NSW Strata Reform Draft Bills

21/07/2015 3:48 am

3 storey walk Up

This article was prepared by DFP

After three years of consultation, the NSW Government has released draft strata legislation, the first major reform of strata laws since the Strata Titles Act commenced in 1973. The changes include 90 areas of reform through the Draft NSW Strata Schemes Development Bill 2015 and the Draft Strata Scheme Management Bill 2015 which aim to address what has been described as an outdated strata scheme. Strata schemes are incorporated in city high rises, suburban apartment buildings, mixed use developments, offices, townhouses and dual occupancies (to name a few) and these schemes are governed by the Strata Titles Act legislation that was created for much simpler, smaller residential and commercial developments primarily in the form of self-managed walk-up apartment buildings.

There are now over 72,000 strata and community schemes in NSW and this number is expected to rise significantly over the coming years due to an increased need for urban consolidation primarily as a result of NSW’s growing population. However since the Strata Titles Act 1973 commenced there have only been approximately 825 strata schemes terminated. This poses a significant issue for NSW’s housing stock as buildings reaching the end of their economic life are not being substantially repaired or replaced. The current strata schemes for existing buildings can make it difficult to do so.

Current strata legislation requires unanimous support from all owners to terminate the strata scheme which makes it particularly difficult for strata schemes for larger existing developments. However one of the main proposed changes to the strata legislation is the collective renewal and sale strata reform which reduces the percentage of support required. The change allows for a strata scheme to be terminated when there is support from a minimum 75% of owners thereby facilitating termination of the strata scheme if required. This reform will only apply to future strata schemes, not existing strata schemes. However, existing strata schemes can vote to opt in to this reform change.

The collective renewal and sale reform includes a number of checks and balances in the process, including:

  • Compensating lot owners the market value of their property as a minimum, plus moving costs as detailed in the Land Acquisition (Just Terms Compensation) Act 1991.
  • The Land and Environment Court will be referred renewal plans for final consideration.
  • A free advice service provided to all owners by the NSW Government, including assistance to vulnerable owners.

The proposed collective sale and renewal strata reform will facilitate the urban renewal of housing stock in the Sydney Metropolitan Area and throughout NSW, as well as provide opportunities to develop undercapitalised land in existing urban areas of Sydney and other parts of NSW. However, any changes to strata legislation will need to remain fair and transparent for all stakeholders.

Other areas of strata legislation reform include renovations, defects, dispute resolution and model by-laws. You can view the draft legislation and read about all the proposed changes on the NSW Fair Trading website.

If you have an inquiry in regard to the collective renewal and sale reform of the strata laws, please contact DFP to discuss.