Strata law wars: Why neighbours can now force you from your home unit

The NSW Government is reforming its strata and community scheme laws. Darren Moffatt from Housenet hopes that the new laws will be fair for all lot owners.

Are apartment and unit owners the new ‘second-class citizens’ of the Australian housing market?

With the release of proposed Strata Title law reforms in NSW, it’s a question that needs to be asked. This new legislation, if passed, will for the first time enable a majority of lot owners in a strata scheme to force their neighbours to sell against their will.

Are we seeing the beginning of the strata law wars – where neighbours can now force you from your home unit?

If a block of units is old and costing too much in strata levies, currently every single owner within the apartment building must agree before the strata scheme can be demolished or sold to a developer. However, under the new laws put forward by NSW Fair Trading minister Anthony Roberts, only a majority of 75 per cent is required.

In what other form of residential property is your home at the mercy of your neighbours?

If you own a free-standing house it’s yours for life; as long as you continue to pay the mortgage, you live in the home that you love until the day you die. (The only rare exception is where the RTA requisition land for road building, but even then you’re given plenty of notice and fair market value for your property. And besides, it’s a government planning initiative).

This is different. These strata laws potentially set neighbour against neighbour in a fight to control your housing destiny. That’s powerful, emotive stuff. Strata is already notorious for conflict amongst residents, but this proposal could take disputes to dangerous new highs.

Apartment living has skyrocketed over the last decade and the trend is forecast to grow exponentially over coming years. Indeed, the NSW Government predicts 50 percent of all residents will live in strata schemes by 2050. That’s amazing growth, and the surge of money and capital into apartment complexes by property investors and developers is no surprise.

But what if the effect of these laws is to create an underclass of home-ownership? “The home you have, when you may not have a home for life?”

Home ownership is a ‘sacred cow’ in Australia.

Our whole culture of wealth creation is built around housing – 70 per cent of total household wealth is held in property. So how will the market for unit and strata title apartments hold up when the core notion of housing – a secure place to live and a repository for wealth in retirement – is threatened by these laws?

I think it is possible that values for strata title property could fall, particularly if there are insufficient safeguards or these laws are poorly implemented. And you can just see the inevitable TV news coverage: imagine the first elderly resident forcibly removed from their home to make way for the bulldozers. What a bad look. And not just for the resident, but for market confidence in strata as a class of investment asset.

I’m not suggesting that these laws don’t need reform, they clearly do. But the danger here is that by setting ‘neighbour vs neighbour’, the popularity of strata living could tumble.

At the very least, substantial processes and dialogues among the lot owners will be required for any strata schemes where sale, demolition or redevelopment are being considered. At Housenet, we’ve been thinking about this for a while. Which is why we created our ‘Strata Pages’ feature – a free management tool for lot owners and managers. Strata schemes can create private online social networks that are a big help with:

• Communication
• Ready access to strata scheme information
• Rumours and disputes
• Managing events and maintenance
• Dialogue and relationships between lot owners

Clearly strata lot owners in NSW – and perhaps elsewhere if these reforms are adopted by other states – will have a lot to talk about in coming months and years. We think our Strata Pages tool could be indispensable as these laws move closer to reality.

Let’s hope they’re implemented with care and that all lot owners get a fair outcome.

This article was first published on Housenet and appears with the permission of the author.

0 Comments

1. 

   stratatitle

   July 9, 2014 at 10:32 am

   Strata law reforms

   neighbor vs neighbor is definitely a very dangerous situation for the future of strata living. These reforms need be brought up keeping everything in mind from small to big issues. The reforms must be constructive and not destroy what we know as strata living