In case you haven’t taken the time to update yourself more than 90 strata law changes passed by the NSW Government came into effect on 30 November 2016 and investors looking to renovate their apartments could reap the rewards.
The laws, which changed as part of the usual 10-year re-evaluation, have been viewed as potentially revolutionary for apartment owners, due to a change in the “strata renewal” clause which will allow 75 per cent of owners to support developmental changes instead of the previous 100 per cent.
The changes present great opportunities for investors in older blocks, opening up the chance to sell to developers or renovate to increase capital growth without 100 per cent backing by other owners. The new laws have been designed to not only make it easier to update ageing buildings, but to increase density as part of the government’s urban renewal strategy.
Apartment owners can choose to cash in by selling to a developer, but they may be better off holding on and redeveloping their property to perhaps add a penthouse or other amenities with the benefits shared by all owners.
Not everyone is happy with the changes; critics of the laws have said they provide unfair pressure on financially vulnerable residents who may be forced into changes they do not support.
Other changes that came into place include the role of developers in strata committees – they are no longer able to act as strata managers or vote on building defects.
Owners need to review the funding of a 10-year capital works budget (previously called a ‘sinking fund’) at their initial and annual meetings; previously only a 12-month budget was considered.
Owners retain the right to choose to fund capital works by regular levies, one-off levies, borrowing or any mix of the three. The only material difference is that they now need to consider a 10-year capital works time-frame instead of just one year.