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Strata Titles Act 1973 is getting a make over

Over twenty five percent (25%) of Sydney’s population are currently living in a strata complex. This number continues to grow each year. This was the trigger for the proposed new changes as strata laws have remained largely unchanged for over fifty (50) years.

The Minister for Fair Trading, Victor Dominello says: “By 2040, about half of Sydneysiders will be living in strata. The proposed reforms are reflective of present needs and future demands.”

In 1973 when the current laws were developed, Sydney’s skyline had a very different look to today. Most strata complexes were three-storey blocks with an average height of ten (10) meters. It was the year the Sydney Opera House opened and the height limit was set at 279 meters until Sydney Towers’ construction in 1975, opening in 1981. Sydney Tower stands at 309 meters and is now surrounded by dozens of skyscrapers buildings exceeding 30 floors high and ten (10) of them are over 200 meters tall.

Currently, the City of Sydney Council along with Parramatta City Council are pushing a proposal to the federal government for skyscrapers to reach as high as 500 meters.

Recently the draft Strata Schemes Development Bill 2015 and Strata Schemes Management Bill 2015 were released for public comment. The one (1) month time frame in which the public were to respond recently expired. If approved, the changes are envisaged to come into force in July 2016.

The reforms aim to:

  1. Improve the democratic process around collective sales.
  2. Increase the ability of owners’ corporations to manage by-laws.
  3. Ensure building defects are addressed early on in new developments.
  4. Increase the accountability and transparency of building managers and managing agents.
  5. Enable greater participation in strata schemes through modern communication methods.

While there are over ninety (90) proposed changes, the major reforms that are most likely to affect owners and residents of strata units include:

Changes to by-laws – by-laws cover various day-to-day matters affecting the following issues:

Overcrowding – allows owners corporations to limit the number of people residing in a lot, as long as it is not less than two adults per bedroom. Effectively, owners will be able to limit the number of people in a flat, find it easier to gather evidence, then take effective measures at the NSW Civil Administration Tribunal to get apartments cleared and fines imposed.

Pet-keeping – greater flexibility around pet ownership rather than automatic blanket bans. This includes considering each case on its merits.

Smoke drift – allows the owners corporation to enforce bans if nuisance smoke drift occurs, rather than leaving it up to individual unit owners. Of course this is not intended to result in banning all residents from smoking in their own units.

Owner renovations – a more common-sense approach such as allowing owners to do minor renovations and cosmetic changes to their own units without needing approval from the owners corporation. Reflecting the desire of owners to make it easier to live in a home that suits their needs and sense of style without requiring permission to hammer a nail in a wall.

Parking control – changes to enable greater control over unauthorised parking, such as the ability for owners’ corporations to enter into agreements with local councils to manage parking in common areas such as visitor parking spots. So once signs go up and the parking inspectors come in, everybody will have to be on their best behaviour.

Short-term letting issues – short-term stay arrangements can tend to result in excess noise and overuse of common areas. The reforms allow owners corporations greater control in enforcing by-laws around these matters.

Proxy voting restrictions on individuals controlling decisions by gathering a majority of votes by proxy. (otherwise known as proxy farming. – Proxy farming is when individuals or minority groups collect votes from fellow owners who can’t or won’t attend their buildings’ annual general meetings, giving them a majority over those who actually turn up at the meetings.)

Tenant participation provisions for tenants to take part in owners corporations meetings and to be represented on strata committees, in cases where the majority of units are tenanted.

Dispute resolution – expanded tribunal powers to deal with strata disputes and to recover unpaid levies. The Tribunal would also be able to limit the matters that committees can make decisions about, and require votes on certain matters.

Transparency and accountability – lifting of the standards for building managers and managing agents such as the requirement to disclose conflicts of interest and any commissions they receive such as insurance commissions. It also includes placing time limits on managing agent agreements

Collective sales & renewal – increases the rights of owners to jointly end a strata scheme to allow the site to be sold or renewed, with the agreement of 75% of owners instead of the current 100%. Reforms would also protect the rights of owners to ensure at least the current market value of their lots plus extra to cover costs, and put protections in place for elderly and vulnerable owner-occupiers. Similar to how things run in New Zealand, North America and the UK.

New building conditions requirements for developers to lodge a two percent (2%) bond of the contracted price of the building as security for defective works. Effectively, owners of new apartments who discover defects will no longer face the choice of accepting them and paying for rectification themselves, or enduring the hassle of pursuing wayward developers through the Courts to get what they paid for.

Modern flexible schemes such as enabling voting to occur through the post, electronic means or secret ballots, and accommodating meeting attendance through electronic communications such as teleconferencing and social media.

The submissions for feedback are currently being reviewed and we look forward to seeing what the final proposal is prior to enactment.

If you would like any further information on this topic, please contact:

Claire Martin

Solicitor

Phone: (02) 8239 6511

Email: claire.martin@kreissonlegal.com.au

This communication has been prepared for the general information of clients and professional associates of Kreisson Legal. You should not rely on the contents. It is not legal advice and should not be regarded as a substitute for legal advice. The contents may contain copyright.