08th Oct2012

Shaping the future of strata living

by Chelsey Blount

Shaping the Future of Strata Living

Shaping the future of strata living: next step in reform released

More than 50 years after the commencement of the world’s first strata title law in NSW, major reform continues with the release of a discussion paper for the public’s input to help shape new laws for the 21st Century.

Minister for Fair Trading Anthony Roberts said people should make submissions and have a say in the laws that would govern their future living and working environments.

“Strata is how many live, work and play. Shared living arrangements are expected to grow into the future. Within 20 years, half the state’s population is expected to be living in strata and community schemes.”

More than one quarter of the state now owns, lives or works in one of more than 70,000 strata or community schemes worth an estimated $350 billion.

“Overly formal, old fashioned, complex and restrictive is how many view the current set of laws governing strata. The Liberals and Nationals State Government is aiming to fix that. Community living and renewal are critical areas that need swift and bold reform and innovation. This reform is well overdue.”

“The government needs as much feedback as possible to make sure we achieve a good balance between competing interests when legislating. To achieve considered reform, people need to have a say and give us their views.”

The discussion paper, Making NSW No 1 Again: Shaping future communities, follows a 3 month online consultation project by Global Access Partners (GAP) that generated 1200 comments and more than 600 suggested law changes.

The University of NSW City Futures Research Centre report, Governing the Compact City: the role and effectiveness of strata management also informed the development of the government’s discussion paper, as did decisions from the Consumer, Trader and Tenancy Tribunal (CTTT), and consideration of arrangements in interstate and overseas jurisdictions.

Mr Roberts said NSW introduced the world’s first strata title law in 1961 and led again in 1989 with laws enabling the development of community schemes that allowed for multiple dwellings on one piece of land. Similar laws have since been adopted around Australia and throughout the world.

“NSW will again set the benchmark. Out of this reform process, we will produce more modern, effective and friendly laws that enable easy community living and shared arrangements.”

“We will cut red tape and repetition, streamline and strengthen laws and remove anything that strangles good governance or inhibits necessary protections for people.”

Almost three quarters of all schemes have 10 lots or less but all are compelled to elect a committee. Just over half of all lots in NSW are currently investor owned. In some schemes tenants make up all or the majority of residents and yet they have no voting rights and can’t attend committee meetings.

Around 60 percent of all schemes in NSW are managed by a licensed strata managing agent and it’s close to 100 percent in large and complex schemes. About one quarter of all disputes that come to Fair Trading are about the conduct of managing agents.

About 30 percent of residential strata schemes in the Sydney metropolitan area were registered more than 30 years ago. Many older buildings, some nearing 100 years old, have been converted to strata title.

Renewal or termination of schemes is an urgent issue in some developments. Urban consolidation demands will mean many low density existing schemes will need renewal, yet community and majority interests can conflict with those of the individual. Many buildings are not economical to keep repairing and maintaining. We need a fair and reasonable way of allowing schemes to be redeveloped in the best interests of the community.

The number one enquiry from strata and community schemes across the state is about common property maintenance. Land and Property Information and NSW Fair Trading receive more than 500 calls a week about this issue and it can be quite a complex matter, with anomalies between schemes registered under different Acts. A simpler method of dealing with common property maintenance is required.

Owner renovations, overcrowding and short-term rentals, building defects, levies, debt recovery, sinking funds, insurance, money management, dispute resolution and compliance and enforcement are all covered in the paper.

The perennial issues of parking, pets, smoking, timber floors and washing on balconies are also raised.

“We can make things a lot simpler and more certain for people. Consumer protection is a guiding principle in the government’s review, as is democratic process, transparency, accountability and appropriateness.”

The discussion paper examines development issues when schemes are established, as well as management issues that arise on a day to day basis during the life of a scheme.

Mr Roberts said the government had already received excellent feedback and advice from industry experts and peak bodies on issues affecting strata owners, strata industry professionals and other stakeholders.

Strata Community Australia NSW President David Ferguson welcomed the release of the discussion paper and said it defines the issues well. He said the SCA looked forward to the strata debate.

Chairperson of the Owners Corporation Network, Stephen Goddard, congratulated the Minister for identifying issues within the strata sector that need a new social agreement.

The discussion paper and a quick online survey can be found on the Fair Trading website.

Comments can be made to Fair Trading by email to policy@services.nsw.gov.au, by mail to Strata and Community Scheme Review, Fair Trading Policy, PO Box 972, Parramatta NSW 2124 or by fax on 02 9338 8918. People can also call 13 32 20.

