Developers and NSW Management Rights

21 February 12

I continue to scratch my head and wonder why developers in New South Wales are so slow to pick up and run with the concept of management rights. Other than Meriton Apartments, there are very few developers in NSW who seem interested in the concept.


I believe it comes down to a combination of factors.
1. Lawyers’ advice
Most NSW Lawyers are telling their developer clients that management rights are a dead issue in New South Wales. They are saying this because of a combination of reasons – including the Arrow Asset Management case and the inability of developers to now hold proxies to vote in the management agreements at the first AGM. The reality is however that Arrow Asset case is simply a disclosure issue in the off the plan sale contracts and everyone still loves the developer at the first AGM and will vote for agreements that are disclosed in the sale contracts.

2. Not understanding the concept
Most developers in New South Wales do still not understand the management rights concept. Many still don’t understand the benefits of having a manager residing on-site and being on call to sort out all of those day to day issues that crop up in strata living. Likewise, many can’t see the benefits of having an on-site letting agent living in the complex with the tenants that are putting into owner’s units. In 10 out 10 cases, the on-site manager will know if he has a problem tenant way in advance of an offsite letting agent and can deal with the problem at a much earlier stage.

3. Bad publicity
In recent years, there have been some well publicised cases of disputes between managers and Owners Corporations in a couple of large Sydney complexes. Clearly, a number of developers have sat on the sidelines watching these disputes evolve and decided that they don’t want the same thing to happen to their buildings.
The reality however is that these disputes are very much a minority and for every building where a dispute has developed between the Owners Corporation and the manager, there are many, many other complexes where there have never been any problems.

4. Increase in levies
There is also a general perception that by incorporating on-site management, owner’s levies will substantially increase and therefore decrease the saleability of units in the complex. In reality, on-site management only results in moderate increase to the administration fund levies as other funds which would normally be budgeted for outside contractors is built into the caretaker’s fee. Also, efficient on site management invariably reduces major future expenditure because of the regular maintenance programs conducted by the on-site manager.

5. Real Estate Agents
Real estate agents have been exceptionally good to date in talking down management rights to developers, with a view to them obtaining rentals in buildings, as well as sales. Some developers in New South Wales feel that if they incorporate management rights, their selling agent might lose some incentive in marketing the units if they can’t also pick up rentals in the complex.


Simply put, a lot of money and a great opportunity to set the building up for long term success!
As far as I am concerned, a developer may as well stand in front of me and rip up a couple of hundred thousand dollars in notes if they don’t incorporate management rights in these large predominantly investor complexes – and that’s even before you get to the compelling arguments of the social and maintenance benefits which managers bring to these complexes. If I was purchasing a unit in a large inner Sydney building, I would not go ahead if there wasn’t an on-site manager responsible to the Executive Committee and owners for the daily maintenance and cleaning of the common property and assisting with enforcing the by-laws. It would only be a matter of time before the complex becomes run down (along with my investment!).


Contact Us Now

Phone:+ 61 7 5552 6666
Fax:+ 61 7 5528 0955
Address:Level 2, 17 Welch St Southport, Qld, 4215
Postal:PO Box 1876
Southport 4215



Most Popular Articles

Management Rights News

Number of news items returned: 1 to 15 records of 113

The Different Types of Caretaking Agreements

17 November 2014


 Essentially, there are three types of caretaking agreements in the marketplace: “Do” agreements; “Supervisory” agreements; Hybrid “Do” and “Supervisory” agreements. “Do” Agreements A “Do” agreement ...

Unit Entitlement in NSW

11 February 2013


The issue of unit entitlement was recently looked at again as part of the Department of Fair Trading’s Discussion Paper ...


16 July 2015


This month, we continue our examination of various clauses within caretaking and letting agreements and the important considerations to be ...

Is it Time to Change the Management Rights Model?

13 May 2013


I think the time is right for the management rights industry to explore the creation of a new model. I ...

What Managers Need to know about the NSW Child Window Safety Devices Act 2013

17 January 2014


Resident building managers have general obligations under their Caretaking Agreements to assist Owners Corporations with building and compliance issues. Managers ...

Short-Term Letting, Occupancy Limits And Tenant Representatives In NSW Strata

25 July 2017


Occupancy Limits By-laws in NSW may limit the number of adult residents in a lot. The limit however cannot be fewer ...

Be Careful with your Proxies!

03 October 2013


In June this year, I wrote an article headed “Proxy Farming”, which set out the relevant restrictions on caretakers using ...

The Law Relating to Management Rights in Queensland

14 June 2010


This article looks at the legislation in Queensland dealing with the constraints and obligations imposed on developers whilst they control ...

Duty Bound or Duty Free - Do you know what Your Duties Are?

23 September 2013


The day-to-day care and maintenance of your resort facilities and communal areas is essential to its ongoing performance and success. ...

Caretaking and Letting Agreement Essentials Part 1

03 September 2014


We regularly prepare caretaking and letting agreements for new developments. However, it has become increasingly common for us to be ...

For Your Eyes Only!

15 April 2013


Information is a commodity and for many, information is power. As you would most likely know from personal experience, the right ...

Owners Corporation Insurance - How do we Stop the Spiraling Costs?

12 August 2013


In NSW, all strata schemes are required to be insured for the full replacement value, as well as public liability ...

Proxy Farming

10 June 2013


It is often stated that Strata and Community Schemes represent the “fourth tier of Government” and, as such, voting (either ...

"Legal Action", All those in Favour say "Why"

15 July 2013


I was recently involved in a New South Wales matter where an Executive Committee had received extensive legal advice from ...

Not Getting the Fundamentals Right

15 October 2013


A recent decision of the NSW Consumer, Trader and Tenancy Tribunal (CTTT) has highlighted the importance of ensuring that the ...