Strata pantomime villain takes centre stage

It seems strata may have a new pantomime villain (like we need one).  This week we look at multi-millionaire developer of fancy pants apartment blocks Tim Gurner.

He once shocked an economic conference by saying the country needs 40-50 per cent unemployment.

If that wasn’t bad enough it’s alleged he was the first public figure to draw parallels between young people eating smashed avocado and not being able to afford to buy a home.

Now this Melbourne developer of luxury apartments, and some of his customers, are in conflict as defects start to surface in his uber-fancy St Moritz block in the Victorian capital.

It’s not so much how the mighty have fallen (because he hasn’t) as how the prices have fallen, and in a rising market.

But before that, we look at the new regulations for strata managers that come in nest week (Feb3) and wonder how much difference they will really make.

And finally, Jimmy comes up with his radical plan to build more affordable apartments, saying that affordable luxury is impossible but liveable affordability may be the way forward

If you can tolerate a bit of noise from your neighbours, and one lift instead of two, surely apartment blocks could be built more cheaply without the risk of them falling down. 

That’s all in the Flat Chat Wrap.

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Flat Chat is all about apartment living, especially in Australia.
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Recorded by Jimmy Thomson & Sue Williams; Transcribed by Otter.ai.
Find out more about Sue Williams and Jimmy Thomson on their websites.

Transcript

Jimmy

Well, I don't know if you're back, but we're back. We took a break last week. We put in a rerun of the Lynton Besser interview that we did last year, and a hundred people, a hundred more people listened to it.

So it's now the second most listened to podcast. In terms of podcasts, it's actually the most listened to podcast we've ever had.

Sue

Oh, fantastic.

Jimmy

Which has got about 600 listens now. The most listened to is Hyperbole Towers, our little comedy that we did during COVID. That's nice.

But yeah, so a lot of people caught up with that. So the whole Netstrata thing is still very much alive. We'll be briefly talking about that.

We'll be talking about the man who is arguably the least popular developer in Australia right now, as a person rather than a developer. And we'll be talking about the new restrictions on your strata managers in New South Wales, which came in this week. A lot to get through, as you always hate me saying, Sue.

I'm Jimmy Thomson. I edit the flatchat.com.au website.

Sue

And I'm Sue Williams, and I write about property for the Sydney Morning Herald, the AFR, The Age and Domain.

Jimmy

And this is the Flat Chat Wrap. 

Just briefly, we were talking about the whole Netstrata thing before the introductory music. Now, did you know that the Netstrata inquiry report was about to be published?

Sue

Yes, and it's been delayed again, hasn't it?

Jimmy

It's been delayed, like it's something like nine months now. And apparently, it was all set to be published. And there's a really detailed story on the ABC News website.

But it sounds like because Netstrata had paid for the inquiry, which was being done by McGrath Nichols, an independent group that does that kind of thing.

Sue

They paid for it themselves? Yep.

Jimmy

But it gave them the ability to see the report before it went out.

Sue

And that's ludicrous, isn't it?

Jimmy

Yeah. So they have basically gone back to McGrath Nichols and said, oh, here's some information that you didn't get when you were doing the inquiry.

Sue

And this is some counter arguments to the ones you put in the paper, presumably.

Jimmy

Yeah, this, yeah. So this is, I'm doing air quotes here, folks. This is factual stuff.

It's not opinion. It's factual stuff, they say, that wasn't in the initial inquiry, wasn't available to McGrath Nichols, but now has been made available to McGrath Nichols.

Sue

Why didn't they give it to them in the first place?

Jimmy

70 pages of this stuff. 70 pages. 7-0.

And there are people, some cynical people might think that... Like us. Like us.

That somebody is playing fast and loose. You know, whenever I mention Netstrata, I get emails from people saying, you know, Netstrata came in and told us that they were going to make our lives better. And within a year, our levies had doubled.

Somebody said that they found out that Netstrata was taking commission, which they denied, for insurance. So they said, well, look, we've got our own insurance. So we're not going to pay you the commission that you get for getting us insurance.

And they've said, oh, check your contract. You still have to pay us the commission for any insurance that you get.

Sue

Even if you organise it yourself.

Jimmy

Even if you organise it yourself.

Sue

That's shocking, isn't it? Isn't it appalling that they're allowed to get away with this?

Jimmy

And that's supposed to all stop like this week.

Sue

Great. And is it going to?

