In brief - Strata and community title law reform to facilitate
Proposals put forward by the NSW government will make it easier
to extinguish strata schemes, allowing thousands of apartment
buildings to undergo the redevelopment they desperately need.
NSW government releases position paper on proposed changes to
In November 2013, the NSW government released a position paper
on proposed reforms to strata and community law, Strata Title Law Reform.
The paper sets out over 70 changes ranging from pet ownership,
smoking restrictions and occupancy limits to possible redevelopment
of older and dilapidated buildings.
Easier termination of strata schemes to facilitate
redevelopment of ageing apartment blocks
One of the most significant changes proposed involves a six
stage process to permit the extinguishment of strata schemes with a
75% consensus of lot owners (not based on unit entitlements),
thereby giving owners greater opportunity to vote and sell
buildings to property developers and investors. The current law
provides that a strata scheme can only be terminated with the
unanimous support of all owners.
These changes would apply to all strata schemes in NSW, but are
mainly targeted at older residential apartment blocks that are well
past their prime.
It is predicted that the reforms would open the doors for
developers and investors, particularly in the Sydney area, where
there are numerous ageing and old apartment blocks very much in
need of a makeover.
Introduction of bond for work on buildings with more than three
Another major change is the introduction of a 2% bond (based on
the contract amount for the building work) to be paid by developers
of strata buildings with more than three storeys. The bond must be
paid as assurance that defects will be rectified.
This will add to the cost of development. However, the Urban
Taskforce which represents developers has welcomed these changes by
saying: "The proposed changes to the NSW Strata Act
will give greater confidence to the development industry and to
owners corporations that apartment buildings will be well designed
New by-laws to address pet ownership, cigarette smoke and
More than 14 changes are proposed to the standard strata model
by-laws. The model by-laws are a set of rules which govern the use
of common property by residents and are adopted by many strata
Some of the changes will give owners the ability to keep pets
(such as cats, small dogs, birds and fish) without permission,
which will give new hope to pet owners wishing to live in apartment
It is also proposed to amend the model by-laws to deal with
cigarette smoke drift and to make it clear that cigarette smoke can
be a nuisance or hazard to other residents. Pursuant to the reform,
repeat balcony smokers will face steep fines.
Overcrowding has also been a constant problem in apartment
living, so it is proposed to amend the model by-laws to limit the
number of people who can occupy a lot to combat this issue.
Property developers to welcome greater opportunities to
redevelop old apartment buildings
These reforms will no doubt receive some political backlash from
the community, as they affect the proprietary rights of unit
In NSW there are currently more than 72,000 strata and community
schemes. Many of these cannot be maintained by the owners and are
in desperate need of redevelopment. There is no doubt that these
changes will be welcomed by investors and developers. However,
there will be some owners who will not want to sell, for whatever
Some of the changes dealing with by-laws may be perceived as
infringing on personal rights to occupy one's own home and use
the common property of a strata scheme. However, they do seem to
reflect the current values of Australian society.
Strata law reform - what happens next?
The NSW government is in the process of drafting a Bill to give
effect to these reforms. The Bill is expected to be tabled in
Parliament in early 2014.
We will provide further updates on the strata and community
title law reforms as new information comes to light.
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