Property crash, just maybe it really is different this time (Part 3)

[sancho panza]

https://uk.news.yahoo.com/lost-human-touch-australians-ending-140004722.html

‘Lost its human touch’: Australians ending up in court over missed strata fees in cost-of-living crisis

As Oliver packs up his Melbourne home of 16 years, he wishes the managers of his strata property had checked in with him before things became so bad that he needed to sell. In 2018, Oliver – who asked not to use his real name – lost his job and fell behind on his strata levies, the regular payments made to upkeep common facilities like roofs, stairwells, lifts and gardens. Then the managers took legal action, meaning he had to pay legal fees on top of his strata payment debt.

Now he’s facing forced bankruptcy after the strata managers filed a claim against him.

Oliver is among a growing number of homeowners falling behind on strata fees as they battle the cost-of-living crisis and rising mortgage repayments. But many of these homeowners are finding themselves caught up in legal action – leaving some with a bigger total bill than their original debt.

Unlike a freestanding house, where homeowners can skip maintenance work, there is a statutory obligation for common property in strata homes to be maintained and repaired. This means everyone in the building chipping in via regular levies – and sometimes special levies to cover unplanned repairs.

Managers can take legal action against homeowners who haven’t made their strata payment by a certain period and the cost of the legal action is often added to the person’s debt. Once unpaid strata fees reach $10,000, managers are able to take bankruptcy claims against homeowners.

Figures collated from the federal court by Financial Counselling Australia (FCA) show there have been 126 filings for forced bankruptcies related to strata debt in 2023-24 as of mid-March.

It already exceeds the 116 forced bankruptcies filed for the previous financial year – and in Victoria, where Oliver lives, the figure has already doubled to 31.

About 16% of Australians lived in strata-titled properties as of last year, a number projected to increase as more apartments are built in response to the housing crisis. In NSW, almost 3 million people are expected to live in strata properties by 2040.

Homeowners can face exorbitant “special levies” – payments to pay for maintenance costs such as replacing the roof – on top of regular strata levies.

“[Rising strata fees are] a real problem for those [who] are on fixed incomes and haven’t budgeted for this, and have chosen [a strata property] as an affordable option,” says Reece.

Why more people are falling behind

After forced bankruptcy was filed against him, Oliver decided to sell the home where he and his 17-year-old son live. He estimates his total debt may now reach $22,000 with legal costs and interest added on top of the original $10,000 strata debt.

Gary Bugden, a Queensland-based internationally recognised expert in strata law, says this is not uncommon.

He found that in 10 bankruptcy proceedings for levy recovery in Queensland in recent years, the amount of debt recovery costs exceeded the amount of the original strata debt. In six of those cases, the legal costs were close to double the amount of strata debt being recovered.

The laws around strata vary from state to state, but Bugden says in Queensland and New South Wales they are the least compassionate when it comes to debt recovery.

Legal action as a first resort

The issue extends beyond just forced bankruptcies. Advocates say they’re seeing body corporates and strata managers increasingly taking legal action as a first resort rather than the last where an owner has missed just one payment.

In NSW, a notice of recovery action can be filed in court 21 days after a missed payment, while in Victoria a notice can be filed after 28 days. In other states and territories there is no limit, says the FCA advocacy lead, Lody Stewart.

Stewart says they frequently see NSW strata managers applying debt recovery costs without a court order – a contravention of the law.

“We’re seeing more and more instances where managing agents, rather than just sending a reminder notice to say they’ve missed a payment, flick it to a legal firm,” she says.

[spygirl]

5 hours ago, Option5 said:

So the big Audi SUV goes at the end of the lease, lots of unloaded lease cars means values dropping. Lease costs go up to cover the losses. It's a vicious circus.

Get ready to own a house at a realistic price and you can park your cheap top of the range ex lease car on the driveway. (Because the stupid truck won't fit in the garage).

Problem is the cars tgat were leased before IR were all big German land yachts.

I want a mid size Jap car.

[roundhouse]

10 hours ago, Long time lurking said:

 

Heard on a recent Charlie (MHWC) podcast that the govt has run out of practical time to put through the renters reform bill before the GE, as it wasn't announced in the gov's recent listing of upcoming business. Via his previous guest landlord Suzanne Smith, who's in favour of the bill (!) and, it seems, fairness to tenants as well as landlords. 

Don't suppose anyone is surprised, them having left it to the final year before an election. But I feel Gove was/is sincere in wanting it to happen. 

