A more flexible approach and less red tape needed in NSW strata laws review

Peter ChittendenNovember 26, 20120 min read

Since December 2011 a review of strata and community scheme law in NSW has been underway, and comments and submissions closed last week.

In 1961 it was NSW that enacted the world’s first strata title laws with the introduction of the Conveyancing (Strata Title) Act. In 1973 there was a major upgrade to the laws, and the Strata Titles Act was introduced.

When the current review was first announced more than 1,200 comments and some 600 suggested changes to current laws were received. NSW Fair Trading has issued a strata and community title law reform discussion paper, which highlights some of the key concerns the review is expected to address.

Some of the key points noted in the discussion paper are of vital interest to the ongoing development of the entire range of projects we are all involved with, and they cover a wide gambit of topics.

One of the key points is that the current legislation is a "one size fits all" approach, which experience demonstrates is a rigid and unrealistic approach given the variation is the size of projects. Clearly a small scheme of six apartments or homes is very different from a high rise that contains 100 or more apartments.

Red tape is another area the review may well address, as the discussion points out the original 29 provisions of the original law has now grown to more than 1,500 provisions covering 926 pages.

A need for a more flexible approach

It is interesting then to note that the discussion paper is also suggesting that greater flexibility is required for individual schemes.

Examples given in the discussion paper include pointing to the mandating of a particular colour scheme for outdoor furniture and the banning of Christmas decorations and flags.

Somewhat allied to this point is the very real need to balance personal freedoms and co-operative duties, because as we will all understand the move from a private freestanding home into a strata building or community projects is for many people a major lifestyle change.

This then leads onto the very real question of how so many competing interests in a scheme are best managed. Just think about the varied stakeholders that an owners corporation has to interact with – developers, owner-occupiers, strata managers, letting agents, tenants, selling agents, investors – are just a few.

And just like the red tape issues outlined there is clearly more room to use simple plain English in the new legislation.

Beyond these issues other major topics covered in the discussion paper cover governance and participation, these areas are very important, as there appears to be some reluctance for many owners to be involved with management of their owners' corporation.

One way to improve participation is the discussion paper notes a more deliberate focus on communications, which would for instance accommodate "virtual meetings" using Skype and teleconferencing. As technology moves this sounds like a logical and helpful idea.

In NSW 60% of schemes are managed by licensed managing agents and almost 100% of large schemes are managed by agents, making transparency and accountability key issues.

 


 

Urban renewal

Urban renewal in the area of project development and project marketing are topics of particular interest, because the redevelopment of existing strata schemes needs to be facilitated as the current act is often a barrier to change and redevelopment.

And so a review of the law in this area may directly impact future redevelopment and urban consolidation efforts – in a forthcoming post I will be talking with Shane Dargue from Colliers International in Melbourne as Shane’s work focuses on major site sales and acquisitions, which is an area that impacts opportunities in many markets.

A fourth level of government

The full discussion published in September can be sourced via the NSW governments Fair Trading website, and I will not go into all of the details it covers. However, most of the key issues will not come as a surprise and many make interesting reading.

According to a recent study by the University of NSW looking at the experiences of the estimated 3 million people who live in strata-title dwellings, there are many and varied issues with strata living which the current review aims to address.

Lead author of the study Governing the Compact City: The role and effectiveness of strata management is Dr Hazel Easthope, research fellow at the City Futures Research Centre at UNSW’s Faculty of The Built Environment.

She said a quarter of Sydney people now live in what is virtually a fourth tier of government, as strata dwellings set laws and impose taxes on residents.

Where to from here?

From the many topics outlined above there are many and varied issues to address. Some of which are very close to home and can involve a high level of emotion, as more people live in less space and as lives overlap this will be an ongoing and important issue that we all need to be involved with.

However as far as the timetable to complete the current review, meet with key stakeholders and draft new legislation, the final bill is then expected to be introduced into the NSW Parliament in the spring session 2013, but I expect we will return again to many of these issues before then.

Peter Chittenden is managing director for residential of Colliers International.

Peter Chittenden

Peter Chittenden is managing director for residential of Colliers International.
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