Australia: Changes to strata laws in NSW aim to deliver urban renewal and boost housing supply

Last Updated: 28 October 2016
Article by Anneka Frayne

New strata laws which come into effect in NSW on 30 November introduce changes to the collective sale and renewal process, remove some obstacles to owner renovations and embrace modern technology in the administration of strata schemes.

New rules for collective sale and redevelopment of buildings

As cities become more densely populated, strata arrangements are becoming ever more prevalent. In NSW more than a quarter of the population lives in, owns or manages strata. It is estimated that by 2040 half of all people in NSW will be living in strata accommodation.

Of all the changes to laws governing strata schemes introduced by the Strata Schemes Management Act 2015 (NSW), the most significant – and controversial – concerns the collective sale and redevelopment process. At present a strata scheme can be terminated when there is unanimous support from all owners.

Under the new law, a strata scheme will be able to be terminated with the approval of 75% of owners. However, owners corporations of existing strata schemes will need to agree to opt in for the new arrangements to apply. If 50% or more of the owners do not agree to opt in, this change will not be made to the existing strata scheme.

If 50% or more of owners agree to opt in, there are specific steps to be taken in considering a proposal to sell or redevelop a strata scheme. These include the formation of a strata renewal committee with the ability to appoint professionals like lawyers, tax experts and valuers and the development of a collective sale / renewal plan.

Owners must be given a minimum of 60 days to consider the plan, which will lapse if it has not been approved by 75% of owners within 12 months. Once 75% of owners have approved the plan, it will be referred to the Land and Environment Court for approval.

The Department of Fair Trading will establish a Strata Renewal Advice and Advocacy Program, which will include a dedicated hotline for strata owners and additional protections for elderly and vulnerable owner-occupiers.

The new process for selling and redeveloping ageing strata buildings is intended to promote urban renewal and increase housing supply in desirable suburbs where people want to live, while at the same time protecting the rights of vulnerable and dissenting strata owners.

Easing restrictions on owner renovations

One eminently sensible change is the removal of restrictions on minor and cosmetic renovations, such as the installation of picture hooks.

A general resolution requiring 50% of the vote of strata owners will be required for renovations which have a more significant impact, such as the installation of floorboards. A special resolution requiring 75% of the vote will need to be passed for renovations which will have an impact on the external appearance or the structure of the building.

Use of social media and other modern communication tools

Another practical and welcome change introduced by the reforms is allowing strata schemes to make use of modern technology for administrative purposes. This includes circulating information by email, allowing electronic voting and making use of social media and teleconferencing for holding meetings.

Reform of model by-laws regarding pets and smoking

The legislation introduces new model by-laws concerning keeping pets and smoking. Model by-laws are suggested by-laws that owners corporations can choose to adopt if they wish to do so.

All strata schemes will need to review their by-laws within a year of the introduction of the new laws on 30 November 2016. Owners corporations will be encouraged to consider lifting their ban on the keeping of pets during this review process.

Strata schemes will still be able to determine their own rules concerning pets. However, schemes will not be able to act unreasonably in their assessment of written requests to keep a small pet such as a cat, especially if it is kept inside.

Assistance animals such as guide dogs and other animals which assist people with psychiatric disabilities cannot be banned by strata scheme by-laws.

Another model by-law which strata schemes can choose to adopt covers banning residents from allowing smoke to drift into another resident's lot or into common property. The new laws define smoking as a "nuisance or hazard".

As with the model by-law concerning keeping pets, formal adoption of the smoke drift by-law by the owners corporation is required for the by-law to take effect.

Owners corporations will also be able to set occupancy limits on apartments and will be able to call council parking inspectors onto the property to issue fines when cars are parked without authorisation.

Anneka Frayne
Strata and property law
Stacks Law Firm

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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