 

[roundhouse]

Renters reform bill - Suzanne Smith, Indy Landlord, apparently tweeted/Xd about this not being listed in upcoming gov business. I don't do TwitX so can't read content but it's this one (don't know why it's embedded and also says "Nothing to see here"

Her website blog has a thread on it but not updated since March 15th

https://theindependentlandlord.com/latest-renters-reform/

[Royston]

20 hours ago, Option5 said:

So the big Audi SUV goes at the end of the lease, lots of unloaded lease cars means values dropping. Lease costs go up to cover the losses. It's a vicious circus.

Get ready to own a house at a realistic price and you can park your cheap top of the range ex lease car on the driveway. (Because the stupid truck won't fit in the garage).

I've been waiting at least 15 years to see this flood of cheap 3 year old ex lease and PCP cars to swamp the used car market.

 

Still waiting.

[One percent]

8 minutes ago, Royston said:

I've been waiting at least 15 years to see this flood of cheap 3 year old ex lease and PCP cars to swamp the used car market.

 

Still waiting.

Im convinced that they are shipped off abroad so as to keep prices artificially high. They certainly aren’t being kept on the roads here. 

[AWW]

1 hour ago, Royston said:

I've been waiting at least 15 years to see this flood of cheap 3 year old ex lease and PCP cars to swamp the used car market.

Still waiting.

They were certainly there 15 years ago, even 10 years ago.  In 2014, we bought a top-spec 2010 Golf with every option ticked. The original invoice was for more than £30k. We paid £8990 for it at a VW dealer. Average mileage, good nick. Only sold it because of the ULEZ extension.

The market has definitely changed since then, mind. If you want an ex-lease that's undergone massive depreciation, you need to be looking at things like Teslas and Audi Etrons. Everything else seems strong. I assume this is because the only forced sellers/forced handers-back are those who've bought an EV and found that it's not suitable for their use cases. The equivalent of the 3 Ds in the housing market.

[onlyme]

[Royston]

19 minutes ago, AWW said:

They were certainly there 15 years ago, even 10 years ago.  In 2014, we bought a top-spec 2010 Golf with every option ticked. The original invoice was for more than £30k. We paid £8990 for it at a VW dealer. Average mileage, good nick. Only sold it because of the ULEZ extension.

The market has definitely changed since then, mind. If you want an ex-lease that's undergone massive depreciation, you need to be looking at things like Teslas and Audi Etrons. Everything else seems strong. I assume this is because the only forced sellers/forced handers-back are those who've bought an EV and found that it's not suitable for their use cases. The equivalent of the 3 Ds in the housing market.

That was a decent enough deal, especially in light of what's happened to used car prices in recent years.

But I still say given the huge number of debt junkies that were on the never ending hamster wheel of 3 year lease/pcp deals the market should have been absolutely swamped with 3 year old cars for a long time, but I never really saw it.

I suppose the fact that pcp and lease arrangements allowed manufacturers and dealers to massively inflate the otr price for cars anyway doesn't help, if it wasn't for pcp/lease that £30k golf would have been closer to a £20k golf to begin with.

 

[Frank Hovis]

26 minutes ago, AWW said:

They were certainly there 15 years ago, even 10 years ago.  In 2014, we bought a top-spec 2010 Golf with every option ticked. The original invoice was for more than £30k. We paid £8990 for it at a VW dealer. Average mileage, good nick. Only sold it because of the ULEZ extension.

The market has definitely changed since then, mind. If you want an ex-lease that's undergone massive depreciation, you need to be looking at things like Teslas and Audi Etrons. Everything else seems strong. I assume this is because the only forced sellers/forced handers-back are those who've bought an EV and found that it's not suitable for their use cases. The equivalent of the 3 Ds in the housing market.

 

As @AWW syas, @Royston, I think you've missed it.

 

In the 2000s three or four year old cars were practically being given away (I exaggerate of course, but £6k for a three year old car was not unusual.

Since then cars have become more complex, bigger, and a lot more expensive.

People typically lease for longer than three years, my old company initially changed its (owned) work vans every three years, then four and now I have seen them aged eight years old or more.  They are keeping them going as long as they can.

 

And global car production peaked in 2017, which given the continued population explosion means more people chasing fewer and more expensive cars.

And then you have the impact of the Lockdowns which crashed car production generally, but it was already falling.

IMHO cars are going to keep becoming more expensive.

At the bottom end pre-lockdowns you could buy a reasonable car with a long MoT for £500.  That rose to £800 and is now about £1,000.  And these are twenty year old cars which are very much "end of life".

Buy now if you want one, and no I'm not a car salesman.

