Pets and ‘forced sales’ strata laws to change

Major updates on the cards for four key areas while Property Services Commissioner to take on strata too.

Pet ownership barriers, the cost of repair work, collective sales and compulsory appointment of strata managers are at the forefront of proposed changes to NSW strata law that were announced this week

And a new(ish) Strata Commissioner has been appointed to help shepherd the changes through, as well as oversee the whole strata sphere. 

The main proposals being presented to the NSW Parliament this week  include measures to make it easier for strata residents to have pets in their apartments by banning application fees, bonds or insurance as a condition of housing a companion animal.

Regarding collective (or “forced”) sale and renewal processes, applicants will be required to disclose conflicts of interest, and courts will be able to award costs against anyone found to be acting unreasonably.

Where strata schemes are seriously dysfunctional, Fair Trading will be able to apply for the compulsory appointment of strata managers to take over the management from the owners corporations and strata committees.

And all schemes – not just large ones – will have to get at least two quotes for any work costing more than $30,000.

Meanwhile, John Minns, currently Property Services Commissioner, has had Strata added to his portfolio – raising concerns in some quarters, both that strata is once again an afterthought as well fears that strata managers, rather than strata owners and residents, will be most influential in evolving policy for the sector.

That said, John Minns has been an approachable and effective Commissioner in the Property Services area – although it must be said he is no (Building Commissioner)  David Chandler.

“Despite around 1,000 strata schemes being registered every year for the last decade, the previous government did not act to implement recommendations from the 2021 Report on the statutory review of these laws,” a government press release says.

“To help bring a new focus to strata living and to implement the changes needed, John Minns will add strata to his responsibilities, becoming the state’s Strata and Property Services Commissioner.

“At the moment the Property Services Commissioner is charged with setting professional development requirements for agents and setting the rules supervision of agency businesses.

“Elevating strata into the Commissioner’s role will make him responsible for oversight and reform across the whole sector, with strata at the centre. The Minns Labor Government will move ahead with its first phase of reforms to give immediate benefits to people living in strata.”

The proposed changes should find their way on to the statute books fairly quickly as there is broad support and they could be enacted before Christmas. More controversial proposals from the 2021 review of strata laws have been held over so that they don’t delay the implementation of the “easier” options

New strata regulations

Making the collective sale and renewal process more transparent.

The collective sales process allows owners to sell off all or part of strata blocks with the consent of only 75 per cent of the owners.  The intention is to require owners disclose conflicts of interest and letting courts award costs against those acting unreasonably.

This will help close the loopholes that have seen some strata residents hoping to sell their buildings stuck in courts for years because an alternative developer owns several apartments. This problem was highlighted in a recent story in the Sydney Morning Herald by our own Sue Williams.

Making it easier and fairer for residents to keep pets.

The plan is to ban owners corporations from demanding fees, bonds or insurance as a condition of having a pet.  Currently, some strata schemes are charging application fees to even consider an request to keep a pet or imposing a bond on keeping a pet. 

These fees or bonds are costly, unnecessary and unreasonable, says Fair Trading. Owners already pay levies to finance the administration of their scheme and the cost of insurance for any damage to common or association.

Ensure goods and services are obtained at competitive prices.

This new rule will require owners corporations to get a second opinion when the bill for work will be over $30,000. Currently, only large strata schemes are required to obtain two quotes.

The change ensures that competitive quotes are obtained for significant expenditure, regardless of the size of the scheme.

Give Fair Trading the ability to ask the Tribunal to appoint a compulsory strata managing agent to help manage dysfunctional strata schemes.

Currently, owners and certain other persons such as creditors can apply to the NSW Civil and Administrative Tribunal (NCAT) for compulsory management to be appointed. The changes mean that NSW Fair Trading can also apply to the Tribunal to protect owners where a scheme is so dysfunctional that it is not undertaking its core duties.

This would help in cases where the majority of owners aren’t aware of their rights or responsibilities and the scheme is being mismanaged by the owners corporation, the strata committee or a strata manager in a way that is to the detriment of the majority of owners and even the fabric of the building.

Compulsorily appointed managers take over all the powers and duties previously held by the owners corporation and strata managers.

‘Rules haven’t kept pace’

“There are currently over 85,000 strata schemes in NSW compared to just 50,000 in 1996 (when modern strata law was first enacted), so getting this right will be critical,” Minister for Fair Trading and Better Regulation Anoulack Chanthivong said.

“As the number of strata schemes in the state has grown rapidly, the rules haven’t kept pace.”

Minister for Customer Service and Digital Government Jihad Dib added: “We are now seeing safeguards that were intended to support owners in renewing their strata schemes being used against them.”

“This reform will help restore balance, improve transparency and boost protections for owners in the collective sale and redevelopment process.”

The President of the Strata Community Association, Chris Duggan said the appointment of John Minns was a “genuine reflection of the Government’s authentic commitment to the strata sector and consumers.”

That may be so, but owners representatives such as the Owners Corporation Network may well wonder why they weren’t even approached for comment.

John Minns is highly regarded but many owners may justifiably fear that the property services side of strata – strata managers and real estate agents – will be calling the shots more often than those directly affected by decisions made at this level.

Owners call for better communication

In a pre-prepared statement, Karen Stiles, Executive Director of the  Owners Corporation Network said that while they welcomed the appointment of a Commissioner dedicated to Strata, there was no substitute for listening and direct dialog with strata residents and consumer participation was vital.

“This [appointment] should lead to better coordinated, and transparent responses to the many challenges facing this growing housing sector,” she said.

“Right now, cost-of-living pressures are putting the spotlight on opaque market practices. Strata residents are facing an energy transition, sustainability demands, and rising costs of insurance to name just a few.

“Higher standards in the strata management industry, a more open and competitive market for all services, and stronger consumer protection will be just some of the achievements we’ll be looking for.

“We look forward to working with the Commissioner on key priorities to deliver value for money strata living.”