NSW Strata Links

In New South Wales, Australia there are a few places and groups for people interested in strata and community title to go to find out more or participate in strata related activities.

The Office of Fair Trading is the NSW government department regulating the operation on strata and community title laws, strata managers, on site manager and the specialist dispute system operated by the Consumer Trader & Tenancy Tribunal. 

The Consumer Trader & Tenancy Tribunal is the specialist dispute resolution tribunal for NSW strata and community title schemes.

The Land & Property Management Authority is the land title registration authority in NSW.

The Institute of Strata Title Management is a leading industry association in NSW for strata managers, strata suppliers and strata and community schemes.

The Owners Corporation Network is a leading industry association for strata and community schemes and owners.

The Urban Development Institute of Australia is a leading association representing the property development sector.

Strataman is a general information site that provides a range of information about strata schemes.

My Strata is a technology and information services company for the Australian strata and community sector.

Flatchat is a site run by Jimmy Thompson who writes the FlatChat column every Saturday in the Sydney Morning Herald.

Do you know any others or do you want to be linked here too ?  If so post a comment with your links.

Francesco ...

Obsolete Strata Buildings - Going Going Gone ???

Yesterday, the NSW Minister for Planning, Tony Kelly MP, addressed ISTM members at Darling Harbour about government plans to change laws to allow the demolition and redevelopment of old buildings. 

The Minister also commented on how the Government may cope with population growth in the Sydney metropolitan area over the next 20 years as well as whether the Government intends to review planning policy and regulation to remove the inconsistencies that exist between local councils in applying the current planning laws.

A few key things he said included -

•  The government had prepared discussion papers about the termination of strata schemes in 2003 and 2004 covering the issues and options and had received hundreds of submissions.
• The ageing of strata buildings in inner Sydney suburbs was a serious issue that needed addressing in the next 10 years.
• There are good examples of ways to end strata schemes without 100% owner agreement overseas that were being considered by government.
• It was important to government (and him personally) that displaced owners (especially those who were older or less able to help themselves) were treated fairly in the termination process.
• He was working to have developed reform proposals ready for consideration by the second half of 2010.
• At this stage cabinet has not approved non unanimous strata scheme termination.
• Government policy was that 70% of new dwellings were to come from infill or brownfield sites rather than greenfield development (and that currently that ratio was 79% to 21%).
• Presently approximately half the infill development in NSW is strata or community title (about 39% of new dwellings) and that ratio was expected to increase.
• By 2036 there will be an additional 1.7 million people in Sydney and another additional 1.6 million people in the rest o f NSW.
• There are currently two important Premier Papers touching on the government’s approach on these matters; the Metro Transport Plan and the Review of the Sydney Metro Strategy.

Forcing strata schemes to end when some owners disagree is a very challenging issue.

I believe that a lot more needs to be said and considered about ending existing strata scheme arrangements before any law reforms can be safely or effectively introduced.  In later blogs I’ll cover some of the debate and developments so far.

But for now, I’m interested to hear your views about some key issues I can think of in relation to the various existing proposals.

1. Is owner agreement to end a scheme enough (regardless of appropriate level) or does there need to be a valid underlying reason (like the obsolescence of the building, uneconomic repair costs, changes to land use, unresolvable owner conflict, etc)?
2. What level of agreement to end a scheme is appropriate if less than everyone – 95%, 90%, 80%, 75%, 66% or a simple majority?
3. Should mortgagees get a vote on ending a scheme ?  And, should mortgagees have a priority vote (over an owner’s vote) or have to vote as well as the owners vote or have a veto vote?   
4. What compensation should disagreeing owners get – market value, the same as other owners (proportionately) or a premium?
5. Should a Court or Tribunal approve ending a scheme before it occurs ?  Or, should disagreeing owners have a right to challenge the decision to a Court or Tribunal instead?
6. Who bears the cost of any aborted or unsuccessful attempts to end a scheme?  The scheme, proponent owners, the government or someone else (and if so, who)?
7. What role, if any, should government play in the process?

