Strata Laws

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The past few weeks have been hectic for real estate with headlines about a possible shift in market sentiment as the major banks all increased their home loan rates and we also saw a drop in auction clearance rates below 65%. 
And so somewhat lost among all of these headlines is the news about the passage into law of the long-awaited review of Strata Title Legislation in NSW.
The Strata Scheme Management Bill and Strata Scheme Development Bill have both passed the Legislative Council. The two bills contain more than 90 changes to how strata agreements are governed.
Long after the other headlines start to fade these changes are going to impact the market for many decades.
I think that the correctly described as a ‘once-in-a-generation reform’ to the state’s strata title laws after much debate will come into force from July 2016. The Minister for Innovation and Better Regulation (interesting title) Victor Dominello who has been responsible for the bills, said that the laws are an important step forward for the state.
He noted that more than two million people live and work in strata and that the new laws will cater for the needs of 21st century strata living.
“The new laws will modernise collective decision making processes, increase protections against unresolved building defects and improve out-dated regulation impacting on renovations,” he said.
The key changes have received a deal of publicity and have also attracted a lot of emotional comment but I think the case and need to renew many older buildings has been fairly established.
Across Sydney there are pockets of development from the 1960’s and 1970’s that fall a long way behind modern standards and amenity. If we fail to make it possible to redevelop these buildings then this paralysis can have a detrimental impact on urban standards and possibly create disadvantaged areas, where values fall and we see a cycle of neglected investment. In a dynamic city this sort of urban renewal is vital to the city’s livability.
Now of the nearly 100 changes in the updated legislation, most notable is the requirement that only 75% of owners will need to agree for an apartment building to be sold.
One of the other key points addressed is a move making it easier for owners to complete cosmetic and minor renovations to their apartments, again this is important to keep apartments modern and with the services and facilities that owners require without being consumed by over regulation and far too much red-tape.
The changes will also prevent proxy farming, and while the extent of proxy farming is hard to measure, it can often be used to set up long-term appointments and policies in a building that do not always work for the owners. This change should be a welcome move.
Then we see another key change, which has also attracted a great deal of industry comment, which will see the introduction of a defects bond to fix building defects early in new developments. In the past we have seen some poor quality buildings leaving the owners corporation with a major headache and on some counts big repair bills that sometimes came on top of big legal bills because of a disagreement with a developer or their insurance company.
The new bill has a requirement of developers to lodge a bond of 2% of the contracted price of the building as a form of security to fix any defective work.
Here again the changes should be welcome and should not be seen as a threat among well-regarded developers. The suggestion that the introduction of these bonds might further inflate prices is a bit of a bluff as experienced developers have to their credit always understood the importance of delivering quality buildings, and most already do so.
The new provisions have also taken on some house-keeping issues to tackle that can have an annoying or even detrimental impact on people’s daily lives. These include the addressing of the perennial issues of (illegal) parking, pets and smoke drift.
According to The Minister the over-riding objective has been to modernise our strata laws to better reflect the way people live and work in 2015 and beyond, and as everyone is aware the numbers of people living in strata developments is now massive and growing.
In some parts of Sydney in areas like Rhodes, Chatswood, the CBD, Zetland and Pyrmont, plus many other spots, the concentrate of apartments and the density of population really dictates that the rules need to be keeping up with the pace of modern development, and to date they have not.
It is more than 20 years since the last major amendments to strata law were made and over those two decades we have seen how and where many people live change dramatically. Today’s strata landscape is also much more varied than a three-level walk up building and now includes city high rises, sometimes very large scale buildings, townhouses, dual occupancies, offices, retirement villages, mixed use and tourism.
According to published figures there are currently over two million people, including 25% of Greater Sydney’s population, living or working in more than 75,000 strata schemes across NSW.
But what is a very interesting figure is the prediction that by 2040, half of all Sydneysiders will be living or working in strata and that single static alone underlines the urgency and importance of the current review. The new Strata Scheme Management Bill and Strata Scheme Development Bill follows a comprehensive community consultation, with over 3,000 individual submissions received.
With the bill soon to become law it’s a good idea to take a keen interest as the development industry and buyers are all going to be impacted for many years to come but I think the laws do go a long way to creating a better outcome for strata buyers and developers and their passage ends a long drawn out process.
 
