Strata in the spotlight

3 June 2021

Five years after landmark reforms were introduced, the strata framework in New South Wales is once again under review. Here’s how REINSW has responded to the NSW Government’s call for input.

The Strata Schemes Management Act 2015 (NSW) and the Strata Schemes Development Act 2015 (NSW) introduced significant changes to the management and regulation of strata schemes in New South Wales. Now, five years on, the NSW Government is reviewing these Acts with a view to ensuring the right laws are in place to manage future developments in this vital area of real estate practice.

“The NSW Government released the Statutory Review of the NSW Strata Schemes Laws Discussion Paper late last year and submissions were due by 7 April 2021,” REINSW CEO Tim McKibbin said. “The Discussion Paper was extensive, posing 140 questions for stakeholder feedback.

“Almost from the moment the new framework commenced, the REINSW Strata Management Chapter Committee began analysing the changes. We knew the mandatory statutory review would come around all too quickly and the Chapter Committee kept a watchful eye on the impact of the reforms on day-to-day practice, continually assessing what was working and what was not.”

Even before the official launch of the review and the release of the Discussion Paper, the Chapter Committee were preparing REINSW’s lobbying platform.

The complexity of property services industry demands a regulator that has industry experience and the expertise to deliver better outcomes for the consumers, professionals and businesses operating in the sector.

“We lodged a preliminary submission ahead of the release of the Discussion Paper,” Mr McKibbin explained. “We have now also lodged a comprehensive submission in response to the questions raised in the Discussion Paper, as well as raising various other key issues.

“Importantly, throughout this process, REINSW and the Strata Management Chapter Committee have been in regular contact with key government stakeholders, including representatives from the Real Estate and Housing Regulatory Policy Division of the NSW Department of Customer Service and also representatives from the NSW Office of the Registrar General. This collaboration has been extremely beneficial for all involved.”

Mr McKibbin emphasised that REINSW’s submission in response to the Discussion Paper again reiterated our position that the real estate industry should be moved away from NSW Fair Trading.

“All property transactions are complex – and strata is extremely complex,” he said. “Indeed, there are solicitors who specialise in strata management and strata development exclusively.

“The complexity of property services industry demands a regulator that has industry experience and the expertise to deliver better outcomes for the consumers, professionals and businesses operating in the sector.”

Mr McKibbin noted that this latest submission was a “colossal” piece of work.

“Extending to more than 60-pages, the submission leaves no stone unturned,” he said. “Every member of the Strata Management Chapter Committee has dedicated a huge amount of time to this task and I can’t thank them enough for their efforts.

“All REINSW members, and the wider industry, will undoubtedly benefit from their work.”


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Issues raised by REINSW

With 140 questions posed in the Discussion Paper, REINSW’s submission in response was extensive to say the least. Here’s a snapshot of just some of the recommendations we made on key issues.

Developer documents

Developers should be required to provide a pack of all relevant documents when they apply for registration of a strata plan.

Appointment of strata manager

Strata managers who are also developers should not be prohibited from managing a strata scheme in which they hold a beneficial interest, where there is unanimous consent by the Owners’ Corporation.

Term of appointment as strata manager

The term of appointment for a strata manager appointed at the first Annual General Meeting of the Owners’ Corporation should be extended from 12 months to 15 months.

Recording exercise of functions

The records that a strata manager needs to keep and provide to the Owners’ Corporation should be precisely defined.

Gifts and benefits

The definition of “gift” should be clarified; for example, what amounts to a gift, rather than an expression of gratitude.

Capital works fund

The matters that need to be included in the 10-year capital works fund plan should be further clarified, including the annual savings required to meet anticipated expenditure.

Initial levies set by developers

An independent expert should be required to assess and sign off on the levies that are initially set by a developer.

Payment of special levies

The 30-day payment period for special levies raised to fund emergency repairs should be reduced.

Interest on levies

Interest should start to accrue on levies where they have not been received into the strata scheme’s bank account by the date they are due and payable.

Minor renovations by owners

There should be a statutory requirement to register minor renovations to common property carried out by lot owners.

Window safety devices

The legislation needs to clarify who is responsible for the ongoing maintenance of window safety devices and address the many practical issues that are currently causing confusion.

Insurance valuations

The requirement for an Owners’ Corporation to obtain a building insurance valuation every five years should be reintroduced, and amendments made to remove ‘reinstatement’ from the valuation exercise.

Record keeping

The legislation should be amended to allow for the better maintenance of strata records, including electronic storage and back-up, as well as a requirement to maintain an overall index of records.

Affixing Owners’ Corporation seal

The requirement to affix the seal of the Owners’ Corporation to instruments and documents should be repealed.

Items requiring statutory warranty

Further guidance needs to be provided regarding the need to include an item on the Annual General Meeting agenda to consider building defects and rectification where warranty periods under the Home Building Act apply.

Quorum

The provisions regarding the quorum at a meeting need to be redrafted, so that it is clear, particularly in the case of small strata schemes, what happens if there’s not a quorum.

Pre-meeting electronic voting

The legislation should be amended to make it clear that pre-meeting electronic voting does not extend to elections.

Altered arrangements for convening and voting at meetings

The provisions allowing electronic convening and voting at meetings, introduced in response to the COVID-19 pandemic, should be made permanent.

Privacy of owners’ details

Personal details, including email addresses, should not be available for general inspection via the Strata Portal, strata roll and other records.

Disability access

The strata legislation should reference disability access and provide a pathway or roadmap for parties to follow in terms of decision making when it comes to making changes to the building for accessibility purposes.

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