7 key changes under the NSW strata reforms launching 30 November

After a lengthy consultation period, 30 November 2016 is the day that the much-anticipated, and some would say overdue, strata reforms will come into effect.

There are more than 90 changes to the NSW Strata Management Act, some of which have been controversial. While consumers were expecting sweeping changes to strata legislation, the Strata Schemes Management Act, 2015 (NSW) has largely re-enacted existing strata laws with some new legal concepts or changes under categoriesConstruction Law Gavel.

At Premium Strata, we have been preparing for these changes to ensure our staff and you as our owners of units under our management are prepared for these changes before they come into effect.

To help you absorb the key changes, we have written this to-the-point pocket guide to the legislative changes.

Seven main changes to the NSW Strata Management Act

1. Recognition of the electronic age in which we live

For example, an Owners Corporation may now specifically elect (by way of ordinary resolution) to permit email voting and/or postal voting. It will also be possible to attend meetings via telephone or internet.

2. Transparency of those involved with the strata scheme

For example, a developer of a strata scheme, or a person connected with a developer, cannot be appointed as the strata managing agent for the scheme until 10 years after the registration of the strata plan for the scheme. Further, the term of appointment of a strata managing agent will be limited 3 years for any other appointment, with any reappointment also limited to maximum terms of 3 years. Strata managers will be need to disclose insurance commissions received. The number of proxy votes any one owner can use will be limited, making the dreaded ‘proxy farming’ a lot more difficult.

3. Financial management

It will now be required that developers set realistic levies during the establishment of the strata scheme and the expiration of the initial period and for the subsequent year after. This helps avoid unusually low strata levies, which will then increase exponentially once all the lots have been sold by the developer. Books and records of the Owners Corporation will now be required to be kept for 7 years.

4. Standard by-laws

For example, it is now expressly recognised that smoke drift constitutes a nuisance. Smoking, per se, however, is not banned so presumably it will be up to the Owners Corporation to prohibit smoking at the scheme by way of a special resolution by-law. In relation to pets, the default position will now be that buildings are pet friendly.

5. Tenant representatives:

Tenant representatives may be elected and attend meetings of the Owners Corporation. However, for this to apply, at least 50% of the lots must be tenanted. Tenants will not be able to vote and can be prevented from certain discussions. Owners Corporations will be able to set occupancy limits on units, which will avoid over-crowding and the associated building fire safety risks.

6. Building defects

Some level of protection has been afforded to high-rise strata owners (that are not covered by the Home Building Compensation Fund) by way of the introduction of the following key concepts. For example, mandatory defect inspection reports will be required to be paid for by the developer (by an inspector approved by the Owners Corporation) together with the requirement of the developer being required to provide a building bond. Further, the occupation certificate is not to be issued unless the Secretary has first received the bond in the requisite amount. The original owner will be required to prepare and the Owners Corporation required to consider the initial maintenance schedule for a new scheme. As a side note: the building defects bond scheme won’t come into effect until 1 July 2017.

7. Renovations

A distinction is made between ‘Cosmetic Work’ and ‘Minor Renovations’. Everything falling outside these categories will require a special resolution

building design drawingCosmetic Work

This update will focus on the changes to how renovations will now be permitted to be carried out to strata lots. To some extent, the requirements for renovations have been relaxed.

So, under the new regime, the following newly defined “cosmetic works” will not require approval whatsoever from the Owners Corporation:

  • installing or replacing hooks,
  • nails or screws for hanging paintings and other things on walls,
  • installing or replacing handrails,
  • painting,
  • filling minor holes and cracks in internal walls,
  • laying carpet,
  • installing or replacing built-in wardrobes, installing or replacing internal blinds and curtains,
  • any other work prescribed by the regulations for the purposes of this subsection

However, for this to apply the below conditions must be met:

  • the work that does not constitute minor renovations as defined for the purposes of section 110,
  • the work does not involve structural changes,
  • the work does not change the external appearance of a lot, including the installation of an external access ramp,
  • the work does not detrimentally affects the safety of a lot or common property, including fire safety systems,
  • the work does not involve waterproofing or the plumbing or exhaust system of a building in a strata scheme,
  • the work does not involve reconfiguring walls.

Building maintenance toolsMinor Renovations:

The concept of “minor renovations” has been introduced and now only requires approval from the Owners Corporation by ordinary resolution:

  • renovating a kitchen,
  • changing recessed light fittings,
  • installing or replacing wood or other hard floors,
  • installing or replacing wiring or cabling or power or access points,
  • work involving reconfiguring walls,
  • any other work prescribed by the regulations for the purposes of this subsection,

However, similar conditions as the ones listed under Cosmetic Work must be met.

All other works, which fall outside the definitions of “cosmetic works” and “minor renovations”, will require a special resolution pursuant to new Section 108 (Changes to Common Property By-law) and/or a new by-law Section 142 (Common Property Rights By-law). For more on by-laws click here. Bathroom renovations, for example, will automatically require a new by-law (because they typically involve waterproofing). While kitchen renovations appear to have lowered requirements (and now only require an ordinary resolution), it is difficult to imagine a kitchen renovation being carried out without the application of waterproofing, except, of course, if only, say, the cabinetry was being replaced.

Some regulations are still being finalised and are expected to be made public over the coming weeks. The final regulations will be published on the NSW legislation website.

We hope you found this article useful. Please remember that this is a summary of all changes. This article is not intended to be exhaustive and we recommend you speak with your strata manager in first instance.

If you have any questions, please don’t hesitate to contact us at 02-9281 6440, and we’ll be happy to help you.