If you Google "most dangerous animal in the world" you will get a list of all the usual suspects --- polar bear, elephant, lion, great white shark, box jellyfish, and even the tiny mosquito! These answers are all wrong!

The most dangerous animal in the world is a politician who thinks he (or she) has just had a "good idea"! Even more dangerous if the "good idea" fulfils every politician's need to "be seen to be doing something"!

In the current furore over the climate, these dangerous animals are roaming abroad, "good ideas" expanding and exploding like thought bubbles, polluting the landscape and endangering our sanity.

The latest "good idea" in Queensland is the Sustainability Declaration --- my interstate or international readers may substitute their local knee-jerk nonsense of choice. The Queensland Sustainability Declaration is a government form containing over 50 questions which must be completed by every homeowner in Queensland (or every interstate or overseas investor owning property in Queensland), who wishes to offer that property for sale.

The form is effective from 1st January 2010, and any property available for sale from that date will have to be withdrawn from sale if a Sustainability Declaration is not in place.

But, "AH!" you say, this must be a good thing! The government will be able to collect all this valuable information about R-rated pink batts, pale coloured roof

material, dual flush toilets and 3-star WELS taps (whatever they may be), and plan more adequately for our bright and prosperous future. Wrong again! None of this information will be collected or collated. Once the exercise is finished and your house is sold, you can flush your Sustainability Declaration down your (hopefully) dual flush toilet!

Real estate agents in Queensland have already been warned by their insurers that they must not complete this form on behalf of sellers. Children of elderly parents should also respectfully decline when asked to complete this form on behalf of their loved ones. Under no circumstances should a manager or a tenant complete the form on behalf of his landlord as one desperate southern owner of a Brisbane unit has just requested. The law is plain in any event that the document must be signed by the owner or a duly appointed attorney of the owner. The reason for caution is clear, because while the Government has been keen to point out that a contract could not crash because of an incorrect declaration, a buyer will still have clear rights to sue for damages if a document's content is misleading and $2000 Government penalties apply for the same reasons.

The ultimate joke in the whole process is that in the fact sheet accompanying the Declaration it states "The intention of the form is that it is completed to the best of the seller's ability and knowledge.

Where the seller cannot reasonably find out information or has no technical knowledge about the feature then the box may be left blank."

So there you have it! If you or your granny don't want to brave the ladder to check for batts in your belfry, or are not sure what 3-star WELS taps are, just leave it blank!

For those of you who remember "Yes Minister" , why is it the Public Service in Queensland does not have a Sir Humphrey Appleby? If The Honorable Jim Hacker had raised the possibility of a Sustainability Declaration to inconvenience almost every voter in the state, Sir Humphrey would have just said, "Minister, that is the most courageous decision you have ever made!" --- and that would have put an end to it!

As I write these words, it is still all systems go for 1st January 2010! We can only hope common sense prevails and the whole thing is postponed until it is made simple enough for less intelligent folk than politicians to understand.

We would like to wish all our hard-working politicians a very happy Christmas. While we are in the festive spirit, may the Directors and the hundreds of Management Rights professionals who comprise The RAAS Group wish the same to you and yours. Big things are planned for RAAS in 2010 --- brand new websites, a new Gold Coast office, new North Queensland office and further expansion into NSW. We look forward to seeing you in the New Year.

By Damien Windle - Director - PCS Finance (damien@pcsfinance.com.au)

Surviving the last 12 to 18 months is a good feeling. I can proudly say to my father in law that I survived a Global Financial Crisis (GFC), the worst in 100 years. You see my father in law has been in business since the mid 70's and he's experienced the good and bad times (more than once). The GFC was a topic of discussion at many family dinners. The uncertainty of the extent of damage this could have on Mums and Dads and the many different industries, at times, was overwhelming. My business relies on people requiring finance for Management and Letting Rights (MLR) and residential property, so if money was scarce and confidence was shattered how would this affect my business? The last 18 months has me made me realise how important cashflow is and the saying "cash is king" is underestimated.

Like many, my business was affected by the GFC but compared to others, the impact was minimal. Thankfully, banks continued to support the MLR industry and with interest rates reducing, it meant for those on variable rates, interest costs were reduced in some cases by 35%. This is a significant amount of savings if you do the calculation on a debt of $500,000. Not to mention $1M +.

Did the GFC have an effect on MLR sales and purchases? --- I am often asked what is the trend in MLR sales and purchases. Based on my seven years experience financing MLR's there is a clear pattern in the Brisbane market. From March to August purchases seem to be very active. It tends to drop off through September and October and then the last half of November and early December there is a rush to purchase a business prior to Christmas.

