Strata schemes to benefit greatly from reform to NSW strata laws.
It’s hard to believe that in just four days, the largest ever reform to NSW strata laws will come into effect. The NSW Government has been talking change for five years, but finally, after a few false starts, reform is happening.
The new laws are set to be implemented from November 30 and are clearly outlined in the Strata Schemes Management Regulation 2016. When NSW Parliament approved the reforms just over a year ago, the announcement was greeted with overwhelming positivity amongst the property community including from the Property Council of Australia (PCA).
So who will be impacted?
More than 75,000 strata schemes will be affected, benefiting more than two million people in NSW who own, rent or manage strata schemes. By 2040, it is predicated that the percentage of Sydney’s population living in a strata scheme will double, from 25 per cent to 50 per cent. This no doubt will be aided by the likely increase in housing supply of the back of reform to strata laws.
So what does an amalgamation have to do with it?
Of the 90+ changes to strata laws, perhaps the most important is the reduction from 100 per cent to 75 per cent agreeance for strata owners to collectively decide to amalgamate and end their strata scheme so the site can be sold or developed. The intention of the change is to boost the redevelopment of older, dilapidated, low-density strata buildings into new, denser and more efficient housing i.e. urban renewal. By lowering the termination threshold, the will of the majority should prevail. The process empowers owners to realise the full potential of their strata building and ensures owners receive at least the market value of their lot, plus an extra amount for the costs associated with moving.
Strata schemes should be aiming for 100% agreeance if they want developers to pay a premium. Developers will often turn a blind eye if they associate hassle with a deal. Once agreed on by a majority of the owners, the proceeds are distributed according to unit entitlements (the figure on which your levies are calculated).
If an Owner’s Corporation agrees to explore the possibility of an amalgamation, it is recommended professional advice is sought from a Commercial Property Agency, a solicitor – a Memorandum of Understanding (MOU) may need to be drawn up to prevent a fractured group, a town planner, and development valuer.
Tom Appleby specialises in selling strata property on the Lower North Shore of Sydney from Colliers International.