There is a submission form at the back of the discussion paper. It is not compulsory and submissions can be in any written format. Submissions close 5pm, Thursday 15 November 2012.

The government intends to release an Exposure Draft Bill by mid-2013 and bring a final Bill to the parliament in the Spring session next year.

02nd Aug2012

Children in Strata

by Chelsey Blount

Children in Strata

Have you ever encountered issues with children in your usually peaceful gated communities? Regardless of whether this is a one off or if it happens frequently, there’s no doubting that children can be a blessing as well as a handful!

The issue of children in strata can be quite a contentious one, although there are many helpful by-laws in place to keep everyone happy.

Many strata schemes have by-laws placing restrictions on unsupervised children playing on common property within and outside of buildings. The reasoning behind such a by-law is to ensure safety and minimise risk wherever possible. There also may be by-laws in place ensuring there is quiet and peaceful enjoyment for all occupants. By-laws are never allowed to restrict or prevent children from living in a strata scheme (apart from retirement villages).

Given the usually close confines of complexes, parents need to be aware of other residents and teach their children to moderate noise and behaviour. If conflict arises between neighbours over children, generally the easiest way to diffuse the situation is to have a quiet word with the parents of the children and avoid getting anyone else involved. After all, it is a parent’s responsibility to understand the by-laws before deciding to live in a gated community, as well as govern their children’s behaviour.

Another important aspect to consider is child safety. It is very important to ensure apartments and their common areas are child-safe. The most serious risks to young children are falls from windows and balconies, and for complexes with pools or water frontage, drowning.

Definition of By-law: a rule adopted by an organisation in order to regulate its own affairs and the behaviour of its members. 

 

25th Jun2012

Strata Living On The Rise

by Chelsey Blount

Strata Living On The Rise

According to the census data released last week by the ABS, there has been a reasonable shift towards more people living in units and townhouses, with the proportion of people living in detached houses falling by one percentage point between 2006 and 2011.

Dwelling structure

Australia

%

2006

%

Separate house

5,864,573

75.6

5,472,527

76.6

Semi-detached, row or terrace house, townhouse etc

765,978

9.9

658,858

9.2

Flat, unit or apartment

1,056,236

13.6

932,862

13.1

Other dwelling

66,666

0.9

76,080

1.1

The largest change was seen in Sydney, with the percentage of separate houses falling from 60.9 percent of all private dwellings to 58.9 percent. This can been attributed to the high housing costs that have encouraged people to move to more densely populated communities.

The major increase seen in Sydney, which has more flats and other higher density dwellings than any other Australian city, is congruent with the findings of the UNSW strata study: Governing the compact city. This research found that Sydney housed the largest amount of strata schemes in Australia.

In light of these results, it is important to consider the impact of communal living before deciding to purchase property in strata communities. Rick Deering, SSKB’s Victorian General Manager, says one of the top responsibilities that an owner needs to consider when purchasing a strata lot is to “…accept that it can be a very close community that you live in and have consideration, patience and understanding for your fellow residents.”

For more information on communal living, or to ask a question visit www.livinginstrata.com.au

 

20th Jun2012

Top 5 Responsibilities Of Owning Strata Property

by Chelsey Blount

Top 5 responsibilities of owning strata property

It is important for owners to be aware of their responsibilities and obligations when owning a strata property. Upon the purchase of a strata titled residence, the owner immediately forms part of the Body Corporate/Owners Corporation and has a right to participate in decision making processes.

Here are the top 5 responsibilities to be considered when owning strata property.

1. Paying contributions on time

Paying your levies is one of the biggest responsibilities of an owner in a strata community. This will ensure the body corporate/owners corporation is running smoothly and in tip top shape. If all contributions are paid on time then forecasted and unexpected maintenance and repairs can easily take place. A well maintained body corporate will also help to increase the collective value of the investment. Click here to see an example of how levies are spent.

2. Read the by-laws

The biggest issues that seem to constantly resurface in strata are smoking, parking, noise and pets (just to name a few!) All of these, and anything and everything else relating to your community will be addressed in the by-laws. It is hugely important for owners to consider these when living in a communal environment to reduce the amount of potential disputes as well as help a scheme to run smoothly.

3. Voting

Using your vote in a strata community is the only way to be involved in your body corporate/owners corporation without being a committee member. It is important to make sure you have your say, rather than letting others make decisions for you and regretting it later! Click here to watch a short video on how owners can get involved in their community.

