviction within five years of making the application They must not currently be disqualified from holding any form of licence under the Act They must have satisfied the educational requirements, which will comprise six subject modules from a curriculum approved under the Australian National Training Authority. The licensee must reside in the complex and can manage more than one building provided there is no public roadway dividing the block, and has the body corporate’s approval to manage each building. If the licensee does manage more than one building complex, they must reside in one of the building complexes under management. Managers appointed by the Licensee will also be subject to the same requirements and must be licensed by the Office of Fair Trading. All tenants will now be given extra protection through the new Code of Conduct, which provides rules specifically for the conduct of Residential Letting Agents. Those who already act professionally and ethically should have no difficulty in complying with the new Code, which aims to ensure a consistent standard throughout the State. Another new and exciting initiative within the Act is the introduction of an Internal Dispute Resolution process. Under the Act every licensee must implement a procedure for handling complaints. The procedure must be practical in application and readily accessible by residents. Any complaint received must be investigated and responded to within seven days. The manager may respond by giving a reason for rejecting the complaint or accepting the complaint and rectifying/making restitution within seven days or an agreed time period. If the manager decides on the latter then certain procedures must be followed. As we all know electronic banking and computerised accounting procedures are increasingly popular. The new Act has introduced a capacity for trust accounts where monies can be received and payments deducted. However, the licensee must obtain written approval from the Chief Executive of the Office of Fair Trading before the account can be opened. The Office of Fair Trading urges all agents to ensure they understand their new obligations under the Act and comply from 1 July. Further information and details are available on line at www.fairtrading.qld.gov.au or from your local Office of Fair Trading. The Act and Regulations can be viewed at the website. The Office of Fair Trading plan to have Form 20 (Appointments) and all other forms available at the website for completion online and saving electronically. Those steps are probably six months away. For the present, Form 20 can be downloaded but must be completed manually offline. Section 115 prohibits any changes or editing of Form 20. Financial Returns on Investment Property - Research Project Research Project QRAMA has responded strongly to a research proposal that has sought to prove that property investment in strata titled holiday accommodation does not provide viable financial returns. QRAMA Secretary, Mr John Anderson, was alerted to an expression of intent by the Collaborative Research Centre (CRC) for Sustainable Tourism, which is based at the Griffith University campus on the Gold Coast. Mr Anderson has responded to the CRC, offering to work with the researchers, but to examine the broader impact of the industry’s activities, rather than just the investment issue. Similar research led to a general criticism of community title schemes as residential property investments. “QRAMA believes that many of the industry issues have not previously been well-researched and that many aspects of the industry’s role have grown,” said Mr Anderson. “QRAMA has offered their support for the research project and indicated ten areas that could be considered in the project, and we hope that it will be progressed by the CRC,” said Mr Anderson. QRAMA has suggested some areas for review in the CRC’s research, which include financial returns on investment property: Investment Issues The CRC proposal appears to aim at an evaluation of the effectiveness of strata title type accommodation as an investment, a role addressed in part by the Managed Investments Act and particularly by ASIC's Policy Statement 140. The researcher needs to be aware that investors generally need to assess five areas when considering the effectiveness of an investment in strata titled holiday property: net financial return from holiday letting potential capital appreciation, a factor that has diminished significantly since 1990 but one that agents often highlight to buyers benefits of the use of the property for family holidays, both from cost and convenience viewpoints possible taxation benefits from a "negatively geared" investment "lifestyle" and expected prestige benefits from owning such a property. Investment Objectives QRAMA is concerned that the present CRC research proposal may confirm the “profitless volume” of some buildings, without considering the investor's objectives and other benefits sought. We suggest that any study should consider the forces in the industry that determine financial returns, including a review of the spread in the effectiveness of investments and the factors that cause that spread. Such a review would include five identified issues: frequency and extent of building refurbishment location and facilities provided for holiday accommodation role of the manager in managing the facilities, marketing the building and maintaining the support of owners number of guests who return (and reasons why), proportion of bookings through agents, wholesalers and the Internet the expectation by guests in relation to service levels related to AAA Tourism classifications.
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