Crystal Ball for Strata Reform in 2024

Likely strata reforms
to take place in 2024

The pace of strata reform is poised to accelerate in 2024 with the new Property Services and Strata Commissioner, John Minns about to embark on the next stage of a major overhaul of legislation and regulation.

2023 closed with the passage of the first major updates to strata laws since the current legislation came into effect in 2015.

It also saw the formal commencement of the new Building Commission, headed by David Chandler, with sweeping powers to regulate the entire residential construction cycle and more to come with new legislation planned for early 2024.

As Mr Minns and the Government have made clear, the strata package is only the first instalment of more far-reaching measures. The NSW Government has as its core objective to build consumer confidence in strata living. This aligns with the work of the new Building Commission to enforce higher standards in the construction pipeline and aims to instill the same values of integrity and trust through the entire strata continuum and building life cycle.

The starting point is the unfinished business of the former Government’s strata review released in December 2021. The new Government has picked up this report and the 2023 legislation implemented 30 of its 109 recommendations. The rest can be grouped into a few key themes:

Building management committees

A series of recommendations to tighten regulation of complex layered strata type schemes are timely with a growing number of large mixed-tenure (private, affordable and social housing) developments in the pipeline.

Transparency and governance

A range of recommendations deal with the functioning and day-to-day operations of strata committees and strata service providers. Perhaps the most far-reaching may be a proposal to mirror the general protections against unfair contract terms in the Australian Consumer Law in state laws governing owners corporations – which are not, currently, defined as consumers under that regime.

This will have particular implications for embedded networks. A specific focus in the reform package will be on reforming and in some cases overturning long term utility contracts initiated by developers that lock owners and residents out of competitive markets for electricity and other services.

Building managers

A raft of measures to aim to bring building manager obligations more into line with those applicable to strata managers. A key recommendation is to establish a clear duty of care to act in the best interests of owners corporations.

Maintenance

Several recommendations seek to clarify and strengthen the powers and responsibilities of owners corporations to keep common property in good order and repair. Perhaps the most contentious will be proposed measures to enforce these obligations through penalties or formal orders from the Building Commissioner. Others seek to strengthen the hand of owners pursuing sustainability initiatives over objections from fellow owners.

A wider reform agenda

The Government has flagged other areas it wants closely scrutinised. While the first tranche of legislative reforms included some measures to encourage strata renewal, it wants to do more in this area to encourage redevelopment of under-capitalised residential schemes.

Work is also under way on potential hardship measures to assist owners struggling with levy arrears. And strata insurance – both affordability and availability – will almost certainly come under the regulatory microscope.