4. Keeping up to date

Be informed about what’s happening in your community! After all, it’s in the owner’s best interest to know about what’s happening around the community. If you can’t attend committee meetings or AGMs then make a habit of reading your minutes so you’re always prepared for maintenance, disruptions or changes.

5. Be mindful of others

Strata schemes are small communities where the activities and attitudes of residents can have a significant impact on the satisfaction and enjoyment of others! It is so important for owners to be aware of their responsibilities and obligations when owning a strata unit.

For more information on strata properties or to ask a question go to www.livinginstrata.com.au

 

15th Jun2012

How Are Levies Spent?

by Chelsey Blount

Confusion has been the longstanding norm when it comes to levies for lot owners. The UNSW study, Governing the Compact city, identified that a large proportion of the State “did not consider their levies to be appropriate,” and that there is a great amount of confusion amongst owners about what levies are actually spent on.

Although there are many variables to consider, this blog will give you a general indication of how levy contributions are spent along with an example of a building’s expenditure throughout the period of a year.

A body corporate has many particulars that are allocated for over a year. These can include:

management fees, cleaning, electricity, fire control, insurance, R&M building, R&M electrical, R&M gardens and grounds, R&M lifts, R&M plant and equipment, R&M plumbing, R&M pool, resident/building manager, security, tax/bas filing fees, pool heating, and sinking fund expenses. 

Of these particulars electricity and sinking fund expenses can generally account for the largest amount of expenditure. An EXAMPLE of the breakdown of expenses for a body corporate is as follows:

Body Corporate expenditure example

Even though there are countless variables to be considered for individual situations, there should be little confusion as to what levies are being spent on, given you have a good strata management company that remains as transparent and helpful as possible.

At SSKB, our Community Managers provide detailed spreadsheets and graphs showing the budgeted and actual expenditure for a given year. This information is freely available and also provided in the minutes to keep all lot owners up to date and prepared for the levies to come.

07th Jun2012

Green Strata

by Chelsey Blount

Green Strata

Australia is fortunate enough to have a rich cultural and natural heritage and plentiful resources to support economic prosperity. However, the future holds many challenges which must be faced in order to continue to prosper. Sustainability, particularly within the realm of strata development is an issue of great importance.

So long as urbanisation continues to grow, we can expect a sustained growth in the number of strata titled properties in Australia well into the future. With this in mind, it is essential that sustainability, or ‘green strata’, be considered within strata communities.

There are many things communities can achieve by ‘thinking green’ and all efforts will help to make for a more sustainable country. These can range from communal composting, to recycling efforts and solar power installation.

Green Strata, a non-profit association based in Sydney, is tackling the issues of how to live more sustainably with the lowest possible ecological footprint. “We focus solely on helping owners and occupiers of residential multi-unit properties to improve the sustainability of their common property and their community of residents.”

To learn more about Green Strata, or to share what you’ve done to help within your community click here.

31st May2012

Do Committee Decisions Influence Property Values?

by Chelsey Blount

Do Committe Decisions Influence Property Values?

Not all lot holders have the same income stream and their ability to fund improvements is not limitless. To live in a scheme should be a decision not taken lightly as you become part of a community and decisions on expenditure, behaviour and external appearance of lots is not yours alone. This can cause many problems with the loss of autonomy, however if all lot holders can work together for the common good of the scheme it represents good value for the investment.

Strata title developments are suited to first time buyers, investors, semi/retired people, families, in fact the whole gamut of society. The question remains, how does the Committee manage to conduct the role and represent the interests of all owners?  Particularly when the ‘act’ does not require all owners to partake in all decisions!  In many cases the Committee consists of 3, 4, or 5 people who have only nominated to be on the Committee as they have the time to commit to the role on offer.

In some cases, the Committee may consist of professionals that want to upgrade common areas such as the pools, lifts, lobbies, external painting or gardens in order to maximize their return on investment.  These types of people want a return on their investment by maximizing the property values – they renovate, make a profit and subsequently upgrade to another complex. On the other side of the spectrum is the more conservative approach to keep levies low, these people want cost saving measures to be the priority when budgeting and setting levies.

What is the possible outcome over a period of time if each group has their way?

Conservative: Save money by cutting budgets and keeping levies low, engaging contractors at the lowest price and fixing items rather than replacing them.  This can result in some owners resenting paying levies as they perceive that nothing is being done to improve the property and that the building is only being ‘maintained’ rather than being improved.  This could also lead to the possibility of a ‘special levy’ if sufficient funds are not put into the sinking fund if a major expense becomes essential.  Conservative owners also see lower levies as a benefit for potential buyers. Non conservative Owners and Committee members will see this as selfish by only considering their own needs and not providing the necessary prerequisite for rising property values.