Jimmy

Or is it next week? Next week. Next week, February the 3rd, the new laws about Strata managers come in.

And we could go straight into that.

Sue

Yeah, sure. I'm interested to hear them.

Jimmy

I have a piece of paper here. So this was published on the Strata Hub by New South Wales Fair Trading. That's where everybody in every scheme in New South Wales is supposed to be registered on this hub with the details of the chair and the Strata manager and whatever.

And I think it's safe to say that right now, most street schemes don't. The reason they don't is because the committee chairs are saying, you want us to put our mobile number on a website that is accessible to everybody on the planet. Are you insane?

So that is having limited effect, but some people are on it. And they all got an email last week or the week before saying, hey, these are the new rules and regulations about Strata managers. Please send these out to your owners.

I have not yet met an owner who has received this apart from me. And I only got it through the FlatChat website.

Sue

Right. And what does it say?

Jimmy

OK, well, here we go. Understanding Strata managers' new disclosures in more detail, it says. Currently, your Strata manager can only accept any commission or training service linked with their management of your Strata scheme if, one, they include the details in the agency agreement.

This is the contract the owners' corporation negotiates with them when the Strata manager is being appointed. Or two, they gain approval first at a general meeting of the owners' corporation. So they say, yeah, they can still have commission, but they've got to tell you either in the contract or at an AGM.

From 3rd of February 2025, your Strata manager's approval request at a general meeting for a commission or training service must include a new written explanation.

Sue

So then it's going to draw attention to it. It can't just be hidden away in the small print, really.

Jimmy

Yeah, so they can say, we're getting commission for this and this is why. They need to include why approval is in the owners' corporation's interest and such details as the commission amount, which seems fair. But you know how these things work.

They will say, we are getting this commission because we believe it's in the best interest of the owners' corporation to have this commission paid to us because it will improve our services we offer and our efficiency. And who's to say that that's not a valid thing? And the problem is not that owners' corporations are stupid.

It's that the majority of people who go to these meetings are just happy to go along with what the Strata manager tells them because they trust them.

Sue

And they feel they're working in their best interests.

Jimmy

And they feel they should be.

Sue

You know, a fair assumption, really.

Jimmy

And they think, well, the government wouldn't allow them to rip us off, would they? But, you know, there's a lot of Strata managers out there to whom that applies, that they do look after the best interests of their customers because they think that being good to their clients means that their business will prosper. There are others who look at it and say, how can we make the most money out of this that we possibly can without breaching the law?

That's two very different attitudes. And I'm calling those two attitudes the good guys and the bad guys. And the bad guys are looking at your Strata scheme and thinking, if we limit the number of hours that our Strata managers spend on this Strata scheme, it's going to improve our profits.

And there are other Strata managers who are looking at it and saying, if we give this Strata scheme that's struggling a little bit some good advice and help them out, they will tell other Strata schemes how good we are and we'll get more business that way.

Sue

Which is a completely fair assumption because at the OCN, the owners' peak body...

Jimmy

Owners' Corporation Network. That's right.

Sue

On their forum, there are often people writing in saying, can anybody suggest a good Strata manager for my building, which is, you know, 100 units in this area? And people are looking for recommendations all the time. So I think that's a really fair assumption.

Jimmy

Okay. Now, the other things that are coming in next week from February the 3rd, a Strata manager will also need to make certain disclosures before they are appointed to your scheme about, one, the suppliers that they use routinely, such as if they have given advice about Strata plans or community land plans to your building developer in the last two years, such advice may indicate that the Strata manager has an ongoing relationship with the developer. So basically what they're saying in English, what they're saying is at your first AGM, when the Strata manager is looking to be appointed, they have to say, oh, by the way, in the last two years, we have advised this developer on six different developments. Now, if people in the owners' corporation, the owners want to go, hang on, that seems a bit cozy.

Whose side are you on? I think they're entitled to ask that question.

Sue

Absolutely.

Jimmy

They also have to make real-time written disclosures as soon as they become aware of any connections between your scheme and their suppliers. So as soon as your scheme approves maybe a plumber or an electrician to come in and do regular work, they have to say, oh, by the way, guys, we have used these guys six times in the last two years. And you just need to be aware of that.

They have to disclose more information at your AGM, which includes any connections they have with suppliers or the building's developer. They have to talk about any connections they've had in the previous 12 months. They've got to provide clearly itemized quotes for insurance policies.