Peter Chittenden is managing director for residential of Colliers International. He can be contacted <a href="https://www.projectagenda.com.au/" target="_blank">here</a>.
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New strata rules set to have big impact: Peter Chittenden

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This week marked the first anniversary of new strata laws across New South Wales.

They appear to have worked well. There were over 90 changes implemented by the then Innovation and Better Regulations Minister Victor Dominello.

The new laws for apartments modernised strata laws to reflect 21st Century living in the biggest overhaul in four decades.

There are around 90,000 working strata schemes across the state ranging from duplexes to those with 100s of flats. The state recently registered its 96,000th strata. More than a few have disappeared over the years.

Some two million NSW residents currently live in the apartments, units and townhouses, and that is set to rise dramatically from the trend of downsizers into apartment living. 

The new rules effected everyone who owned or rented with the laws marking the most significant reforms since 1973 revisions. 

Some changes could be implemented quickly while others will still take time - especially the reform that paved the way for urban renewal by the compulsory demolition particularly of well-position small, older apartment blocks on large land holdings. There have been a few easy gets on this front with owners delighted at the money on offer from developers.

NSW was the first place in the world with strata title in 1961, so there is no doubting they needed modernisation. There were modern day issues to address - issues such as using BBQs on apartment balconies.

Around 30% of schemes in the Sydney date back more than three decades.

Many of the new by-laws only apply to new strata schemes, but could be adopted if older strata embraced them.

All strata schemes had to have reviewed their own by-laws by 30 November. 

Owners corporations were to determine by-laws that best suited their strata.

The existing by-laws that apply to your strata scheme depend on the date the strata plan was registered.

If, as a result of the latest review, your scheme proposes changes to the by-laws, these must be put to a special resolution vote at a meeting of the owners corporation.

Any new by-laws must also be registered with the NSW Office of the Registrar General within six months after the special resolution. 

A by-law must not be harsh, so they for instance cannot restrict children, and cannot restrict the keeping of an assistance animal. Pets are a matter for each strata to work out themselves.

A copy of your scheme's by-laws is kept on the strata roll and is available from either the secretary of the owners corporation or from your managing agent.

While things have gone seamlessly, there appears to be a need for some review from Macquarie Street.

It has been suggested a loophole emerged after owners took action at the NSW Civil and Administrative Tribunal (NCAT) against a resident who broke the bylaws by ripping up her carpet to use the concrete slab as flooring. It emerged they could not, under current rules, impose a fine on her.  

Of course short term letting is the biggest unresolved strata issue, which is still subject to NSW parliamentary review.

This article was first published in the Saturday Daily Telegraph.
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jchancellor-FAypfDUnLy

New strata laws working well on year anniversary

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The first hotel on sale under NSW's new 75 percent strata renewal rule is Sydney's Seasons Harbour Plaza hotel in Darling Harbour.
The new legislation came into force in November and forces strata unit owners to sell if 75 percent agree.
An AFR report noted most of the strata asset's owners – more than 90 – have agreed to sell the 119-room hotel at 252 Sussex Street in one line for a price of about $70 million.
Gus Moors , Colliers International's head of hotels, said in one of the most tightly held markets in the country, the sale of Seasons Harbour Plaza Sydney represents an incredibly rare opportunity to secure a hotel asset with immense opportunity.
The hotel is 446 sqm, 19-floor hotel and has rooms ranging from a 30 sqm studio to a 157 sqm loft penthouse. It is leased to the Seasons Apartment Hotel Group. 
The hotel's recent room sales have been sparse. Room 803 sold in 2015 for $625,000.
It originally sold for $305,000 in 1997.
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First hotel on sale under NSW's new 75 percent strata renewal rule

