In his speech to the Strata Community Australia’s Owners day on Saturday, Fair Trading Minister Anthony Roberts outlined a number of key elements of proposed change in the upcoming review of strata laws in NSW.
This is an edited and distilled sample of the major part of his speech:
Insurance Commissions
We are exploring options in this area and remain engaged with your organisation [strata managers] and its leaders.
We are confident that in working together, we will reach an agreeable outcome that balances the interests of all stakeholders.
Communication
We will give owners corporations the flexibility to use modern technology, like teleconferencing and online tools, to hold meetings and vote on motions if they wish to do so.
We will allow managing agents and committees to distribute papers and hold records electronically.
We will give schemes the flexibility to adopt voting methods that suit the needs and circumstances of their members, including the option of voting via secret ballot.
Schemes will also be allowed to accept postal or electronic votes from owners who are not able to physically attend meetings.
Meetings
We will also make a number of smaller changes that will remove unnecessary red tape and make it easier to run a strata scheme, particularly for committee members who often volunteer their time to a scheme.
This will include giving owners corporations more flexibility about when to hold annual general meetings.
We will remove the strict requirement for meetings to be held within one month of the anniversary of the first annual general meeting.
The new laws will simply provide that an annual general meeting must be held each financial year.
We will also remove the current requirement for a second meeting to be called before a quorum can be declared.
This stringent requirement often results in participants having to attend two meetings before important issues can be discussed and decided upon.
Tenants
I am also keen to encourage a greater level of tenant participation in strata communities.
While it is generally agreed that tenants should not be involved in the financial affairs of owners, they are often willing and able to make a positive contribution to schemes.
I am therefore proposing a number of reforms that will support greater opportunities for tenant participation.
It is proposed that the law give tenants the right to attend and participate in meetings of the owners corporation.
In schemes where more than half the residents are tenants, we will give them the opportunity to have a non-voting representative on the strata committee.
The laws will balance this increased tenant participation with the overarching rights of the owners corporation.
Tenants will not be given new voting rights and the owners corporation can choose to exclude tenants from deliberations on certain matters.
Proxy Farming
Proxy farming is a major issue in some schemes and can lead to decisions being made that are not in the best interest of the strata community. The practice also builds resentment and further discourages participation by owners. I therefore propose to limit the number of proxies that one individual can hold.
An individual will only be entitled to hold five percent of the lots in a scheme of more than 20 lots, and only one proxy vote in a scheme of 20 lots or less.
Conflicts of interest
Committee members will be required to disclose any conflict of interest in a matter to be considered by the committee and will then be excluded from any vote unless the committee decides that the conflict does not warrant this.
In addition, non-owners with a financial interest in a scheme, including managing agents, letting agents and building managers, will not be able to become committee members.
Strata manager contracts
I am proposing to limit the terms of management contracts and will increase managing agents’ disclosure requirements.
This reform will ensure owners are fully aware of the cost of management services, including the previously hidden costs related to the receipt of commissions.
Leasing
We will allow an owners corporation with a temporary need for additional common property within a scheme, such as for a caretakers office or a meeting room, to lease whole or part of a lot.
Similarly, a scheme looking for additional common property, to be used for parking or some other purpose, will be able to lease nearby land that does not strictly adjoin the strata parcel.
By-laws
By-laws are central to the things that people living in strata care about, including pets, parking, parties, smoking and hard wood floors.
They are an important tool for promoting harmonious living.
Concerns were raised in submissions about ignorance of the by-laws among residents. It is a particular problem among tenants, who may not have been given a copy of the by-laws when they moved in.
It is only fair that people are made aware of the rules that apply to them.
Other concerns raised about by-laws included that:
they are not always fair;
they are inconsistently applied;
they are sometimes difficult to enforce; and
the model by-laws need to be updated to better reflect changing community attitudes.
We will:
- ensure that a consolidated copy of the by-laws is made readily available;
- streamline enforcement options for owners corporations; and
- give the Consumer, Trader and Tenancy Tribunal greater powers to ensure by-law compliance.
We will produce a new set of model by-laws that … better reflect changing community attitudes.
For example, there is currently no model by-law that deals with smoke drift, and those by-laws that deal with hard wood floors are only concerned with fixing
noise-related problems after installation.
Approval from the owners corporation may not be required to install hard wood floors, even though this could have a significant impact on other residents.
We are also looking to make changes to by-laws dealing with pets.
Fair Trading receives numerous complaints from people who are forced to choose between living in strata and keeping a pet.
While many schemes would be happy to allow pets, it is often the default rule that they be banned, and potential owners and tenants are not always in a strong position to see the by-laws changed.