Written by Jamie Horner
STRATA is a form of ownership where a single parcel of land is subdivided into lots. These lots can each be owned by a separate person. Think apartments, townhouses, villas, etc. All of the owners share ownership of and responsibility for any common property—like gardens, driveways, and external walls.
As Perth residents move away from large homes in suburbia, Empire Estate Agents have observed a rise in popularity for high-density living. With this shift, comes a need for modernisation of Strata regulations.
In the most extensive shake-up in twenty years, the Strata Titles Act 1985 is being modernised, with big changes for residents, managers and strata councils. The changes will take effect on May 1st, 2020, and make strata management clearer and fairer.
There are six key areas of change being introduced to the Strata Titles Act 1985:
- Better buyer information (more transparency and full disclosure): enabling potential buyers to make informed decisions when purchasing into a strata complex.
- Strata disputes will have a simpler resolution, with the State Administrative Tribunal to become the ‘one-stop-shop’ for strata disputes.
- Scheme termination (relating to the collective sale or redevelopment of strata schemes) will become a fairer process.
- Strata schemes benefit from better by-laws, modernised scheme management, statutory duties for strata managers, insurance requirements and (in some instances) the implementation of a 10-year maintenance plan and reserve fund.
- The introduction of leasehold strata…a new form of land ownership in WA that will become available, starting May 1st, 2020.
- There will be more flexibility for the staged development of strata and survey strata schemes; protecting the rights of owners who bought into earlier stages of the development.
We’ve dissected these into easy-to-digest bites so you can get across the update.
1. Strata buyers are to receive more information about the property they are looking to buy before signing a contract of sale.
New regulations are to provide more clarity to buyers, and mean a seller will now need to provide prospective buyers with:
- The scheme plan, by-laws and unit entitlement
- Minutes of the most recent Annual General Meeting and of any subsequent Extra-ordinary General Meetings
- Estimated strata levy contributions over a 12-month period
- The most recent statement of accounts of the strata scheme
- Any amounts already owed to the strata company (by current lot owner)
A seller’s failure to comply will allow a buyer to lawfully delay settlement, or avoid the contract.
2. Strata disputes will have a more cost effective and efficient dispute resolution forum, with the State Administrative Tribunal becoming the ‘one stop shop’ for strata disputes in WA
The State Administrative Tribunal (SAT) is an independent tribunal, with procedures that are less formal, and more flexible, than traditional courts. This will allow for more appropriate and timely administrative justice. The SAT will have broader powers to resolve strata scheme disputes and enforce by-laws. ALL strata disputes will be heard by the SAT, compared to the current systems wherein strata disputes are heard in multiple courts and by the SAT.
The only exception being the recovery of unpaid levies which are still to go through the civil courts.
3. The scheme termination process will become fairer
The termination of a scheme relates to the collective sale or redevelopment of strata schemes. The new reforms enable this process to be fairer, and introduces new safeguards for all strata owners.
Schemes of four lots or less require a unanimous decision before the termination can proceed.
For schemes of five lots or more, there is the introduction of a comprehensive series of safeguards. These include an independent review by the State Administrative Tribunal in instances involving dissenting owners. The SAT cannot confirm a termination resolution unless satisfied that fair process has been followed, and that every owner will receive market value for their lot.
This legislation looks to pave the way to allow older and under-developed sites to move forward and be rejuvenated with new housing stock.
Eight Parker Avenue in South Perth is an example of the termination of an existing strata scheme, the new development is derived from the collective vision of Owners of an ageing apartment complex, into a stunning new residence.
Image credit: Colliere Architecture
4. Strata schemes will benefit from improved by-laws, modernised scheme management, statutory duties for strata managers, and (in certain instances) the introduction of a 10-year maintenance plan and reserve fund
By-laws are the rules a strata company sets out to regulate itself, by which all lot owners and tenants must abide. The new reforms govern that by-laws must not be unfair, or discriminatory, oppressive, or unreasonable.
It will also be a new requirement that strata title schemes lodge a consolidated set of by-laws with Landgate, and must be lodge every time a by-law is amended, added, or removed, making access to this information easier for existing owners, and prospective strata buyers.
Select strata properties will be required to implement a 10-year maintenance plan and reserve fund. If you’re part of a scheme with 10 or more lots, or with a $5 million replacement cost for buildings or improvements on common property, this applies to you. This ten-year plan sets out the expected maintenance, repair or replacement of common and personal property in the ten-year period, including their estimated costs. The reserve fund is to cover expenses (excluding those of a routine nature), and other expenses that are likely to occur.
The running of strata schemes is being modernised. It’s been a long time since the Strata Titles Act was written, and since then, technology (and the internet) has changed the way the world operates. Finally, reform will allow the running of strata schemes to better reflect modern strata management needs. We will see the introduction of electronic options for communications, voting and meeting attendance—significantly improving the process of getting strata company approval for new installments and upgrades on common property.
Strata managers will now have clear statutory duties defining their roles and responsibilities. Encouraging consistency and clarity, this is a first for Western Australian Strata. Among other new requirements, strata managers will now need to attain educational qualifications, have a written contract between them and the strata company, and have professional indemnity insurance. Additionally, an annual return must be lodged with Landgate with general info about the schemes they manage.
Volunteer strata managers, those self-managing, are still subject to the statutory duties of a career strata manager, however there are some exceptions. If you would like to read the requirements of self-managed schemes we have further information.
5. A new form of land ownership will become available…introducing Leasehold Strata Title.
A leasehold strata title is a built strata or survey-strata scheme with a fixed-term lease of between 20 and 99 years. Each lot in the scheme will have a strata lease, and each lease will expire on the same date. This is expected to increase the availability of affordable housing options.
6. Increased flexibility for the staged development of strata and survey-strata schemes.
These new changes will make it clear when the consent of owners is required to change the way a scheme is being developed and allows for greater flexibility for developers to deliver strata schemes in stages while preserving the rights of the owners who bought into earlier stages of the development.
With more than 325 thousand strata properties state-wide, and approximately half of new land subdivisions in WA being strata-titled, these changes are set to impact thousands of strata owners, residents, and managers.
Would you like to know about how the changes and how they will affect your Strata complex? Give us a call and we will be happy to guide you through and answer your queries.
About the Author
Jamie Horner leads the Strata Management Team at Empire Estate Agents. With more than 20 years of experience, Jamie is a member of the REIWA Strata Titles Committee and holds a Masters in Property and Degree in Business. With a belief to never stop learning, she has spent considerable time developing vital forms, best practices and documents in relation to the new Act. Whilst the timing of the introduction of the Act is during COVID-19, the team at Empire has worked through the very significant legislative change and is ready to support your Strata Company effectively through the changes.
Considering handing the management of your strata scheme to the experts? Talk to our team of professional strata managers at Empire Estate Agents today! We manage strata complexes across the Perth metro region, and as our clients will tell you…we create better communities.