Unlocking land for urban renewal

| February 3, 2012

The current strata scheme legislation in NSW is the most significant hurdle to the urban renewal of our major population centres, and Stephen Albin writes that meaningful reform is needed.

Sydney is a city under immense population pressure. In the next 24 years alone, existing urban areas will need to accommodate at least 539,000 new homes, according to the Metropolitan Plan for Sydney 2036. Strata reform is essential to allow urban renewal and the supply of more homes that are safe, affordable, environmentally-sound, and appealing to live in.

The first strata scheme in NSW was registered in 1961 and many buildings with strata schemes pre-date that. The life cycle of most buildings is considered to be 50 years, and ageing buildings often do not comply with safety codes, are environmentally unsustainable, fail to offer amenity and contribute to urban blight. The cost of rectifying poorly-maintained buildings is not viable in many cases, and approaches that of redeveloping the land.

In the current legislative environment it is extremely difficult for residents of a scheme to dissolve it and allow for renewal of a site. The laws effectively sterilize sites in strategically-important locations such as transport hubs from providing buildings that meet modern design and safety standards and allow far more efficient urban outcomes. This is because it takes the agreement of 100 per cent of the owners in a scheme to disband the scheme. Alternatively, an owner or owners can seek a Supreme Court order to terminate the scheme, which can be a lengthy and costly process.

Giving residents an ability to reach a reasonable consensus to terminate their strata scheme is necessary to unlock land for renewal, boost housing supply, increase affordability, and meet strategic growth objectives.

Urban Development Institute of Australia NSW (UDIA NSW), believes new strata scheme laws should be governed by some core principles. These include that all newly-created strata schemes allow those schemes to be dissolved with a majority vote with a threshold that represents the collective will of the owners. Existing schemes should be allowed to “opt in” to the new laws, via a majority vote of strata owners. Protections for dissenters must be enshrined in law to ensure the scheme dissolution process is carried to the letter and that there are rights of appeal to an independent authority on issues such as fair and reasonable compensation.

Fostering increased density on these sites not only helps house an increasing population, it can dramatically increase the value of the site, making it financially worthwhile for owners to dissolve a scheme and choose to become an owner in a newly-built development on the same site, or purchase elsewhere.

UDIA NSW believes this reform is necessary if Sydney is to reach its housing targets and accommodate the estimated population growth over the next 24 years, and beyond.


Stephen Albin is an economist and policy-maker with more than 15 years’ experience working in property and tourism industry associations. He began his career with the Australian Government and has worked as Deputy CEO of the Tourism Task Force, National Policy Manager for the Tourism Council of Australia, and a Director of the Banking and Property Group at Macquarie Bank. Stephen has a Master of Public Policy and a Bachelor of Administration, both specialising in economics. Today, he leads UDIA NSW, an industry group dedicated to promoting urban development and housing affordability in NSW.


Strata Laws Online Consultation Questions:

Q1. What are the main areas of the existing strata and community scheme laws you would like to see changed?

Q2. Can you see any future issues that need to be addressed in the legislation?

Q3. How could the management of strata and community schemes be improved?

Q4. Are there any changes needed to the way disputes in strata and community schemes are resolved?