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Strata by-laws that impose restrictions on short-term letting, including Airbnb, in residential-only Sydney apartment blocks are invalid and only councils have the authority to take these steps, according to NSW Fair Trading.
The watchdog has modified its Strata Living handbook to warn strata committees and owners corporations that they can’t pass by-laws restricting holiday letting just weeks before a discussion paper on new holiday letting legislation is released. 
“Section 139 (2) of the Strata Schemes Management Act 2015 states that no by-law can prohibit or restrict the devolution of a lot or a transfer, lease, mortgage or other dealing relating to a lot,” a Fair Trading spokesperson for Innovation and Better Regulation Minister Matthew Kean was quoted by Fairfax Media.
The statement was immediately welcomed by peer-to-peer letting platform Airbnb, which said it protected the rights of people to share their own homes.
“Strata laws prevent an owners corporation restricting an owner from letting their lot, including short-term letting,” says a recent amendment to Strata Living. 
“The only way short-term letting can be restricted is by council planning regulations,” it said.
A government spokesperson explained that this means by-laws telling owners that they must abide by local council zoning restrictions are invalid as only local councils can enforce their zoning.
By-laws supporting local zoning have been used by some strata schemes to work around the restrictions on by-laws directly banning short-term letting.
“The local council ‘owns’ the zoning regulation,” the spokesperson told Fairfax Media. “Only they can enforce it.”
Head of public policy ANZ at Airbnb, Brent Thomas added that it was unfair to “discriminate against apartment dwellers, and prevent them from participating in the sharing economy in the same way house dwellers can”. 
However, the ruling has not gone well with strata managements. Reports say local councils are receiving between zero complaints in a year to 10 a month in Sydney areas where short-term letting is most prevalent.
While the due process to turn a discussion paper into a Bill and then passed by Parliament could take a year, the ministry advised that owners can only pursue the issue of short-term letting through their local council.
A senior executive of Owners Corporation Network, which represents strata owners, Karen Stiles said the OCN was awaiting the NSW parliament amending laws to allow owners to effectively manage their communities or “we will see a summer of chaos in Sydney apartment blocks”.
“Local council engagement with this is patchy, to say the least.”
A spokesperson for City of Sydney Council – where residential letting is defined as three months or more – denied that they have backed off from pursuing non-compliant holiday lets but said they had very few complaints, two of which were currently being  pursued.
“The City carefully addresses all reports about short-term letting but has received complaints from only a small number of people,” said the spokesperson.
In contrast, Waverley Council – which covers Bondi Beach – receives about 10 complaints about holiday letting a month, while in Randwick there has been no council action against non-compliant short-term or holiday letting over the past summer.
A spokesperson for Woollahra Council said they had only had a handful of complaints in the past nine months but two of the properties concerned were now applying for official bed and breakfast permits.
They said the complaints were specific such as late-night noise or misuse of waste bins.
Other states have been facing similar issues as well. Last year, research by a <a href="https://www.urban.com.au/expert-insights/51953-queensland-strata-residents-concerned-about-airbnb-security-grant-mifsud" target="_blank">Queensland body corporate</a> company indicated that one in three Queensland strata residents were concerned about apartment security from Airbnb guests.
Commercial short-stay companies like Airbnb are expected to deprive the <a href="https://www.urban.com.au/expert-insights/72645-airbnb-escapes-tax-time-crackdown-but-mum-dad-hosts-left-with-a-bill-marshall-delves" target="_blank">Victorian Government of more than $14 million</a> in uncollected GST.
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Strata body corporate can't stop Airbnb rentals, only local Sydney councils

