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New Strata Reform Laws – three important changes that will make a difference

New Strata Law reforms - the changes

New Strata Reform Laws are here! For a long time Strata professionals and Strata property owners have been lobbying for reform to the NSW Strata Laws, believing that many areas required updating and change.

In October 2015 two reform bills were presented to parliament by the Minister for Innovation and Better Regulation, the Hon. Victor Dominello MP.

There have been many submissions by industry bodies, leading experts and Strata Community Australia (NSW), and the bills have now passed and are expected to take effect from mid-2016.

With strata living fast becoming the predominant choice of housing, especially in the cities, CBD, and close to centers of employment, a review of the old strata legislation was long overdue. The new regulations will rectify many of the shortfalls and make it easier for over 2 million people who are already living in Strata Schemes.

It is expected that half of Sydney residents will live in Strata Schemes by 2040 and these changes will ultimately affect all strata owners and occupants in the many strata schemes across NSW.

The three important changes that will make a difference:

  • A flexible and fair mechanism for sale and renewal

Once the laws take effect only 75% of owners will be required to agree to redevelop, renew or sell a strata complex.  This will on the one hand make it possible to achieve the outcomes wanted by the majority of owners, and on the other, make it more difficult for those opposed to stop it.

Provisions have been made for consideration and compensation for owners.  Though the changes may not please everyone, on the whole they are an improvement, with the main focus being on those older complexes that are in desperate need of repair, leading to many owners living in extremely poor conditions.

With the demand for strata living getting higher, and a large number of older buildings requiring expensive major repairs, redevelopment is often the best option.

  • A defects bond to repair building defects in new developments early

Under the new regulation, a bond will be introduced to cover repairs in an attempt to safeguard the interest of the strata owners.  This new regulation has been introduced to remedy the backwards and forwards which occurs between Owners Corporations and developers or builders, when trying to have building defects, due to poor workmanship and building materials, repaired.

  • Updated rules to help prevent proxy farming

Proxy farming, a system where votes are collected by proxy, is a growing concern among many strata owners.  These proxies can sway decisions which are not necessarily in keeping with the opinions or wishes of the majority of owners.  This has been addressed under the new laws and should provide a fairer process when voting on the Owners Corporation board and any other major issues.

If you have any questions in respect to the new laws you should speak to your strata manager or industry professionals on how these changes affect your strata scheme.  Visit the Strata Community Australia (NSW) website for further information or contact a member of our Property Law team.


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