[onlyme]

 

[Rare Bear]

15 hours ago, roundhouse said:

Heard on a recent Charlie (MHWC) podcast that the govt has run out of practical time to put through the renters reform bill before the GE, as it wasn't announced in the gov's recent listing of upcoming business. Via his previous guest landlord Suzanne Smith, who's in favour of the bill (!) and, it seems, fairness to tenants as well as landlords. 

Don't suppose anyone is surprised, them having left it to the final year before an election. But I feel Gove was/is sincere in wanting it to happen. 

 

Gove sincere?

[spunko]

8 hours ago, Royston said:

I've been waiting at least 15 years to see this flood of cheap 3 year old ex lease and PCP cars to swamp the used car market.

 

Still waiting.

I think you will be waiting a long time now sadly, unless you want an EV....

You can get a 4 year old Jaguar I-Pace for about £20k. List price when new £80k.

https://www.autotrader.co.uk/car-details/202402246908506

Change

22/03/2024

21/03/2024

19/03/2024

05/03/2024

04/03/2024

25/02/2024

-£1,400 (-7%)

£19,049

£19,099

£19,349

£19,799

£19,849

£20,449

In fact sod that, you may as well buy new, they're giving close to 40% off.

https://www.autotrader.co.uk/car-details/202402026173164

Change

15/03/2024

13/02/2024

02/02/2024

-£8,061 (-15%)

£46,676

£51,092

£54,737

[Royston]

5 hours ago, onlyme said:

 

Gove's proposals seemed to be mainly centred on Ground Rent, introducing a cap of £250 on it I believe. 

When it comes to Leasehold the Ground Rent is minor issue anyway, I can't recall ever seeing a Leasehold property with a Ground Rent of £250.

The real issue for Leasehold properties, especially apartment blocks, is the rip off service charges with money for nothing management fees and wildly inflated costs for repairs and maintenance on top of the service charge.

[belfastchild]

7 hours ago, Royston said:

 

But I still say given the huge number of debt junkies that were on the never ending hamster wheel of 3 year lease/pcp deals the market should have been absolutely swamped with 3 year old cars for a long time, but I never really saw it.

Anecdotal but I know a few who, when the 3 years were up were given another 3 years on the same car at the same rates etc. When one complained they didnt want to be seen in the same car they were given the option of two more identical 3 years old cars with different number plates. They were 'new' to them.

Talking to dealers most of last year they had a lot of enquiries about how can I get this car for a cheaper price now the payments have gone up. You cant, its either pay up or get a smaller car. Then the people coming in asking why there were no 0% deals. There were, you just had to put down in excess of 60% off the rrp.

[AWW]

36 minutes ago, belfastchild said:

one complained they didnt want to be seen in the same car

They need therapy for their rock bottom self esteem, not a new car.

[onlyme]

[roundhouse]

8 hours ago, Rare Bear said:

Gove sincere?

Yeah, ok. But yes to sincere on the housing reforms.

 

[Royston]

3 hours ago, AWW said:

They need therapy for their rock bottom self esteem, not a new car.

I got banned from Pistonheads for saying exactly this!

[AWW]

10 hours ago, Royston said:

I got banned from Pistonheads for saying exactly this!

PH is basically Mumsnet with cars now. The journalistic content crap too.

[HousePriceMania]

12 hours ago, onlyme said:

Imagine trying to stop a boulder rolling down the 2007 peak hill.

Now imaging stopping a boulder falling down the 2022 hill....

[spygirl]

 

Co-op Bank cuts 400 jobs - one in ten of its workforce - in latest blow to the high street

• This comes after there were talks of a merger with Coventry Building Society

https://www.dailymail.co.uk/news/article-13239493/Co-op-Bank-cuts-400-jobs-one-ten-workforce-latest-blow-high-street.html

[Royston]

9 minutes ago, AWW said:

PH is basically Mumsnet with cars now. The journalistic content crap too.

What gets me is you can still see some relatively spicy content on PH in terms of posters being offensive or abusive or judgemental... yet when you comment that the debt junkies in their PCP'd white Audi S-Lines are just ten bob millionaires suffering with feelings of failure and inadequacy... you get an instant permenant ban!

[spygirl]

The logn logn crash of the finsec as a source for well paying jobs and credit for houses continues.

Bolting two crap BSes together wont work, which is why theres been no merger.

Ditto NW + Virgin.

 

 

[HousePriceMania]

13 minutes ago, spygirl said:

The logn logn crash of the finsec as a source for well paying jobs and credit for houses continues.

Bolting two crap BSes together wont work, which is why theres been no merger.

Ditto NW + Virgin.

 

 

Dont worry, the red tories are on it.