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Iridium Developments has bought four freestanding unit blocks from two strata corporations for $54 million in Sydney’s beachside southern suburb Cronulla, possibly the first group strata sale in NSW of its kind after new rules were implemented. 
The deal was struck in one line and the company is expected to demolish the buildings and construct a new complex, according to a report in The Australian.
The new strata laws, which came into force in in November 2016, say owners can sell and redevelop their block if 75 percent of owners agree and if some other conditions are met. According to government data, more than a quarter of NSW's population lives in, owns or manages strata.
Iridium Developments is backed by the Manassen family which has a track record in other Sydney developments.
The deal was brokered by JLL’s Dylan McEvoy, the report said. The firm said the deal was one of the first group strata sales of its kind in NSW after changes to the state’s strata laws. 
The blocks — 49-51 and 55-57 Gerrale Street — are opposite Cronulla Beach. 
The dated three-storey structures comprise 32 older, one-bedroom apartments. The site area of 2,921 square metres presented as a strong opportunity for redevelopment, and has potential for a nine-storey mixed-use development in the future.
McEvoy was cited by The Australian as saying the owners of the apartments were a diverse group and included investors.
“With a total sale price of $54m, each owner will take home a significantly higher sale price for their apartment than if sold individually. Most owners achieved two to three times the current market value of their apartments,” he said.
McEvoy said he was already seeing an increase in vendors inquiring about how the process could unlock the values of their buildings.
According to the report, John Thomas, chairman of the group of Gerrale Street residents, said the release of new planning rules in Sutherland Shire brought about changes to zoning which had added significant value to properties.
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Cronulla sees $54 million group strata sales after new rules

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The biggest overhaul of NSW strata laws in four decades is about to make apartment and townhouse living that much easier, according to estate agent John McGrath.
Affcecting those who own, rent or manage strata properties, more than 90 individual changes to strata legislation have been approved by the NSW Government.
It followed five years of public consultation which saw 3,000 submissions.
Most of the changes are effective from November 30.
"Not only are there changes for owners, but tenants are included too, which is an important step given the rising number of people renting their homes these days," John McGrath noted.
Owners can set a broader range of community rules, such as allowing or restricting pet ownership, classifying smoking as a nuisance (thus enabling more action to be taken against residents whose smoke drifts into neighbouring abodes), and paying the local council to issue parking fines for unauthorised use of common property, such as visitors’ parking spaces.
"There are some common sense changes in relation to how a strata property is run, such as allowing owners to use technology to communicate on issues, participate in meetings and cast their vote.
"This includes the use of social media, video and teleconferencing, electronic voting and distributing papers via email," he noted.
Tenants will have the right to attend owners’ corporation meetings, but won’t be able to speak or vote unless they hold a proxy on behalf of an owner. 
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Strata law overhaul to improve apartment living in NSW: John McGrath

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New South Wales has modernised its strata laws to reflect the realities of 21st Century living.
The laws come into effect on 30 November 2016, and are expected to set the pace of change for the industry as a whole, according to property services company, PICA.
Among the new legislation are relaxed requirements for attending general and committee meetings and voting.
Owners can now use conference calls and video conferencing to participate in meetings, removing the need for proxies.
Greg Nash, managing director and group CEO, PICA, said, investor owners who don’t live in or near their property will now be able to participate in meetings more easily without the expense and inconvenience of travel. They can keep a better eye on their investment and be more involved in decision-making.
“For strata managers being able to use modern technology to communicate will increase productivity and efficiency, enabling urgent matters to be addressed offsite if necessary," he said.
"Plus, the challenges of coordinating schedules become less of an issue since investors no longer have to travel for meetings."
The new legislation also changes how meeting notifications are sent. Currently, meeting notices must be sent via post or, if there is already a by-law in place, they may be sent by email. The postal address must be located in Australia, making foreign investment tricky. When the new legislation takes effect, by-laws will no longer be necessary for meeting notices to be sent by email. This makes it simpler for people to keep track of notices.
Greg Nash said some people still prefer post and that will remain an option.
"These new laws are simply taking advantage of the way communications technology can streamline processes. Most people prefer to communicate via email for greater convenience,” he said.
"The need to accommodate the varying ways people prefer to attend meetings means strata management companies may need to invest in new technology. This could include video conferencing or unified communications solutions, for example.
"PICA has invested heavily in a property services online platform that offers options for people to communicate in the way that suits them. It also includes a self-service capability so that owners no longer have to contact the strata manager to keep informed of repairs and maintenance progress.
“The new NSW legislation sets the pace of change for the industry in a positive way. It raises the professionalism of strata managers and makes it easier for them to look after owners’ interests. The NSW approach is really just the first step; it’s a blueprint for the future.”
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Property 101: New NSW strata laws will set the pace of change for the property industry

