Strata Scheme Management

Strata Scheme Management

(12.33pm 29 October 2013, Private Members Statement, Legislative Assembly, NSW Parliament)

More than three-quarters of the homes in the Sydney electorate are apartments. Apartments are vital to sustainable living and must become a greater proportion of the housing mix to environmentally, socially and economically address population growth. Strata reform is a common concern raised by my constituents.

Following extensive consultation, my predecessor, Ms Clover Moore, introduced a private member's bill. The State Government has recognised the need for reform and has initiated a review of laws. A wide range of concerns have been raised; I will discuss some of the key issues that need to be addressed. The issues broadly fall into three categories: transparent, accountable and democratic management; protecting amenity; and preventing defects.

Decisions that affect investment and quality of life are made at annual general meetings and executive committee meetings, but there can be problems with how these meetings transpire. Proxy votes can concentrate power in one person or a small number of people who make decisions based on personal benefit to the detriment of the majority of owners. This is unfair and undemocratic and reform is needed in this area. Owners should be required to direct proxy holders how to vote or the law should permit owners to vote on items when they are absent from a meeting.

Executive committee members, when dealing with possibly multimillion dollar assets, do not necessarily know the law or their responsibilities. Some of my constituents have suggested compulsory training, but this needs to be balanced against the increased potential disincentive to becoming a member of an executive committee. The Act should clarify the roles and powers of executive committee office bearers and introduce a code of conduct to ensure they fulfil their duties appropriately. Disclosure requirements should be strengthened, and strata managing agents should be required to publicly disclose their connections with the original owner, caretaker, letting agents and builders, as well as commissions received from contractors.

Owners corporations need time to carefully consider long-term contracts. However, these are often entered into when a strata scheme begins and owners do not have the necessary knowledge or experience for informed decision-making. Therefore, in the first year of a scheme contract lengths should be restricted. Many residents are concerned that short-term rentals in their buildings create noise from visitors in holiday mode, cause damage to common property from frequent luggage movements and reduce security with the changing residents. The law should allow owners corporations to be able to restrict short-term leases. Overcrowding also creates serious problems. Some unscrupulous landlords and subletting tenants cram people, mostly overseas students and new residents, into apartments, which creates noise, high water use, wear to common property and fire hazards. Some owners use their proxies to block bans on overcrowding.

In buildings approved since 2006, City of Sydney consent conditions limit apartment occupancy to two adults per bedroom and enable it to take action against overcrowding.This approach should be adopted in strata law, and the Consumer, Trader and Tenancy Tribunal should have the power to prohibit overcrowding and short-term rentals where there is a proven pattern of antisocial behaviour. Illegal parking on strata property and residents using visitor spots are a common problem and some residents want the reintroduction of clamping laws. This option, as well as delegating parking laws to councils, needs to be explored.

Individual owners must be protected and be able to claim for financial loss or damages when an owners corporation fails to fulfil its statutory duty to maintain and repair common property. In that regard, legislation will be required to overturn a recent court decision. More families with children are living in apartments and parents are increasingly raising concerns about drift smoke from neighbouring apartments, including from balconies. Where drift smoke is impacting another apartment, there should be authority for the strata manager, for example, to issue a no-smoking order.

Pursuing remuneration or rectification for defects is stressful and arduous. It can involve a protracted court case at significant financial cost, which may result in a negative result due to technicalities. It may also result in reduced property values. I have heard stories of owners losing their homes because they could not afford special levies that were introduced to fix faults. The State Government urgently needs to look at measures to encourage competent development, which will result in reduced building defects. Such measures must include removing private certification and ensuring owners are able to make insurance claims for structural defects. "Defects" should be a compulsory item on the agenda of the first annual general meeting so that owners consider potential problems at an early stage.

Any strata scheme that moves away from unanimous agreement before termination to allow the forced sale of one's home must have strong safeguards to ensure this approach is taken as a last resort and that it is not detrimental to any particular owner. Moving house can be traumatic, especially for frail, socially isolated and elderly people who have lived in one location for many years. Ensuring vulnerable owners receive a fair price for their apartment is not enough if they are unable to afford a new place in a larger apartment block that has higher levies. Apartment living is an important part of the housing mix and reform in a number of key areas is needed to ensure it remains an attractive choice for the community.

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