There is an expectation the contract will be unconditional before Santa comes down the chimney. During the Christmas period it slows down and during this time, I believe people start thinking of life changing experiences and want to try something new. They start to set themselves goals for next year and one of those goals is to purchase a business they have been procrastinating about for the last ten years. By the time February / March comes around there's a flood in the market from those people looking to change their career and finally deciding to purchase Management and Letting Rights. The only change in this trend was from July to Dec 2008. The phone and email enquiries decreased dramatically during this period as much as 30%. People were reluctant to part with their money and or borrow to purchase a business. They lacked confidence and there was an unknown factor that was becoming increasingly overpowering.

The reduction in interest rates assisted with keeping confidence in the market plus banks did not really make any major changes in a negative way to their MLR lending policy. They have continued to support the MLR industry not like other industries. Whilst some banks did 'tighten' up and paid close attention to the performance of existing clients, this did not have a massive effect on lending to MLR's in general. Based on my experience in the last 12 to 18 months it is now proven, that banks are confident lending to MLR's even through a GFC.

I think it's important to say that my comments mainly relate to Management Rights located in Brisbane, in particular permanent and corporate let. Too often I read comments (positive or negative) made by other professionals commenting on Management and Letting

Rights and not stipulating their comments relate to permanent, holiday, short term, corporate or student accommodation. The majority of business that I have experience with are MLR's located in Brisbane.

Finance tips

• It pays to keep accurate financial records in relation to profit and loss reports. Banks will request annual figures which forms part of the annual lending review requirement. If you cannot produce a P&L in a professional format eg quickbooks or MYOB etc this could have a negative impact on your annual review. It also helps if you wish to borrow additional money eg investment property purchase. If you have up to date and accurate figures, this could be the difference between the bank lending the money or not.
• If your bank is insisting on converting your loans from IO to P&I, in some circumstances you do not have to accept this. Banks will tend to request this after a few years but if the business has been trading well and the value of the residence and business has held up, the bank should have no reason to insist on Principal & Interest reductions.
• Don't forget about the Government 50% tax break on new motor vehicles (This expires on 31/12/09). Banks will lend against Motor Vehicle purchases and in some cases the payments could be tax deductible.
• Work smarter not harder by putting your assets to work and taking advantage of growth.

"Life has no limitations, except the ones you make."-Les Brown

By Frank Higginson - Partner - Hynes Lawyers (frank.higginson@hyneslawyers.com.au)

With the annual schoolies 'festival' there has been a lot of press and other comment about the ability of a body corporate to restrict schoolies style tenancies.

In addition, from an internal industry perspective there has been an increasing comment and concern about the mixing of short and long term tenancies (the usual owner occupier vs short term holiday maker argument).

So what is the legal position?

To start with it must be realised that a body corporate only has the legal ability to regulate common property. Unit owners' lots are not common property - they are privately owned. As such, a body corporate's rights to impose conditions on that lot are minimal, unless there is some external impact from the use of that lot, for example:

• Noise - via late / loud parties, loud music etc.
• Amenity - bbq's on the patio.
• Appearance - hanging towels over railings, visible external signs through windows.

Take the position where a body corporate decides that every internal feature wall in a lot had to be green! It simply is unlawful and not enforceable.

The legal position is very clear. A scheme's by-laws provide the individual rules for the body corporate. Section 180(3) of the BCCM Act provides that 'If a lot may lawfully be used for residential purposes, the by-laws cannot restrict the type of residential use.'

So a by-law seeking to impose a minimum term stay for a lot is simply unlawful.

So, what about the letting agreement?

Some letting agreements seek to impose conditions on the letting agent about the minimum length of a tenancy. The validity of these types of condition has not yet been fully tested. Again, from a legislative perspective, a body corporate can only 'authorise' a letting agent. Can it impose conditions on that? The answer is unlikely to be determined by litigation anytime soon as most owners of management rights do not seek to change the nature of what they have purchased.

But even with such a condition in the letting agreement, there is nothing that can stop an owner engaging an outside agent to seek short term lettings. This is an inalienable property right.

What is next?

Then there is the latest concern. Building classifications and planning restraints. Town planning is a dark science at the best of times, and it would be a brave body corporate to engage in litigation from a planning perspective.

Arguments over building classifications for short and long term lettings are likely to be the next battleground open to interpretation. We have recently advised several clients on these issues, and each client had their own individual set of circumstances to consider. It appears to have been presented to some committees as a fait accompli, but these sorts of matters are far from that, even at the best of times. The next 12 months will be interesting on the classification front, to say the least.

We wish you all a safe and merry Christmas and all the best for 2010.

If you would like to comment on anything you have read in The RAAS Report, please write to PO Box 1325, Sunnybank Hills, Qld 4109 or send an email to mike@raas.com.au.

www.raasrights.com.au • www.raas.com.au