Reform of strata and community scheme laws

Community scheme reforms have been unveiled in a position paper, outlining 58 proposed law reforms.


What is this about?

The NSW Government is reforming NSW strata and community schemes laws.

NSW has around 75,000 strata schemes worth $350 billion in assets. The reforms will affect some 2 million industry professionals, strata owners, and residents in strata-titled townhouses and units.

Based on consultation, 70 proposed reforms will update 50-year-old strata scheme laws. Together, they will help to guide strata schemes to best manage their strata community’s needs into the future.

Community schemes law reform is underway with a community schemes law reform position paper released, outlining 58 reforms.

What’s happened so far?

Research and people having their say has informed the comprehensive reforms. This includes 1,200 online and 1,900 discussion paper submissions.

The following consultations took place:

  • September 2014: community position paper released, outlining proposed reforms
  • November 2013: strata position paper released, outlining proposed reforms
  • 2013: roundtable meetings with industry and strata experts
  • September 2012-November 2012: discussion paper inviting comment on reform options and online survey.

What’s happening now?

A Position Paper has been published outlining the Government’s proposed community scheme law reforms. The reforms mirror many of the proposed changes to strata scheme laws, seeking to ensure that the laws provide flexibility, transparency and accountability with strong consumer protections but without imposing unnecessary red tape.

Consistency in strata and community scheme law reforms

Given the strong similarities in many areas of strata scheme and community scheme laws, the proposed reforms in the community scheme law reform position paper mirror many of the proposed reforms in the strata scheme law reform position paper.

While this will enhance consistency across both sets of laws, it is also acknowledged that some of the strata scheme law reforms, for example secret ballots and proxy vote limits, will be most relevant to the operation of neighbourhood associations. These types of reforms may not be necessary or practical for the operation of precinct and community associations.

Among the reforms proposed for both strata and community schemes are:

  • alternative methods of attendance at meetings including social media, video and teleconferencing
  • postal or electronic voting, and secret ballots
  • storage and distribution of documents electronically
  • require committee members to act with due care and diligence and to disclose any conflicts of interest
  • limit the number of proxies able to be held by any person, and limit the matters for which a priority vote can be used
  • prohibit non-owners with a financial interest in the scheme (for example, managing agents and letting agents) from being a member of the strata, neighbourhood, precinct or community committee
  • a new regime of disclosure and accountability for managing agents, with a contract term of 3 years maximum
  • more flexibility regarding AGMs and quorums
  • restrict developers’ rights to vote on matters relating to building defects
  • expand the range of disputes that can be dealt with by the NSW Civil and Administrative Tribunal (NCAT)
  • require developers to set realistic levies during the initial period and first year after
  • better ways to control parking within schemes
  • increasing penalties and streamlined enforcement for by-laws
  • allow penalties to be paid directly to schemes.

Reforms specific to community scheme laws

These proposed reforms include:

  • allow land to be added to a community or precinct scheme, providing it has been disclosed in the development contract
  • allow a schedule of contributions to be included in a development contract which will itemise expenses and identify who is responsible for payment
  • allow additional association property to be created by a community or precinct plan of subdivision, providing it has been disclosed in the development contract
  • require meetings to be called to authorise certain matters identified in a development contract as “development concerns”
  • only require a neighbourhood development contract for staged development of a neighbourhood scheme
  • allow land to be added as association property or as a lot in the scheme by special resolution
  • allow associations to lease additional property
  • allow subsidiary neighbourhood schemes to be wound up and the property to be vested in the parent community scheme
  • enable a community plan of subdivision to subdivide or create association property by special resolution
  • allow a neighbourhood scheme or strata scheme within a community scheme to approve the subdivision of property by special resolution
  • enable associations to take the benefit of a statutory easement, and
  • allow subsidiary schemes to lodge a revised schedule of unit entitlements when development of the relevant scheme is complete.