This includes setting out commissions and insurance broker fee amounts and who these are ultimately paid to. So for instance, our good friends at Netstrata who tell people that they're not accepting commissions, but their brokerage does and that money ends up in the Netstrata coffers anyway. They have to declare that now, I think.

Sue

It's really just semantics, isn't it really?

Jimmy

Yeah. But, you know, what they say, this is a really interesting document and it's really important. But in the document that's sent out, it contains links to the Strataguide.

And it says, this is all explained in this online Strataguide, Fair Trading Strataguide. No, it isn't. It's not there.

Now, it might be there and I am not able to find it.

Sue

Well, if you can't find it, Jimmy, how's anyone going to find it?

Jimmy

That's kind of what I was thinking, but didn't want to say. But, you know, maybe I am less computer savvy than most people, but I don't think so. So maybe there's a link down or maybe they don't want it to come live until the 3rd.

But there's too much ducking and diving going on already. There's too many smokes and smoke and mirror situations. We really need...

This is all supposed to be about transparency. And if you can't see where the transparency is, it's not transparent.

Sue

That's right.

Jimmy

And on that note, when we come back, we are going to talk about someone who may qualify as the least popular developer in Australia right now. That's after this. And we're back.

And Sue, you have discovered someone who might qualify as the least popular developer in Australia at the moment.

Sue

There's lots of competition really.

Jimmy

I'm thinking, I'm thinking that's a low bar.

Sue

Well, it's interesting. In 2023, I went along to this conference. I was reporting on a property conference with commercial real estate.

And there was this guy who I'd never come across before, Tim Goerner, a developer. And he's kind of quite an elite developer. He develops really fabulous apartments for people.

And he's worth about, I think, almost $1 billion. So he's a multimillionaire, almost a billionaire, but not quite. And he was astonishing at this conference because he started telling the audience that he wanted to see Australia's unemployment rate jump to 40 or 50% in order to cause pain in the economy and remind people they work for the employer, not the other way around.

Jimmy

Oh.

Sue

And he also claimed traders had pulled back on productivity and had been paid a lot to do not much in the last few years.

Jimmy

Right.

Sue

It was quite incredible. I think everybody in the room was like, wow, this man, is he actually, does he realise what he's saying?

Jimmy

Do you think he was joking?

Sue

No, it caused an enormous outcry.

Jimmy

Yeah.

Sue

And later on, he was forced to back down and apologise for his comments because I think that probably really hit his share price, I imagine.

Jimmy

Right.

Sue

It kind of certainly hit his credibility. He remained extremely unoffensive. I mean, people criticised him as offensive and out of touch.

And it kind of caused a global sensation because even a US Democrat weighed into the discussion and said that we should remember that major CEOs have skyrocketed their own pay so much that the rate of CEO to worker pay is now at some of the highest levels ever recorded.

Jimmy

Right.

Sue

And it was another MP, Liberal MP, Keith Wollahan, said that he was completely out of touch and the loss of a job is not a number. It sees people on the streets and dependent upon food banks. Right now, families are working multiple jobs just to stay afloat.

Jimmy

Right.

Sue

Because Tim Gurner, he was just so cavalier, the way he said, oh, yes, yes, we need 40% to 50% unemployment. And when you look at Tim Gurner himself, I mean, in 2017, he caused a similar uproar after he criticised a lot of people, well, first home buyers, and said, well, the reason that they're struggling to enter the property market is because they're spending $40 a day on smashed avocados and coffee and not working.

Jimmy

Right. So he was the first one to come up with the smashed avocado analogy.

Sue

I think he was. He was saying it's a real problem with this generation. They expect to be able to buy a three-bedroom home in Morvern or Prahran and Alexandria and Sydney and they're just not pulling their own weight.

You know, it's extraordinary, really. When you think, well, how did Tim Gurner start out? Tim Gurner started out, he bought his first property at 18 years old, which is quite admirable, really.

But his boss offered to purchase the property for him to renovate and then the pair split the profits when it was sold.

Jimmy

So he had a leg up.

Sue

Yeah. And then shortly afterwards, his grandfather lent him $34,000.

Jimmy

Right.

Sue

And this was quite a few years ago. So that's a lot of money. It's even a lot of money now.

To acquire a bank loan in order to start his own gym while he was at university. So, I mean, he had all this help.