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NSW Fair Trading Commissioner Rod Stowe has reminded owners, tenants, strata and property managers that new strata laws will come into effect next Wednesday, 30 November 2016.
“We’re less than one week out from a significant update to the existing strata laws. These changes will improve strata living for over two million people who own, live or manage strata schemes across the state,” he said.
Key changes include:
Making it easier for owners to complete cosmetic and minor renovations;
Making it easier to hold meetings and vote on decisions using modern forms of communication;
New options for addressing issues of parking, pets and smoke drift;
Ensuring tenants can play a valuable role in the life of their strata scheme;
A new collective sale process enabling owners to jointly sell and/or redevelop their strata scheme, which the NSW Land and Environment Court must ensure is ‘just and equitable’ for the owners.
Commissioner Stowe announced there will be a Strata Hotline ready to take consumer calls.
“With major updates made to the existing strata laws, our Contact Centre Officers who specialise in strata law have been familiarising themselves with the changes to ensure that they are equipped to provide the right assistance and advice,” said Mr Stowe.
Mr Stowe is urging people to become familiar with the new laws as they will impact everyone in the strata community.
In 2015, the Contact Centre received approximately 37,000 strata related enquiries from the public.
More than 33,000 enquiries have been received this year already.
To learn more about strata law reform and how it affects you, visit <a href="https://www.fairtrading.nsw.gov.au/" target="_blank">www.fairtrading.nsw.gov.au</a> or call the Strata Hotline on 1800 214 023.
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Property 101: Fair Trading contact centre prepares for strata law reform

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New laws that apply to strata townhouses and apartments in NSW will start on 30 November 2016.
The free information sessions will support:
residents
landlords
strata professionals.
For on overview of the new strata laws, visit our <a href="https://www.fairtrading.nsw.gov.au/sites/ftw/About_us/Legislation/Changes_to_legislation/Changes_to_strata_laws.page" target="_blank">Major changes to strata laws</a> page. 
<a href="https://www.fairtrading.nsw.gov.au/sites/ftw/About_us/News_and_events/Strata_reforms_information_sessions.page#2016_program_of_free_strata_reforms_events" target="_blank">2016 program of free strata reforms events</a>
For the full details, availability and to book, visit the <a href="https://events.fairtrading.nsw.gov.au/scripts/NSWFairTradingCalendar/" target="_blank">Events register</a>.
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Bondi Junction
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6 September, 5.30-7.30pm
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Lane Cove
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13 September, 5.30-7.30pm
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Green Square (Zetland)
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15 September, 5.30-7.30pm
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Hornsby
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20 September, 5.30-7.30pm
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Burwood
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22 September, 5.30-7.30pm
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Castle Hill
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27 September, 5.30-7.30pm
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Bathurst
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29 September, 5.30-7.30pm
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Penrith
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4 October, 5.30-7.30pm
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Gosford
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6 October, 5.30-7.30pm
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Gymea
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11 October, 5.30-7.30pm
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Nowra (Bomaderry)
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13 October, 5.30-7.30pm
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Campbelltown
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18 October, 5.30-7.30pm
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Dubbo
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20 October, 5.30-7.30pm
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Bankstown
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25 October, 5.30-7.30pm
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Parramatta
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27 October, 5.30-7.30pm
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Hurstville
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8 November, 5.30-7.30pm
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Albury
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15 November, 5.30-7.30pm
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Queanbeyan
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17 November, 5.30-7.30pm
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Strata Legislation Roadshow events  
Fair Trading has partnered with Strata Community Australia (SCA) and the Real Estate Institute of NSW to provide further information sessions for owners, tenants and strata professionals.
Sessions for owners and tenants are free. Strata professionals who attend an intensive session will gain Continuing Professional Development points.  
To book for the following sessions, visit the <a href="https://nsw.stratacommunity.org.au/eventssponsorship/sca-nsw-roadshow-strata-legislation/" target="_blank">SCA Strata Legislation Roadshow</a> page.
<ul>
<li>Sydney (city centre) – 31 August 2016</li>
<li>Wollongong – 1 September 2016.</li>
</ul>
Visit the <a href="https://nsw.stratacommunity.org.au/eventssponsorship/legislation-roadshow-release-dates/" target="_blank">Strata Legislation Roadshow – New sessions</a> page to book in for one of these sessions:
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<li>Sydney (city centre) – 8 September</li>
<li>Parramatta – 14 September or 9 November (strata managers only)</li>
<li>Cronulla/Woolooware - 15 September (strata managers only)</li>
<li>North Sydney – 10 November. </li>
</ul>
Related information
<ul>
<li><a href="https://www.cityofsydney.nsw.gov.au/live/residents/apartment-living" target="_blank">Strata Skills 101 workshops</a></li>
</ul>
Run by City of Sydney, these topic-based workshops are designed to help people live better in density. Find a workshop to serve your needs and interests.
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Property 101: NSW strata reform information sessions

