In October 2015 the New South Wales Parliament passed the Strata Scheme Management Bill 2015 and the Strata Scheme Development Bill 2015. The new pieces of legislation set out comprehensive reforms of NSW strata laws.
The changes are aimed at improving strata living and providing greater opportunity for strata redevelopment. The new legislation is expected to commence in November 2016.
Before the new laws commence:
- new regulations are in the process of being developed;
- key information will be developed for strata schemes; and
- a public awareness campaign is taking place.
We examine some of the more significant reforms set out in the new legislation below.
Collective sale of a strata scheme
Currently, a strata scheme can only be ended or “collapsed” with the unanimous support from all owners in a strata scheme. The new provisions allow for the collective sale or redevelopment of a strata scheme by a 75% majority of lot holders. The rights of the owners are protected by the inclusion of certain checks and balances. For example, if a strata sale is agreed to, the owners are to receive the market value of their lot plus an extra amount to cover costs associated with moving.
The purpose of the amendment is to prevent individual owners from blocking redevelopment of aging and high-maintenance unit blocks.
The number of proxies a member of a strata scheme can hold will be limited to:
- one proxy vote only for schemes with less than 20 lots; and
- 5% for schemes with more than 20 lots.
The intention is to restrict “proxy farming”, whereby members gather up the votes of uninterested or absent members in the strata scheme to enable them to pursue their own agenda.
In relation to all future strata developments, a developer must appoint an independent building inspector to provide both an interim building report (identifying any defective building work) and a final report on completion of the building work.
A developer of a high rise strata building will be required to place a bond of 2% of the contract price of the building work, to cover potential defects identified after completion and those which are set out in the final inspection report. The building bond must be claimed or realised 2 years after completion of the building work or within 60 days after the final report is given.
The reforms are aimed at protecting buyers of new units, encouraging early identification and rectification of defects and helping improve the standard of building construction.
Other notable changes
The new legislation also includes provisions which:
- make it easier for owners to complete cosmetic and minor renovations to their units;
- address issues of parking, pets and smoke drift;
- allow an owner’s corporations some flexibility in deciding when their general meetings will be held and allowing more modern forms of communication to be used to attend meetings, such as video and teleconferencing.
What about the other states and territories?
NSW is not the only state turning its attention to strata law reform. In Queensland, discussion papers for similar reforms were prepared in 2014 at the request of the previous State Government. Similarly, in Western Australia a Strata Reform Project Team has been tasked with undertaking research into strata reform to ensure Western Australia has a modern Strata Titles Act. Victoria’s last round of reforms of owner’s corporation legislation took place in October 2014.
The reforms are intended to promote redevelopment of strata apartment buildings, assist in urban renewal and increase housing supply. Apartment owners are encouraged to monitor the progress of the strata reforms and consider the impact the changes might have on their strata living.
If you or someone you know wants more information or needs help or advice, please email us on [email protected], or phone us at Lismore on 02 6621 2481, Ballina on 02 6686 2522 or Byron Bay on 02 6680 8525.