Jimmy

Yeah, yeah. He just doesn't want anyone else to have it.

Sue

Yeah, that's right. And then he criticised working people. But the reason he's back in the news is that he's got this big development in Melbourne, really swishy.

Jimmy

It looks nice.

Sue

Bougie development. Yes, absolutely. It's called St Moritz in St Kilda.

Jimmy

Right.

Sue

And now it's the subject of a number of complaints about defects.

Jimmy

Uh-oh.

Sue

And one of the apartments was offered for sale for a $1.3 million discount. It's against the price achieved in 2022.

Jimmy

Hang on a minute. Weren't we just talking last week about how apartment prices are going up in Melbourne?

Sue

That's right. They certainly are.

Jimmy

But not in the St Moritz.

Sue

Well, no, because there's all these allegations about defects.

Jimmy

Right.

Sue

So it may be that somebody wanted just to get out.

Jimmy

Yeah.

Sue

You know, didn't want all the hassle. Maybe, well, some people have said, well, no, no, no, they found another house and they wanted another apartment and they wanted to get rid of this one quickly so that they could go to the other one. Well, maybe that's true.

But nobody gives up $1.3 million likely.

Jimmy

Maybe it's Tim Gurner. He can afford it.

Sue

So one resident, he accused the Gurner Group, Tim Gurner's company, of encouraging owners who had assisted in fixing defects to sign non-disclosure agreements about the defects.

Jimmy

Really?

Sue

That's amazing, isn't it?

Jimmy

Well, that's illegal.

Sue

Is it?

Jimmy

Well, you know, it's illegal in terms of if you're in a strata scheme and you're having work done to common property and that all has to go on the record and that record has to be available to everybody who lives in the building and prospective purchasers through the people who are selling. So to get people to sign NDAs, which is trying to override strata law, I would say. Because he's probably got better lawyers than we have.

In which case I withdraw and apologise unreservedly.

Sue

But he's actually got an apartment in the complex as well.

Jimmy

Right.

Sue

And he briefed the media that the apartment was worth as much as $15 million but it's now on the market. So he's trying to get out of that apartment complex as well for between $12.5 million and $13.5 million. So he's willing to undergo a loss as well.

Jimmy

He's going to take a hit as well. Goodness me.

Sue

Wow. So interesting, isn't it really? And obviously we're just reporting on the fact that lots of people in there are saying that there are defects.

Jimmy

Yeah, we haven't seen it.

Sue

No. But the owners corporation there has made a statement but that's been provided by Tim Gurner.

Jimmy

Right. He provided the statement for the owners corporation to make. And what do they say?

Sue

They're saying that they're working with the builder Crema and the developer to rectify defects.

Jimmy

Okay. So we haven't called Mr. Gurner for his comments but I would like to say on his behalf that our report is totally one-sided and biased, has no real information and shouldn't be taken seriously at all. I'm sure that should put his lawyers back in their box if they're thinking of coming after them.

Maybe, maybe not. Maybe not. All right.

Well, how surprising. Another new year and a new villain. There's a lot of villains in Strata, isn't there?

Sue

Oh, there sure are. I mean, Tim Gurner, I think, just develops, I think, in Victoria. I've not really come across him in Sydney before but maybe he does in Sydney too.

But obviously in Sydney, hopefully we'll have fewer buildings with defects because of our building commissioner's work.

Jimmy

Yeah.

Sue

And the continuing work that they're doing.

Jimmy

Yeah, they're doing it much more quietly now. Yeah, it's kind of like softly, softly approach. Yeah, we just want buildings, less crap but fewer crap buildings we'd like and the ones that are crap to be fixed.

Sue

Absolutely. And more buildings. I mean, everybody's saying we really need to lift the number of development approvals going through the system because we desperately need new housing and that new housing is mostly going to be apartments.

Jimmy

So I was talking to former Strata commissioner John Minns the other day. I might do that. We'll just take a quick break and I'll tell you what we had in our conversation.

So as I said before the break, I was talking to former Strata commissioner John Minns who is putting together a kind of round table-y conference thing in March, I think, all to do with Strata. He's quite passionate about Strata. And I was saying that one of the things they could do to fix the whole Strata manager thing is have a set fee, have a baseline fee that people, Strata managers cannot bid underneath that because there's the irony at the moment is that one of the companies who's going around saying, oh, we're not paid enough as Strata managers is also the same company that's going around offering to undercut any other Strata manager fees, I am told.