ISTM, who hosted the Minister’s presentation, is a leading NSW strata industry association.

Francesco …

Interest Rates Creep Effects

It seems that real estate interest rates are continuing to rise in Australia with the Reserve Banks announcement this week of another 0.25% rise to 4.25%.


It's expected that all major banks will lift mortgage rates and most also lifting their credit card, business rates and deposit rates as well to match.  Of the 4 major banks this leaves Westpac’s standard variable mortgage rate the most expensive at 7.26% and National Australia Bank the only bank below 7 per cent with a rate of 6.99%.

Of course this still leaves rates lower than only a few years ago when mortgage rates peaked at an average of 9.36% in September 2008.

But, many analysts believe the rate rises will continue in 2010.

‘There is barely a word of weakness in the bank's statement,’ said IPAC Securities economist Adam Carr. '’It thinks the housing market is still buoyant and that's the only sign of weakness in an otherwise bullet-proof economy.’   And, Westpac economist Bill Evans agreed. ‘They haven't finished raising rates. The statement points to concerns with the stimulatory impact of the rising terms of trade overriding any doubts about the housing and consumer sectors.’

Even Reserve Bank Governor, Glenn Stevens, speaking on the Sunrise program with David Koch this week said ‘We cut interest rates to what we call emergency settings when we had an emergency’ referring to the global financial crisis and ‘once the emergency has passed and things gradually look more normal, then it's not wise to leave interest rates right down at rock bottom any longer than we need.’  


Stevens emphasized the point by also saying ‘And you shouldn't assume they'll stay low because that assumption will prove to be, you know, unfortunate.’

So, its fair to assume that interest rate rises for apartment owners will continue with a range of effects on them, tenants, strata schemes, managers and others this year and next year.

Some of the most likely effects include.

• Owners will have less money left after mortgage payments and living expenses to pay strata levies so levy arrears ratios and amounts will rise.
• Strata scheme cashflow will come under more pressure as receipts from owners slow.  Even a 5% worsening of levy arrears over 12 months means that a block of 50 apartments will be at least $5,000 worse off on a cash basis.
• Strata managers will need to more closely and carefully manage expenses to ensure essential payments can be made on time.  In some cases strata schemes will need to borrow money.
• It will take longer to pay scheme suppliers, putting pressure on them and possibly slowing service delivery.  And, non essential work by strata schemes will be cancelled or delayed.
• Scheme operating costs will increase as more money needs to be spent on strata levy recovery.
• Antipathy between paying and non-paying owners will increase.

So, it looks like it will be another interesting money year in strata land.

Francesco ...

Let's start with some basics ...

Let's assume you know very little about high density strata, community and association real estate and want or need to understand it.  So, to start you should understand some basic concepts and the purpose of a separate real estate titling, ownership and management regime.

Strata, community and association schemes exist to allow multiple owners to own and use parts of land and buildings by an interlocked system of rules, rights and obligations. 

The key features characterising this kind of real estate include -

• Split ownership of the real estate between owners and a collective group or body.
• Spatial boundary definitions creating three dimensional spaces.
• Collective governance systems with an overriding collective group or body and compulsory membership.
• Mandatory operational controls usually imposed by regulators that must be followed.
• Restricted property rights for private and shared property compared to single title real estate.
• Close living compromises in relation to shared spaces, shared services and behavioural rules.
• A tension between private law matters in the scheme and public law matters affecting the wider community.
• Perpetual existence of the overriding collective group or body and the scheme itself.
• Management by owner representatives, onsite-facilities managers and offsite facilities and other kinds of managers.
• Compulsory repair and maintenance obligations.
• Compulsory insurance obligations.
• Information and records keeping and access mechanisms.
• Funding controls covering raising, holding, spending and accounting for money.
• Decision making by meeting processes and variable voting thresholds.

Future posts will explore each of these features in more detail.