Forward thinking: This type of owner or Committee member will want everything to be done now! A larger than usual proportion of levies should be budgeted towards replacement of items and upgrading the property to stay in touch with cutting edge ideas to ensure the complex stands out from the rest.  This will ensure that the values will continue to rise. Many conservative owners will resent spending money on repainting the building with the mentality that just because some people hate the colour does not mean the building should be repainted.   The forward thinkers believe that the increase in levies will be paid back 10 fold in higher property values being achieved.  This type of attitude infuriates owners that are opposed to ‘fixing something that isn’t broken.’

Luckily, most buildings have a good mixture of people swaying sensibly in both directions in order to maintain the status-quo.  However, a rundown body corporate complex just doesn’t have the same financial appeal as a rundown house in the real estate world!

28th May2012

Modernising Strata Communications

by Chelsey Blount

Currently, only buildings that are defined as being a large scheme (those with more than 100 lots) are obligated to provide minutes and agendas to all owners. In NSW, large schemes only make up approximately 0.08% of all strata schemes, meaning a huge portion of those living in strata are being left in the dark.

By utilising the internet and modernising the existing communications framework in place for strata schemes, it should be necessary to keep all people living in strata communities informed.

Modernisation of communication is necessary to not only encourage wider owner participation, but to provide an easier way to disseminate information and to help reduce administrative costs significantly.

The power of the internet could potentially allow for buildings to have their own websites, teleconferencing capabilities for owners who can’t be there, as well as the possibility of using Skype to make meetings more convenient.

The NSW Strata Laws Online Forum received an influx of suggestions on how the internet could be used to modernise communications within strata schemes. The creation of a website to act as a notice board was one of the more popular suggestions, as it would allow all owners to be continually updated at no cost.

By harnessing technology more effectively, the strata industry would be able to breach the information gap between small and large schemes.

22nd May2012

Proxy Farming: reforming the proxy vote system

by Chelsey Blount

Proxy voting has always been a hotly debated issue in strata communities; divided by those seeking more power and those lying within minorities. Proxy voting is the process by which owners cast votes on behalf of other owners and many agree this system is in need of reform.

Some argue, “The objective should be to empower owners to participate in the decision making processes within their owners’ corporation, not to make committee members more powerful.”

They say, “The main problem lies with certain individuals carrying their own agendas, collecting proxies from timid, lazy or non-English speaking residents, in order to gain majorities in AGMs.”

Many disagree with this stance in favour of the proxy system as “many people lack the time to study strata documentation or proposals and should be allowed to trust their vote to another member with a better understanding of events.”

The NSW Strata Law Online Forum recently explored the issues surrounding ‘proxy farming’. Many suggestions were put forward and one of the more popular responses was to institute a ballot voting option which would allow for non-attending owners to have their say.

The hugely successful online forum received over 600 suggestions for procedural change and law reform, all of which will be taken into consideration by the NSW Government.

18th May2012

The Blame Game

by Chelsey Blount

It seems to be residents vs owners vs owners corporations in NSW when it comes to problems of antisocial behaviour and noise.

The hugely successful Strata Laws Online Forum found that the types of disturbances ranged from the expected such as playing loud music, to the unexpected such as the noise from leaf-blowers. Although noise and antisocial behaviour are unavoidable provisions of living in a strata community, the question remains: How do you sort the valid complaints from the unreasonable and unsympathetic neighbours?

As the suggestions poured in it became apparent that everyone was trying to avoid taking responsibility for the problem. Residents complained that fear of retribution stopped them from using the standard channels of recourse as well as executive committee inactivity. This was countered with the argument that it was not the committee, but owners who were entirely responsible for their tenant’s behaviour. Owners argued this point by complaining that “…tenancy laws and strata laws are 99% stacked in favour of the occupant and it’s the committee’s responsibility to deal with the legislation.”

The rule remains that an “owner or occupier must not make noise at any time within their lot or common property that is likely to disturb the peaceful enjoyment of another resident.” If you are experiencing trouble with a noisy neighbour, I would suggest your best course of action is to:

  1. Approach your neighbour, make them aware of the problem and try to resolve the issue.
  2. If this doesn’t resolve the situation, or you are uncomfortable approaching your neighbour, then speak to your Owner’s Corporation to get the problem resolved.

 

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