The winners and losers of strata changes

The winners and losers of strata changes

The majority of investors own apartments as their property of choice, and almost all owners of these homes will be affected by changes to the strata laws set to come into place on 30 November 2016. 

The changes, which touch every part of the strata laws, are designed to reflect the modern realities of living in strata townhouses and apartments. But the changes also affect owners when it comes time to sell,  Lawlab legal director Richie Muir said.

“New collective sale laws will make it easier for investors who own older apartments to sell them for redevelopment,” Mr Muir said.

At present, all lot owners need to agree if a sale or renewal of the complex is to go ahead. This means one reluctant apartment owner in a block of 100 can halt a sale.

Under the new laws, just 75 per cent will need to agree.

“As many as 8000 apartment blocks in NSW will now be viable redevelopment sites,” Mr Muir said.

And it’s not the only change benefiting investors – those purchasing off-the-plan will be “comforted” by the realistic levies required to be set by developers, he said.

In addition, cosmetic and minor alterations that don’t affect common property will not need approvals and investors will be able to vote electronically and attend meetings by video conference, such as Skype. For interstate investors, this will make being involved in the decisions around the building a lot easier.

“Prepare to be more involved in meetings by speaking to the committee about setting up Skype attendances,” he said.

Tenants will also get heard more – they will gain the right to attend owners corporation meetings and in complexes with 50 per cent or more renters can elect a tenant’s representative to sit on the executive committee.

“The model by-laws have been updated to make it easier to keep pets, control parking and take action on excessive noise or nuisance smoking. The model by-laws don’t automatically apply but are a guide and can be adopted by schemes,” he said.

This may assist investors who see the benefits in renting to tenants with companion animals but have been restricted due to bylaws. These are likely to be decided on a building-by-building basis.

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But not all of the changes will necessarily be positive. The ability for 75 per cent of property owners to allow the entire block to be redeveloped can hinder investors with longer-term plans, Just Think Real Estate managing director Edwin Almeida said.

“Many bought [their] investment property 30, 40 or 50 years ago, with the vision that one day, they or their children will move into these investments,” Mr Almeida said.

He also warned of underselling an apartment complex to an aggressive developer, without being aware of the true development value of the land.

“I have witnessed many cases already, where owners act for themselves on the sale of property to developers and lose up to 30 per cent of what they should have got,” he said.

Yet the most concerning area for investors buying into apartment blocks, particular when interstate, remains the “dangerous liaisons” the property management, selling agency and developer have, he said.

If property managers fail to report defects within the specified time frame, which “has diminished under the new proposed changes” the investor will be stuck footing the bill for repairs.

Mr Almeida has already noticed strata levies on a “constant increase and [an increasing] burden to investors”.

“The new regulations I strongly feel will only ramp this process as it is easier for developers and builders to walk away from a duty of care,” he said.

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