Strata reform regulations the next step: Peter Chittenden

If you’re currently living in an apartment, planning a purchase or have an investment apartment, it’s important to know that the next and final stage of the big review of Strata Schemes in NSW has been announced.

Draft regulations detailing the backbone of the changes, have been released by The NSW Government to support the wide ranging strata reforms that were passed back in late October 2015.

The Strata Schemes Management Regulation 2016 and the Strata Schemes Development Regulation 2016 that underpin the new Strata Schemes Management Act 2015 and the Strata Schemes Development Act 2015 are due to come into effect later this year.

Peter Chittenden is managing director for residential of Colliers International. He can be contacted here.

The regulations contain a lot of detail and the key points contained in the regulations include:

The provision to accommodate modern technology for virtual meetings and electronic voting which many time poor people will appreciate, and the changes might also encourage more active involvement by owners.

Another regulation and a change that has attracted a lot of comment are the provisions for the documentation and procedures for the collective sale and renewal reform that enables a minimum of 75% of owners in a scheme to jointly agree to sell or redevelop their scheme. As possibly one of the biggest changes, this area needs careful consideration.

There’s also a draft model by-laws on a wide range of issues such as pet ownership and smoke penetration.

Draft Strata Schemes Management Regulation 2016 

The proposed Regulation is extensive and it aims to support strata communities in a number of ways including some of the following summarised key points:

Protecting a scheme’s assets by:

• Outlining what the developer’s maintenance schedule should contain.
• Providing a ‘common property memorandum’, which owners could adopt.
• Setting out how the new building bonds for new strata buildings would function.

Helping schemes to operate effectively by:

• Allowing for different types of voting procedures.
• Specifying that voting records, including electronic voting records, need to be retained for 12 months only.
• Setting out the process for mandatory Fair Trading mediation.
• Establishing that certain financial matters would not require an owners corporation meeting.
• Setting out clearer approval requirements for renovations to make it easier to get basic renovations done with no, or minimal, approval.
• Structural renovations would continue to require approval by special resolution or as set out by the strata scheme in a by-law.

Clarifying and reinforcing key accountabilities by:

• Providing procedures to elect members for the strata committee, including tenant representatives.
• Setting out additional matters and documentation requirements for the agenda for the first annual general meeting.
• Determining the insurance requirements for schemes.
• Clarifying that owners corporation responsibilities could only be delegated to a strata managing agent or strata committee (formerly called ‘executive committee’).
• Outlining requirements for window safety devices.
• Determining how schemes could set and enforce rules to limit the number of adults that can occupy a bedroom. An important and sensitive area for many buildings.
• Listing the offences that may result in penalty notices.
• Setting out the content that should be included in:
  • Payment plans for late strata fees,
  • Statements of key financial information,
  • Receipts issued by treasurers of owners corporations.

The Regulation also include details such as:

• Accountabilities to prevent financial mismanagement.
• Continued provisions allowing lot owners and prospective purchasers to inspect financial and other records.
• Requirements to ensure that building assets are better maintained.
• The approval process for owners seeking to make changes to their lot, and as apartment buildings age this becomes an ongoing issue for many Schemes.

Big Issues – Time To Comment

A fully detailed Regulation Impact Statement outlining the objectives and detail of each proposed regulation is easily accessed from the Fair Trading website.

It makes good sense that all stakeholders be encouraged to review the drafts and suggest improvements needed to the draft regulations. This should help make sure that as far as possible the new regulations work as effectively as possible. Important when you consider the review has taken decades to come around and years to put into force.

The Government has allowed for written submissions on the regulations to be made up until 27 May 2016, which is a tight timeframe, however we should all make our views known.