So I said, why don't you just, why doesn't the government just set a benchmark fee? And he says, well, in any other business, when you do that, it leads to less efficiency. And what should happen is that there should be a drive within the industry to be better at what they do and then they can justify charging more.

But what he didn't say, but reading between the lines, he was saying, everybody hates Strata managers so much that nobody wants to pay them anything. And I also said to him that, you know, I'm thinking back to the early days when we did, started FlatChat. And it was Meritan that used to promote the apartments on the slogan of affordable luxury.

And we were quite derisory about that whole concept. It's an oxymoron. I don't think you can have luxury and affordable.

Sue

Oh, you get what you pay for.

Jimmy

You get what you pay for. But what I suggested was we should be looking at livability, affordable livability. There are a lot of people, especially people coming into this country from overseas who have lived in apartment blocks where you can hear your next door neighbour changing their underwear and they get used to it and they deal with it.

The problem is when you go into an apartment block thinking that your apartment is going to be like soundproofed and it turns out that you can hear a conversation happening next door, people get angry and annoyed. What we need is a star rating system that says this is the level of sound insulation within the building. And it could be we've got two stars.

You've only got two stars. You will be able to hear your neighbour's TV if it's turned up a bit, but you're saving X amount of money. You would save on the building cost.

Sue

Yeah, because that might not worry some people.

Jimmy

I'm sure a lot of people wouldn't be bothered. And people are generally quite smart about making things work for themselves. So that if your neighbour's TV is really loud, you can go to them and say, hey, your TV bothers me between seven o'clock and 10 o'clock.

It's like our friend Kieran, his next door neighbour. She's an old lady. She was mostly deaf.

She would go to bed at night. She loved watching TV in bed at night because she didn't sleep much. So she'd go to bed at night at 10 o'clock and turn the TV up full volume right next to his bedroom.

She was a nice old lady and he liked her a lot. He didn't know what to do. I said, buy her a set of headphones for her Christmas.

And he did. And he was a bit nervous about it. And she put them on and she tried them on.

And the next time he saw her, she said, that's amazing. Suddenly I can hear everything on TV.

Sue

That's great, isn't it?

Jimmy

So you just need a little bit of lateral thinking in this. But I honestly believe that this thing of trying to have luxury in every apartment block. I mean, every apartment perfect is unrealistic.

We should be looking at affordable livability rather than affordable luxury.

Sue

That's interesting because it's all about expectations, isn't it? I grew up in a terrace house and the people next door to us were really noisy. They were always arguing.

But we didn't think anything of it really because we grew up in that terrace house. I was born in that terrace house.

Jimmy

That was normality to you.

Sue

Yeah, that's right. So when you heard them arguing, you just didn't think any more of it. You thought, oh, that's interesting what they're arguing about now.

Because they'd argue about the most tiny things.

Jimmy

On the other hand, I don't think I will ever get used to doof-doof music thumping up from the flat underneath at really loud volumes. And you think, really, guys, this music is designed for nightclubs.

Sue

Yeah.

Jimmy

Go to a bloody nightclub.

Sue

But also we have someone in our building who plays the piano.

Jimmy

Very well. Often.

Sue

Yes, and it really irritates me because I don't like music very much.

Jimmy

Because you hate music.

Sue

Whereas you actually hear it and you quite like it.

Jimmy

I do.

Sue

So, I mean, it's all personal taste, isn't it really?

Jimmy

I know this person and he's a nice guy. And I know if I said to him, hey, your piano scales just is a bit irritating, he wouldn't do it.

Sue

Yeah, that's right. All right.

Jimmy

So we've covered a lot more ground than I thought we were going to cover today. We're almost at our limit of 29 minutes, it says on the screen. But I'll cut that back out once we cut out a lot of the nonsense and the defamatory stuff.

Sue, thank you very much for giving up this very precious part of your day off, your holiday day.

Sue

No problem.

Jimmy

And by the way, if you're interested, I think I mentioned this on something I was writing the other day on the website. Sue's got a new book out. It's called The Governor, His Wife and His Mistress.

It's been getting a lot of publicity, actually. And we had a launch last week, which was really nice. Descendants, because this is Governor Gidley King, who came over here, took a mistress from among the convict women, gave her two children.

When I say gave her two children, she had two children she gave him.

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