NSW strata laws are changing

Doug Daniell Brokers, Knowledge Centre Leave a Comment


NSW strata laws are changing

Strata laws are being modernised to meet the needs of living in a strata community in the 21st century. Over 90 reforms to the strata development and management legislation have been passed by the NSW Parliament and are expected to commence in the second half of 2016.

Comprehensive changes to how strata schemes operate include:

  • New responsibilities for agents and building managers, such as disclosure requirements, to strengthen transparency and accountability
  • A new collective sale and renewal process (for owners to jointly end a strata scheme so the site can be sold or developed)
  • Making it easier for schemes to enforce community rules (called ‘by-laws’) and making new model by-laws for pets and smoke drift
  • Changes to proxy voting to help stop a minority of owners controlling decision-making in a scheme
  • Requirements for developers to set realistic levies.

One of the major changes is the introduction of a building bond and mandatory defect inspection reports. The defect bond and inspection regime will enhance consumer protection if a new building has unresolved defective work and will help get defects fixed early in the life of the building.

There is currently no requirement for HBCF insurance for residential high rise strata buildings (those over three storeys in height). Under the new laws developers will be required to lodge a bond with NSW Fair Trading in the form of a financial security equal to two per cent of the contract price for residential and mixed use high rise strata buildings. An occupation certificate will not be issued until the bond has been lodged with NSW Fair Trading. The bond will provide the funds necessary to fix defective work that has not been rectified within the necessary timeframes.

The new requirements will only apply to building work commenced, or contracts entered into, after the commencement of the reforms. The bond is not payable until it is time to get an occupation certificate.

Developers will be required to engage and pay for an independent building inspector to carry out an interim and final inspection report. There will be a standard report to guide the inspection and rectification process and the original builder will be given at least three months to rectify any identified defects. The bond will be held for two years and the cost of fixing any unrectified defects will be taken out of the bond at that time, any remaining amount will be returned to the developer. If there are no defects, or they have all been rectified, the whole amount of the bond will be returned to the developer.

More information is available on the Major changes to strata laws and Reforms to strata laws pages on the Fair Trading website.

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