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GUEST OBSERVER
Over 90 new strata laws will come into play later this year and of the 90 these are some changes that will most likely make a difference to your everyday.
1. Parking 
Owners corporations will be able to reach agreements with local councils to allow parking officers into their schemes to issue fines to rogue parkers. 
Not only rogue parkers but residents who park over the lines of their parking spaces on to common property or leave their cars in visitor parking (however briefly) could also be ticketed. 
2. Fines
Almost all fines will be paid to the owners corporation, but this won’t be a cash cow for over-zealous committees; they still have to go through the same tribunal process. 
3. Short term rental
Owners corporations can now set limits on the number of people allowed to live in an apartment provided the upper limit is no less than two adults for each bedroom. Failure to abide by this law could result in fines from $11,000 to 22,000.  
4. Smoke 
Simply, an owners corporation can make a strata by-law banning smoking throughout an entire strata building. Orders can also be made against residents who smoke or allow their cigarette or barbeque smoke to drift into other units and landlords can be held liable to their tenants for second hand smoke exposure. 
5. Pets 
The new strata by-laws will not remove a scheme’s ability to make its own rules about pets. However, if the new model by-law is adopted, the request to keep a pet cannot be unreasonably refused. If the owners believe approval was unreasonably withheld, they can apply to the Tribunal. 
6. Renovations
New rules mean hanging pictures; coat hooks and filling cracks can go ahead while “minor alterations” – such as kitchen or bathroom renovations, installing timber or tile floors and replacing wiring or power points no longer need a special resolution by-law. But be aware there are other laws that allow owners corporations to charge owners for any damage caused to common property.  
7. Levies 
Owners corporations will be able to get compensation if a developer promised unrealistic low levies at time of sale. By the time the owners have to pay the actual bills for services, the developer is out of the picture. Now owners can pursue them for compensation through the tribunal (NCAT). 
8. Strata contracts
Strata manager contracts will be limited to one year in the first year of a building’s life and three years thereafter. The one-year initial contract gives strata manager’s ample time to prove themselves to the committee … or otherwise. The subsequent three-year contracts allow owners corps to change strata managers more easily if the relationship isn’t working out.  
9. Votes 
The biggest technological changes in our lives have been in communication. Voting electronically, via Skype calls, by email and even good old-fashioned snail mail will be introduced. 
10. Tenants
Tenants now have a right under the new laws and will be able to attend owners corporation meetings, no matter how many of the lots are tenanted in their scheme. They may vote if they hold a proxy (giving them voting rights on a lot owner’s behalf). 
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Adrian Mueller, is senior lawyer at J.S Mueller &amp; Co and can be contacted <a href="https://muellers.com.au" target="_blank">here</a>. 
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