This week the NSW Office of Fair Trading announced dramatic reforms to NSW strata laws. With an ever-increasing number of Australians residing in strata schemes, this will have an impact for many people; be they home owners, landlords or tenants.

The new laws largely reflect the change in attitudes towards apartment living. The default by-laws now allow pets, curb smoking on balconies (where neighbours are passively affected) and ban the installation of noisy flooring (with prior permission to install them still straightforward). The ultimate aim of these laws is to build a sense of community within buildings and give each resident or owner more of a voice. For example, the length of strata management contracts will be reduced, making it easier for dissatisfied owners to change managers, and there will be complete transparency about issues such as insurance commissions so that owners corporations know exactly what they are getting. Also, anyone who has a professional financial interest in the building – such as strata managers, building managers, caretakers and agents – will no longer be allowed to sit on executive committees. Tenants in strata schemes are also now encouraged to contribute to strata meetings to help landlords understand the concerns of residents (though with no financial interest tenants still have no voting rights).

The ultimate control over by-laws is still at the discretion of the owners corporation (formerly known as the body corporate). Despite the new laws (which will be rolled out for new developments), the by-laws currently in place will not change unless voted upon.

This brings us to the next change in the laws; surrounding proxy voting…

In the past it was possible a few owners to control the entire building by “harvesting” the proxy votes of investors or absentee owners. The new laws will restrict proxy votes in schemes of more than 20 units to 5 per cent of the ownership. In buildings of 20 units or fewer, owners will only be allowed to carry one proxy vote.

At the end of the day, owners of units in any strata scheme can choose whatever rules they want as long as they don’t contravene other laws (such as anti-discrimination laws) or ban children or ‘assistance animals’ such as guide dogs. And with more input required from more owners, one would hope fairness and good judgement will prevail.

IPS views these changes as a positive step for all, including investors. In theory it should allow for more input from owners into the way schemes are run and, hopefully, create more enjoyable places in which to live.


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