Other posts explain the relevant laws containing the details and identify groups you can  participate in.

Francesco ...

Families in Apartments

Recently SMH's Domain wrote in Kids on the Block? about the issues affecting families living in apartments saying that up to 20% of apartment dwellers were families, most parents did not want to live there (but the children liked it) and that it was the lack of safe, usable outdoor space that was the primary concern.

And, the recent study by University of Melbourne's Associate Professor Carolyn Whitzman called Vertical Living Kids says that whilst developers focus on DINKS (double income no kids) buyers and empty nesters they are missing a significant part of the current and future buyer market by not catering for families. Projections of almost 10,000 kids under 14 years living in the City of Melbourne by 2021 mean that families will be living in high rise apartments (like it or not).

Which makes me think that this inevitable demographic change presents as many opportunities as challenges for strata title.

• Will long standing rules about children playing, noise, games, etc, remain appropriate ?
• What new kinds of shared facilities need to be installed in common areas - like playgrounds, wading pools, soft play surfaces, skate parks, etc ?
• How will access and security facilities need to be changed to protect children in apartment buildings ?
• Will long day and after hours child care facilities become standard features in and near apartment developments ?
• How do you make balconies, terraces and rooftops child proof (and visually appealing) ?
• How do you keep those who may prey on children out and/or controlled ?
• How will owners and managers deal with likley conflicts between the living needs and desires of families against those of DINKS, singles and empty nesters already in apartments ?

I suspect that we will initially see attempts to entrench the existing structures and make families change to match them ... but this is not sustainable as the numbers of families in apartments increase, their knowledge and awareness develops and inevitable political and judicial support  for children and families arises.

So, expect and prepare for the challenges since those who get it more right sooner will be the winners as strata becomes family friendly.

Francesco ...

NSW Legal Resources

In New South Wales, Australia medium and high density real estate can operate under a few different legal structures that are regulated by different legal instruments.

The most common form is strata title operating under the following laws.

Strata Scheme (Freehold Development) Act 1973

Strata Schemes (Leasehold Development) Act 1986

Strata Schemes Management Act 1996

Strata Schemes (Freehold Development) Regulation 2007

Strata Schemes (Leasehold Development) Regulation 2007

Strata Schemes Management Regulation 2005

Then there is community title operating under the following laws.

Community Land Development Act 1989

Community Land Management Act 1989

Community Land Development Regulation 2007

Community Land Management Regulation 2007

And, there are also company title operating under the Corporations Act (Cth) 2001 and the Corporations Regulations 2001 and some unincorporated associations operating under the Associations Incorporation Act 1984 and the Associations Incorporation Regulation 1999.

Explore the relevant laws as they are easy enough to read to find relevant controls and get a feel for what's required. But, remember that the laws themselves are not the whole story as they interact with other laws and are re-interpreted by Courts and Tribunals when deciding cases .... so get legal advice when it's important or unclear.

Francesco ...

Street & Building Art

Buildings exterior surfaces create the urban landscape.

Most building owners forget or ignore this. And, others are preoccupied with uniformity and or blandness.

But it doesn't have to be that way !

Buildings can enhance the streetscape (and be fun) in less conventional ways. Just see how NYC street artist and photographer Katie Sokoler converted the streets of Greenpoint, Brooklyn into a real life Pac-Man game.

See more here at Katie's blog.

Why not have more of this on the streets ???

Francesco ...

Welcome

As a Sydney based expert strata lawyer, I've started this blog about all things in high density real estate.

So, if you're involved or interested in high density real estate (whether strata, community, association, condominium, company, co-operative or anything else) keep a track of this blog and post to it whenever you like.

You can also contact me anytime by any of the following.

Email franco.andreone@optusnet.com.au

Twitter frankandreone@twitter.com

Phone +612 8569 0989

Facsimile +612 8569 0155

Mobile +614 1886 4861

Post PO Box A968, Sydney NSW 1235, Australia

I hope you enjoy my blog and posts.

Francesco ...