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Body Issues

Body corporate committees are one of life’s many boring, but important details. Aaron Tunstall explains what apartment investors need to know.

By: Aaron Tunstall

1 May 2016

Body corporate commitees (BCCs) are not glamorous, but they can make a big difference to the success of your apartment investment. Every block of units (more than four) must elect a body corporate committee to administer levies, settle disputes and generally ensure the units meet their legislative requirements.

This committee, usually known as ‘the body corp’, can have a significant impact on the units, the tenants and the owners.

At Impression, one of our roles as property managers for apartment buildings is to represent our owners at meetings. We spend a lot of time doing this and we’ve seen a wide range of types of body corps.

Best And Worst

The best are organised, competent and communicative. They talk regularly to owners, tenants and the building manager. By having a long-term maintenance plan and putting the money aside to implement it, these body corps maintain your apartment’s value and its reliability.

Unfortunately, this contrasts markedly with the worst of the bunch. One or two difficult individuals can throw sand into the gears of any machine. And ‘difficult’ is an enormous understatement when it comes to the combative, awkward, singleissue- obsessed people who occasionally hold entire apartment buildings to ransom. As the professionals, our team has strategies for dealing with people like this, so if you’re struggling with your body corp you might want to consider putting a property manager into place.

Luckily most body corporates are not this bad. But many are less than ideal when it comes to decision-making, communication and administration. That’s one reason MP Nikki Kaye has started the betterbodycorporates.nz website – it’s part of a push to overhaul the Unit Titles Act. Some would like to see more regulations or qualifications required for body corporate managers; there is no mention of BCC managers in the Unit Titles Act 2010. Others are concerned with a lack of transparency, as unit owners can’t contact others in the building. Another issue is the money: collecting, protecting and spending the levies. MBIE hasn’t ruled out a new regime but currently believes there are sufficient obligations to keep problems under control.

Numbers Driven

Would I buy an investment apartment in a building with a dysfunctional body corporate committee or manager? Absolutely not. I know investors are driven by the numbers and I’m the first to demonstrate how appealing those numbers can be. Investors are often told: “Buy on numbers only! Don’t let emotions get in the way! If it adds up, it’s the right property!” Great advice in theory, but there’s always a human element to make life more interesting, frustrating and/or enjoyable. The human element here is the body corp: if it’s not working, don’t buy in the building, even if the returns look good.

Anyone can get onto the BCC without any qualifications or checks, just a basic CV. They can make it all the way to manager without any relevant credentials. A large apartment building is like a small business with an annual turnover of a million dollars or more – you don’t want a useless manager or a team of incompetents running it into the ground.

Read The Minutes

Turning over a million-dollar company to someone who reluctantly agreed to the job (even though they don’t want it) and has no relevant experience, is definitely a recipe for problems.

Find out how the BCC operates before you buy. You should get hold of the minutes of the meetings and see if there are any unusual recurring issues, problem individuals or financial uncertainties.

What are the people like? Do they get along reasonably well? Is there enough money in place to carry out the planned maintenance on the building for the next few years? Just as you would with any small business you were planning to buy a stake in, you want to know that the leadership team is solid.

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