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Proposed WA strata law reform could be sustainability boon

Proposed changes to Western Australia’s strata laws could increase the amount of dense mixed-use infill development and make it easier for residents to put sustainability features like solar panels on their roofs, advocates of the reforms say. However, there is concern the reforms don’t go far enough in promoting sustainability and that termination schemes could affect vulnerable residents.

The changes, which are to be delivered by the State Land Information Authority, Landgate, are a response to a growing population and an increase in strata titles, which now comprise one-third of new lots in WA.

“By 2031, WA will be home to more than 3.5 million people and we need to prepare for the increased demand for affordable and sustainable housing – including more cost-effective urban infill developments and community living options,” Landgate chief executive Mike Bradford said.

“Proposed reforms to the [Strata Titles Act 1985 (WA)] aim to make shared living and working communities more attractive. They consider ways to provide more options for owning title to land and buildings; encourage an improved standard of service from strata companies; and propose better management and dispute resolution processes.”

Lands Minister Terry Redman said the reforms would create more affordable housing options.

“It is hoped these reforms will entice land developers and investors to WA, with provisions for more innovative and flexible planned community developments, which is currently a barrier to property growth in WA,” he said.

Opposition Lands spokesman Chris Tallentire said strata reform was desperately needed, with the government taking too long to progress, and building sustainability suffering.

“If one person wants to put photovoltaic panels on the roof now, for example, they need permission from everyone in the building to do it,” he said.

Proposed reforms recently closed for industry and community consultations, and included:

  • introducing community titles
  • allowing minor changes without unanimous agreement from existing owners
  • simplifying the process of strata scheme termination
  • allowing multiple strata schemes within a single building
  • introducing leasehold strata in a development
  • creating multiple levels of management within a strata title scheme
  • improving dispute resolution

Community title

The amendments aim to address limitations in the existing regulatory framework that could restrict the ability to implement community title schemes. A community title scheme involves more than one strata scheme within an integrated development with an overarching management body known as a community corporation. It could feature a mix of uses including residential, retail and commercial.

“Community titles will encourage larger scale precinct-style housing development to occur in WA, similar to other states,” executive director of the Property Council of Australia’s WA branch Joe Lenzo said. “This includes more mixed-use development around suburban centres and strategic infrastructure investments like train stations.

“It is very important that we modernise WA’s antiquated strata laws as increasing numbers of people choose to live in strata properties, including apartments and townhouses.”

Minor changes rules

As part of the reform, an option is being presented that would allow for some types of infrastructure affecting common property or another lot to have approval requirements reduced from “one vote you’re out” to a simple majority vote.

This could make it easier and cheaper to get sustainability structures like solar panels and rainwater tanks approved.

However, according to Chiara Pacifici, head of sustainability at developer Psaros, the consultation paper hasn’t gone far enough and the reforms should make specific mention to sustainability infrastructure – “a range of fixtures to land that improve the environmental sustainability of a building or development”.

“It should be a lot easier for lot owners to retrofit their properties,” she told The Fifth Estate.

Ms Pacifici has proposed in a written submission to the government, co-authored by commercial lawyer Tristan Cockman, that further legislative changes be included relating specifically to sustainability infrastructure.

She says that because the current situation of preparing and registering an exclusive use by-law for addition of sustainability infrastructure like solar panels is costly and time consuming (up to $1500), many people don’t bother following the rules, meaning there are a number of unlawful solar panels on strata properties at present, and also a big disincentive to bother installing at all.

“In situations where an installation of solar panels is unlawful, the strata company could at any time require the solar panels to be removed. This creates a great deal of uncertainty for solar panel owners. Even worse, solar panel owners may not have protection against damage and/or liability.”

Key to their recommendations is reducing the percentage of strata members needing to approve the installation of sustainability infrastructure on lots and common property; providing statements of factors or principles upon which decisions of the strata company are to be made (which take into account sustainability objectives); and implying a standard term into strata insurance policies so that sustainability infrastructure installed, owned and operated by individual proprietors is covered by the strata insurance policy.

“Sustainability infrastructure will assist in the affordability and longevity of the dwellings designed and constructed in Western Australia, with long-term financial benefits flowing through to occupants,” the submission states.

The ACT, Ms Pacifici said, was the only jurisdiction that had specifically referred to sustainability infrastructure in legislation, and it was time for other states to catch up.

The submission has received support from the Real Estate Institute of Western Australia and the state’s branch of the Property Council, both of which Ms Pacifici says have sent letters to the government supporting the proposal.

Termination

Where changing the rules for voting hurdles becomes controversial is around termination of strata schemes, an important consideration for creating denser infill development.

“Strata schemes in practice have a finite life determined by the age of the building, its capacity for refurbishment and the owners’ capacity to pay for that refurbishment,” LandGate’s discussion paper says.

Currently, an unanimous resolution by all owners of lots in a strata scheme is necessary to terminate the scheme. If the majority wants to sell but there is a small number of recalcitrant owners, then costly legal action must be pursued for termination.

“At the moment a single owner can prevent sale or redevelopment of the land in the strata scheme against the wishes of the majority,” the paper states. “There is an argument that democracy and a majority vote to terminate should prevail over the wishes of a dissenting minority.

“Town planners and developers have asked for more flexible arrangements to end schemes to facilitate planning strategy of urban renewal and urban infill, especially where zoning arrangements are changed, to permit increased density and development around transport hubs.”

For lots of 10 or more, the proposal is for a majority vote for schemes that are at least 15 years old. This is to reflect the reality that buildings have a finite life, and repair and refurbishment costs may impact more heavily on older schemes. A lesser percentage vote will be required as the age of the scheme increases:

  • 95 per cent for a scheme aged 15 or more years but less than 20 years
  • 90 per cent for a scheme aged 20 or more years but less than 30 years
  • 80 per cent for a scheme aged 30 or more years

Jurisdiction for termination matters would be transferred from the District Court to State Administrative Tribunal, which would apply principles in determining all decisions on ending schemes, including that ending the scheme is “just and equitable, objections are unreasonable and that ending the scheme is necessary”.

While the move would facilitate much-needed infill redevelopment, there are those who are concerned that forcing owners to sell could impact on vulnerable residents.

Changes afoot in NSW

A similar move to change majority vote to 75 per cent in NSW – where strata reform has been put on hold but is expected to soon begin again following the Baird government’s re-election – drew criticism from the Tenants Union of NSW, which said it would force out elderly and vulnerable owner-occupiers from their homes.

”We are worried about owner-occupiers as well as tenants in the older strata schemes – particularly older owner-occupiers who have either few or no other assets than their apartment,” senior policy officer Chris Martin said last year.

”We have a housing system that doesn’t have enough affordable housing options, especially for older people. If the NSW government wants this urban renewal agenda it also needs to develop an affordable housing agenda.’’

Strata Community Australia WA, the peak body for strata owners, is behind most of the WA reform changes, however said that reforms needed to “strike the right balance between preserving owners’ interests in their strata property, and flexibility to upgrade, modernise and redevelop”.

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