
Strata renewal soon to take off
Nearly two years after New South Wales introduced strata reform laws there’s been little movement. But momentum is building, says strata law specialist Leisha de Aboitiz.
More than two million people in NSW own, live or work in strata titled buildings.
The NSW Government introduced reforms to strata laws on 30 November 2016 to reduce red tape, minimise disputes and support Sydney’s development as a global city.
The package of 90-plus amendments to the state’s strata legislation came after five years of extensive public consultation and more than 3,000 submissions.
The biggest ticket reform is to collective sales, which now requires 75 per cent of occupational lot owners to consent to a sale or significant changes to the existing footprint. Previously, just one dissenting vote could block this.
According to de Aboitiz, a partner with Massons Commercial Property Law, those “magic numbers” of 75 and 25 are driving interest from developers as several strata renewal projects are in the process of being tested in the NSW Land and Environment Court.
“We are receiving new enquiries every few weeks, and the reforms are certainly being used as leverage to motivate lot owners to sell who may have previously ‘held out’ for much bigger numbers,” she says.
Until 2016, just 1.1 per cent of all the strata schemes in NSW had been terminated since 1961.
There are several critical steps for collective sale and renewal, de Aboitiz explains.
More than per cent of owners must ‘opt in’ to start the process. A committee must be established to develop a strata renewal plan, and the owners corporation must comply with prescriptive timeframes and seek independent valuation advice.
If lot owners do not support the plan at critical steps in the process, then the plan can lapse and it may not be possible to re-enliven it for 12 months.
A court order from the NSW Land and Environment Court is required to give effect to a strata renewal plan before it can be carried out.
“Several strata renewals are currently before the NSW Land & Environment Court, and while there have been some interim rulings on procedural aspects, or parties may have reached agreement outside the strata renewal regime, we are yet to see a final court order approval for a strata renewal plan”.
“Do people have full confidence yet? No. But the good news is that once these first few test cases are finalised – which seems imminent – it should speed up the process and people will be more comfortable pursuing strata renewal,” de Aboitiz explains.
“We’ll see an uptick in people actioning strata renewal because they’ll have a roadmap based on precedent,” she adds.
“Now is a good time to be lining up potential assets,” de Aboitiz adds.
Led by partners Jodie Masson and Leisha de Aboitiz, Massons specialises in commercial property law. Learn more at www.massons.com