The NSW Parliament has approved major reforms to the state’s strata title laws.
Around 90 changes have been made to the existing strata laws, which were first made in 1973 to regulate the redevelopment, sale, renovation, proxy farming and parking of buildings in the state.
Minister for Innovation and Better Regulation Victor Dominello said: “Today more than two million people live and work in strata. The new laws will cater for the needs of 21st century strata living… [and] modernise collective decision making processes, increase protections against unresolved building defects and improve outdated regulation impacting on renovations.”
75 per cent approval needed for redevelopment
Key among the reforms, which commence on 1 July 2016, is a change to the required amount of approval needed before a strata renewal or redevelopment plan can be implemented. Instead of needing 100 per cent approval from lot holders in a strata scheme, the new law requires 75 per cent of lot holders to agree.
The controversial change, which was supported by the Property Council of Australia, has been brought in to “create a new democratic process for collective sale and renewal of strata schemes”.
The intention of the change is to boost the redevelopment of older, low-density strata building into new, denser and more efficient housing.
Property developers have welcomed the move, with Urban Taskforce chief executive Chris Johnson saying the reform was needed as strata living becomes more mainstream.
“To have legislation that is contemporary with modern living is essential,” Mr Johnson said.
“We congratulate the Parliament and the NSW government in not weakening the reforms after significant scaremongering from some interest groups.”
He said the change to a 75 per cent agreement by lot holders to allow termination of the strata scheme allowed for redevelopment opportunities.
“This is critical to ensuring ageing, substandard apartment buildings can be replaced with modern buildings which meet all building standards and cater to the current housing market.
“We believe the legislation contains all the necessary checks and balances to protect the interests of the more vulnerable strata owners.”
A “completely shameful piece of legislation”
Despite these assurances, there have been criticisms of the 75 per cent approval rule, with concerns largely centering on the impact on those who don’t want to sell their homes.
Greens NSW MP Dr John Kaye said the strata title laws could see elderly and vulnerable apartment owners “turfed out” of their homes to “fatten up the profits of developers and other residents”.
Speaking to The Fifth Estate, Dr Kaye said it was a “completely shameful piece of legislation” that “took away the rights of strata owners, including many older people”.
“This is a direct attack on their security and on their capacity to live out their lives the way they had planned,” he said. “You wouldn’t do this to people living in freestanding houses, yet the NSW government has turned on strata owners.
“The legislation was an open invitation to developers to harass strata owners, build a 75 per cent majority, and evict those who would be determined to stay. It’s a gift to the real estate agents at the expense of the elderly, the vulnerable and people who have put their life savings into their strata unit.”
Although Dr Kaye said it was “clear” that reform was needed, he suggested that “the very least” government could have done was mandate that strata owners commission an independent building report to show the state of the structural integrity of the strata building. Only if the independent report could show that the integrity of the building was compromised, said Dr Kaye, should redevelopment be approved.
He said: “Although that’s not perfect, that would have been better than the legislation that went through the upper house that does not require any evidence of the state of the building, or any evidence that redevelopment is necessary to protect the building, or to avoid unreasonable repair costs.”
He said that the next 12 months would be the “beginning of a flight of heart-wrenching examples of elderly people losing their homes to fatten up the profits of developers”.
“The Greens will be working with the community to try and pressure the government into reversing these appalling laws,” he said.
Although the reforms have been contentious, there has been little doubt that changes of some kind have been necessary. Professor Bill Randolph, director of City Futures Research Centre at the University of New South Wales, told The Fifth Estate: “There is no doubt that we needed to consider how strata titled property is sensibly terminated when it has either become too costly to maintain or in an area that might be put to better use.
“This legislation represents a catch-up 50 years after the original legislation that created strata in the first place was passed – without thinking through how we might ever get rid of it.”
He added that although the impacts of the process of strata termination and renewal have “yet to be assessed at a local scale in those areas where it is most likely to be a feasible opportunity”, he said that the new rules have “the potential to transform suburbs where there is enough value add to spur a widespread redevelopment process”
However, he noted that the planning system has “not recognised this as a potential game changer” and highlighted that “the potential loss of affordable accommodation both for sale and rent needs to be recognised as a key strategic planning issue”.
Other reforms created in the bills include provisions to: make it easier for owners corporations to manage issues like pets, parking and by-laws; support the “responsible management” of schemes with new accountabilities for strata managing agents; establish a new process to help ensure building defects are addressed early in the life of the building; and enable modern forms of communication (including new options for strata schemes to keep and issue electronic records, issue email updates and attend meetings “virtually”) to allow greater participation in schemes.
Public consultation on draft regulations to accompany the new acts, including model by-laws, will commence in early 2016.