Major shake up of NSW strata laws – the process continues

We’ve reported before on the NSW Government’s review of strata laws. At that time, the review was just getting underway and we had our own wish list of reforms.

The Government has just released its Strata and Community Title Law Reform Position Paper, so it’s time to revisit the reforms. The Position Paper follows the release of the Government’s Discussion Paper in September 2012 and a period of round-table discussion meetings with stakeholders in 2013.

The Position Paper sets out 70 proposed reforms. One has grabbed the headlines – to introduce a process whereby a strata scheme can be terminated (ie the building sold or developed) via a 75% majority. Currently, one owner can prevent the rest from selling the building to a developer, even in circumstances where the building is well past its economic life. This reform is interesting and difficult because a balance must be struck between individual property rights (all important in our society), the rights of the collective strata members, and the economic benefit to be gain to the community from housing renewal. According to the Position Paper, the process will account for the views of each lot owner and seek to develop a consensus and collective decision-making, where possible.

Some of the other proposed reforms include:

  • Changes to governance to increase participation, transparency and accountability. These include options for secret ballots, greater opportunities for tenant participation (although no tenant voting rights), new rules governing the election/appointment and activities of committee members and strata agents.
  • The establishment of broad principles for the setting of by-laws, including that they cannot be unlawful, unreasonable, oppressive or discriminatory.
  • Amendment of the model by-laws regarding cigarette smoke, the installation of hardwood floors, pets, and over-crowding, and the introductiuon of greater penalties for people who repeatedly breach the by-laws.
  • New processes for dispute resolution.

The Position Paper doesn’t appear to propose giving owners and residents more power to stop short term rentals in their strata schemes. Given the problems these rentals can create, we think this is an oversight.

This reform is long overdue, given that the existing laws were drafted over 50 years ago, and do not reflect the way we live today. Importantly, more people are living in strata, a greater proportion of the population are long term tenants and not home owners, strata schemes have increased in size, and the way in which we live and communicate has changed dramatically. The current legislation has developed in a piecemeal way over time, and is not only outdated but highly complex. The reform of these laws has been rightly described by the Minister of Fair Trading, Anthony Roberts MP as”a “mammoth task”.

The steps so far:

  • Online consultation: December 2011 – February 2012
  • Release of Discussion Paper, September 2012. More than 1,900 submissions received.
  • Series of roundtable discussion meetings with stakeholders: 2013.
  • Release of the Position Paper: November 2013.

Presumably the next step will be draft legislation.

 Tall strata building

Leave a Reply

Your email address will not be published.