The Gold Coast if you know, is renowned for its diverse property appeal, but in 2018 property experts are saying that infrastructure in the Northern and Central suburbs will contribute substantially to an already booming market, not to mention the impact of the Commonwealth Games on the city, but if you’re an outsider contemplating buying into this flourishing market, there’s probably a few idiosyncrasies along with the stable cold hard truths, you need to know before buying that strategically positioned unit on the 24th floor.
Podcast: Play in new window | Download
Simon Bennett of OMB Solicitors discusses the risks and opportunities.
Dan: Simon is all this glitz and glamour of living on the coast potentially at risk of not doing your due diligence?
Simon Bennett: I think that’s right. I think sometimes purchases of property on the Gold Coast get caught up in the excitement and the glitz and glamour and fail to probably undertake what I would consider basic due diligence when looking to purchase property. Now that could be split up. I think there are two real types of category of buyer. You’ve got your owner-occupiers, so someone who’s buying to actually live in the property. Then you’ve got an investor who is someone simply making a property investment. I think there’s really key characteristic differences between those two.
Dan: How should each of those cohorts look at the market?
Simon Bennett: Well an owner needs to look at livability. Am I going to be happy living there? They really need to pay attention when they’re buying into a body corporate about bylaws and rules because these are things that will govern how they can occupy that property. They really need to determine whether they’re going to be happy living there, as well as whether it’s a good commercial purchase. Where the investor on the other hand, really shouldn’t be looking at, do I like it? Does it feel good? It’s really a numbers game. How’s the return? What’s the likely capital growth? They need to be a little bit more removed from the feel, and as I said before, getting caught up so much in what they might like because they need to remember they’re not going to be living there.
Dan: Simon, for the owner I assume that really looking at the bylaws is going to be important, and maybe even so for the investor. Particularly if they’re looking at Airbnb and those other opportunities, but if we talk about the owner first up is what about the bylaws that they should be really analysing or wanting to understand?
Simon Bennett: Sure. Well the bylaws in really basic terms are set as the rules and regulations by which the owner or the occupier of a unit in a body corporate are governed by. Now these are designed to protect an owner, but they also restrict you. Now when I say they protect, what they do is, they govern all owners and say for example, you can’t change the external appearance of your unit. You can’t hang your washing out over your balcony, so that the view of the building doesn’t get the look of a slum or a building you might see in Hong Kong for example, whereby the washing is all hung out the side. That protects values, but it also restricts what you can do. Another common one is you can’t have loud late night parties, which restricts your use of your unit, but also it protects the general common ownership from being disturbed by other owners.
Dan: Simon, is there a divergence among what bylaws are from a complex to complex? I’m assuming that there may well be some that have very, very tight bylaws and others that are a little bit looser.
Simon Bennett: Yeah, that’s correct. It’s important to look at these if you have a specific concern. One of the most common ones we see is with pets. Now this is a really sensitive topic. Quite often a purchaser, or a potential purchaser in a complex, will not go ahead with a purchase if they can’t take their animals with them. It’s important to read those. Know what your specific requirements are if you are planning on letting, if you are planning on living there and taking animals et cetera. To check those bylaws have an experienced, qualified lawyer read through them, and point out what is important to you.
Dan: Okay. Let’s talk about the investor. There’s all this hullabaloo and excitement around Airbnb, and stories about people making thousands and thousands of dollars each week on their property. The investor that wants to buy, say, a unit at Surfers Paradise has got visions of being able to Airbnb it every night. What do they need to ensure is in those bylaws to allow them to do that without sort of running foul with the body corporate?
Simon Bennett: Sure. It’s important to read the bylaws and find out if there are any restrictions in the bylaws on short-term letting, then a qualified lawyer would need to look further beyond that and see whether that constitutes a valid bylaw or not. It may depend on what the original approval or the development approval was granted to that building for. If there were restrictions on what that building could be used for it would come back to town planning, but it is important as an investor to work out what you can and can’t do with it, not just with that letting process, but whether you’re going to put it with an onsite agent, whether there is an onsite letting agent, or whether you’re able to use a commercial letting agent maybe down the road.
Dan: Okay. Now in terms of the contract, or signing the contract, I mean it never ceases to amaze me how many people will go down and chase the cut-price conveyancing law firm to do their work. When in fact it’s a significant asset for many people. What are the risks of going down that path?
Simon Bennett: Yeah. Look, it amazes me as well. I quite often use the analogy of an individual who’s getting brain surgery doesn’t go out and find the cheapest brain surgeon. You generally want to find the best. For most people, buying a property of this nature is one of the biggest monetary financial transactions they will undertake in their life. They shouldn’t be looking at, necessarily, the cheapest option. They should be looking at getting really good value for their money. They should be looking at engaging an expert in that area. I am an accredited specialist by the Queensland Law Society in Property Law. That is an accreditation given by the Queensland Law Society saying that this person is an expert in that area. It’s really important because let’s get to the contract that you mentioned. Realistically, before you sign a contract you should give your solicitor an opportunity to peruse it for you.
Simon Bennett: As a general rule at OMB Solicitors we’re more than happy to look at our client’s contracts before they sign them, no obligation, and no charge. We would rather look at these contracts for our clients up front to say, “Yes, it’s all fine. You’re okay to sign it or gee, we really need to mend these clauses.” Quite often it’s something really technical. It may be the use of a simple word, may or must or something of that nature, that may need to be amended, but the ramifications are quite huge. What we say is before you execute your contracts, get them checked just for piece of mind. That way we don’t have to sort out problems later on.
Dan: Getting quality legal advice just makes common sense.
Simon Bennett: It does. I must say there is a misconception that you want to buy, I want to sell, straightforward it just happens and people go and put the importance on that transaction that they should. I can tell you this is that these transactions often have major problems, end up in court being litigated, and huge amounts of money are spent. The benefit of having an experienced practitioner looking after your matter is that they will have the experience to, not only deal with problems when they come up, but most often anticipate the problem before it becomes a major issue and cut it off at the pass, and things will run smoothly through.
Dan: Yeah. It’s very true isn’t it, I mean given that OMB Solicitors is a diverse practise law firm, you’ve got their back there should things go off track.
Simon Bennett: That’s right. Quite often throughout the course of a matter like this if we do have an issue I will go and consult with our specific body corporate team about body corporate issues, or I will go and discuss with our litigation team what if A, B, or C occurs how do we stand if that ended up in a court? We can use those other areas of expertise in the firm to assist the client quite informally before the problem arises.