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 …