After some period of public consultation, reforms to the laws governing the management and development of strata schemes in NSW have now come into force. Most provisions of the Strata Schemes Management Act 2015 and the Strata Schemes Development Act 2015 have now commenced. 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.
We examine some of the more significant reforms set out in the new legislation below.
Collective sale or redevelopment of a strata scheme
This is considered to be the most controversial of all the amendments.
Currently, a strata scheme can only be terminated with the unanimous support from all owners in the strata scheme or by an order of the Supreme Court. The new provisions allow for the collective sale or redevelopment of a strata scheme by at least 75% majority of lot holders. The rights of the owners are protected by the inclusion of certain checks and balances, including a structured process aimed at ensuring transparency and collaboration between lot owners. For example, if a strata redevelopment 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 Land and Environment Court will have a pivotal role in the process, by making the order terminating the strata scheme if it is satisfied that the process set out in the legislation has been complied with pursuant to the legislation.
The purpose of the amendment is to prevent individual owners from blocking redevelopment of aging and under maintained unit blocks and to free up prime locations that are underdeveloped
The number of proxies a member of a strata scheme can hold is now 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.
There are several changes to the terminology, including “executive committee” which is now known as “strata committee”; “sinking fund” which is now known as the “capital works fund”, and “structural cubic space” which is now known as “common infrastructure”. The “exclusive use”, “special privilege” by-laws is now known collectively as “common property rights by-law”. A “section 109 certificate” is now a “strata information certificate”, a “section 118 notice” is now a “strata interest notice”, and a “caretaker” is now referred to as a “building manager”.
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.
- requires records of the owners corporation to be kept for 7 years.
- Permits a tenant representative to speak in meetings on issues affecting tenants, in some circumstances.
Building defects from 1 July 2017
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 inspection report is given. These provisions are said to commence from 1 July 2017.
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.
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 new 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 contact us on (02) 8014 5885 or email firstname.lastname@example.org.