If you own in a residential strata scheme that shares a building with a hotel, a pub, a shopping arcade, a string of takeaway shops or even a supermarket, you’ve probably had this fight. The residential lifts need renovation. The façade is failing. The fire system is crying out for an upgrade.

Or the commercial tenants’ foyer needs a spruce up, or their business is using enough shared water to fill a reservoir.

And when the bill lands, the residential scheme is wearing a disproportionate whack of it – because of a Strata Management Statement (SMS) drafted by the developer years ago, locked in at registration, and essentially impossible to change.

The SMS will have favoured the commercial enterpises because the developer knows they’ll have accountants poring over every potential expense while the strata apartment owners will blithely and erroneously assume that consumer law will prevent them from being ripped off.

Then they’ll find that changing to a fairer allocation of responsibilites is impossible because any reallocation needs agreement from every member of the Building Management Committee (BMC). And the commercial lot owner who’s doing very nicely out of the current split, funnily enough, never seems keen to volunteer for a bigger share.

Here at Flat Chat we recall the Sydney North Shore hotel, where every couple of years they demanded a refurb of the corridor carpets and the apartment residents, who didn’t have access to the hotel corridors, had to pay most of the cost.

In another issue, one owner on LookUpStrata recently described a depressingly familiar scenario: a 20-year-old multi-purpose building containing a tavern, hotel accommodation, short-term tourist apartments and residential apartments.

Four strata schemes, four votes on the BMC – one each. But the residential scheme pays “the majority of the building costs” under the original SMS formula. Two of the schemes routinely block maintenance decisions. Stalemate, no outcome, building slowly going backwards.

Amending the SMS, the owner noted, looked “prohibitive” on legal fees alone. That’s the problem the NSW government is finally trying to fix, according to the latest newsletter from our sponsors Bannermans lawyers.

What’s coming

The Strata Schemes Legislation Amendment (Miscellaneous) Bill 2025, expected to commence later this year, introduces a proper mechanism to review and adjust unfair allocations of shared expenses in BMCs. The key moves, per Bannermans :

SMSs will have to include a review process. Every Strata Management Statement will need to spell out how the allocation of shared expenses gets reviewed – not left to chance or developer goodwill.

An unfair allocation must be reassessed. If a review concludes the split is unfair, it can’t just be filed in the “too hard” basket. Reassessment is mandatory.

The stitch-up vote flips. Here’s the big one. Currently, one holdout can torpedo any reallocation. Under the new rules, a recommended reallocation must be implemented unless the BMC unanimously resolves against it. To block the fix, every single member has to vote no. One residential scheme standing firm is enough to see the fix through.

The Supreme Court can force the SMS to be amended. If a reallocation is recommended and someone still refuses to sign, the Court can direct the SMS be amended anyway. This is genuinely new – and it’s the bit with teeth.

Signatures can be waived. The Registrar General will be able to waive the signature requirements that currently make registering an SMS amendment such a nightmare, where the amendment simply implements a recommended reassessment.

Why this matters

The leading case on this, Owners Corporation SP 70672 v Trustees of the Roman Catholic Church for the Archdiocese of Sydney [2011] NSWSC 973, went exactly the way you’d expect: the residential scheme tried to reallocate, a BMC member refused, and the whole thing collapsed. That’s been the pattern ever since – the party benefiting from the lopsided split simply says no, and there’s nothing anyone can do.

This Bill reverses the dynamic. The burden shifts from “convince everyone to vote yes” to “convince everyone to vote no.” For residential schemes that have been quietly bankrolling their commercial neighbours since the day they moved in, it’s the first serious relief in more than a decade.

Worth putting a note in the committee diary.

Original source: Bannermans Lawyers (14 April 2026);