New Reforms to Strata Laws

New reforms on the cards for NSW Strata Laws

The New South Wales Government is embarking on more significant reforms of strata laws, aiming to create a fairer and more transparent system for community living.

With over 85,000 strata schemes in NSW compared to just 50,000 in 1996 and an additional 1,000 new – and increasingly large and complex –  strata schemes registered each year, this growth continues to outpace the development of appropriate legislative and regulatory settings.

To refocus on strata living and facilitate the necessary changes, John Minns will now take on strata responsibilities, becoming the state’s Strata and Property Services Commissioner, responsible for oversight and reform across the entire sector, with strata at the core.

The first step will be to press ahead with a number of recommendations from the 2021 Report on the statutory review of strata laws, which had not been acted upon before the change of government in March 2023.

The bill was introduced in Parliament on 10 October and passed on 22 November and include reforms to the following acts:

1. Strata Schemes Development Act 2015
2. Strata Schemes Management Act 2015
3. Community Land Management Act 2021
4. Community and Development Act 2021

Reforms include:

Enhanced transparency in strata collective sales and renewal

Owners will be required to disclose conflicts of interest, and courts will have the authority to award costs against those acting unreasonably, closing the loopholes that have entangled some strata residents in court battles for years.

Subdivisions 

Where a subdivision involves only small amount of common property, this amendment proposes to avoid the need to undertake a review of the unit entitlements for the entire strata scheme.

Create pet-friendly strata

A ban on fees, bonds, or insurance as a condition of having a pet, simplifying the process for residents to keep pets.

Ensure competitive pricing for goods and services

All owners corporations, regardless of size, are obligated to obtain two quotes when expenditures exceed $30,000, ensuring competitive quotes for significant expenses. These quotes must be sourced from independent, non-affiliated entities. Should obtaining such independent quotes prove unfeasible, a detailed explanation must be provided to justify why this requirement could not be met.

Intervene in dysfunctional strata schemes

NSW Fair Trading will have the ability to request the NSW Civil and Administrative Tribunal to appoint a compulsory strata managing agent to aid in managing dysfunctional strata schemes.

Improve notice periods

Requiring the original owner to deliver certain documents to the owners corporation at least 14 days prior to the meeting. The time period for the delivery of General Meeting notices will increase from 7 days to 14 days.

Reduce the value of voting power of an original owner

The value of a vote cast by an original owner of a strata scheme must be reduced by two-thirds if the total unit entitlement of lots for which the original owner is entitled to a vote is at least half of the aggregate unit entitlement of the lots in the scheme and the scheme comprises more than 2 lots.

Emergency levies

The time frame for payment of a special levy for urgent repairs, will be reduced from 30 days to 14 days. This change is intended for essential building repairs aimed at mitigating immediate and severe risks to the health and safety of the building’s occupants.

Better notification of terms of appointment 

Imposing an obligation on managing agents to notify their owners corporation that their term of appointment is coming to an end at least three months before, and not earlier than 6 months before, the term will end.

Simplify record keeping

After the amending bill becomes law, the owners corporation is required to maintain specified records, including strata rolls, in electronic form six months from that date.

Similar amendments have also been made to the Community Land Management Act 2021, with variations, especially in regard to the delivery of notices.

The NSW government sees these reforms as a critical step forward in ensuring a more modern, equitable, and transparent system for all residents in strata communities. Mr Minns has flagged more reforms in 2024 based on the balance of the 139 recommendations from the 2021 review and ongoing consultation with all strata stakeholders. The changes have been welcomed by the Strata Community Association. 

Read the full media report on nsw.gov.au

Community Land Management Act 2021

The amendments to the Community Land Management Act 2021 mirror changes made to the Strata Schemes Management Act. Key modifications encompass:

• the election and removal of committee members
• notice of expiring agency agreements
• reimbursement of funds used for another fund’s expenses
• shorter notice for levies related to urgent works
• the requirement for two quotes
• prevention of a blanket ban on pets or imposing a bond
• permission for the consolidation of by-laws without a by-law change
• extension of the notice period for AGMs to 14 days, and
• restrictions on votes held by company nominees and powers of attorney.

If you have any questions regarding these reforms, please contact your S+ Strata Manager.

Nov 2023