Development Bond Information

Developers are required to lodge a 2% bond for residential and mixed-use high-rise strata buildings of 4 or more storeys.

The proposed amendments to the building bond is to enhance the ability of the Department of Fair Trading to verify the building contract price (which is the basis of the bond) and to clarify the role of the building inspector in the scheme.

Below are the proposed amendments:

  • Developers must lodge a building bond before applying for the occupation certificate.
  • The owners corporation and the developer must agree on the amount to be released from the bond to meet the costs of fixing identified building defects.
  • New powers for the Department of Fair Trading which will enable the verification of the amount of the contract price or building bond.
  • New entry to premises and search warrant powers.
  • An increase in the maximum penalty for failing to lodge the building bond from $22,000 to $1.1 million.
  • An offence for to provide false / misleading information to the Secretary in relation to the contract price or the building bond.
  • New ‘good faith’ liability protection for building inspectors, and the professional associations that appointed them, which excludes them from liability for anything done or omitted to be done in ‘good faith’ in conducting an inspection.

To see more information on the Regulations Amendment, use the link below:

http://www.fairtrading.nsw.gov.au/biz_res/ftweb/pdfs/About_us/Have_your_say/Strata_building_bond_and_inspections_scheme_Regulation_amendments_table.pdf

Please also view the Department of Fair Trading for even more information.

http://www.fairtrading.nsw.gov.au/ftw/About_us/Have_your_say/Strata_Building_Bond_and_Inspections_Scheme.page

Image result for dept fair trading nsw

Trends to expect in 2018

The property market in Sydney in 2017 saw Sydney’s median house price rise by over $530,000. The following is a snapshot of the trends to expect in 2018:

 

  1. Financial markets predict the Reserve Bank will lift the official cash rate off the record low 1.5 percent level late in 2018.
  2. Cooling of property prices. The following shows the forecast for metropolitan areas: 

Source: ANZ Research

3. The Return of first home buyers

Source: ANZ Research

4. The stamp duty taxes on property transfers are seeing people upgrade or renovate their existing dwelling. The following is a graph showing the meteoric rise adjusted for inflation:

sydney-strata-management-stamp-duty-17-pm

READ THE FULL ARTICLE HERE

2017 review & Sydney Strata Management

2017 review and the state of Sydney Strata Management.

Sydney Strata Management

In 2017 Sydney and NSW has seen growth in housing and unit prices and demand. Sydney remains one of the worlds most expensive places in regards to property prices. Sydney Strata Management is changing along with the market trends and changes. Here is some interesting information on the market and how it will affect your investments and strata management.

The following is an overview:

  • House and unit prices in close proximity to Sydney CBD now exceed $1m. The median house price has passed $1.3m.
  • Buyers and owners will find it difficult to find a house under 1m with-in 25km from the CBD. Discounts on Stamp Duty for first home buyers (Properties up to 880k) are affecting growth as they normally do in this area.
  • Newcastle, Central Coast and Wollongong have risen and becoming growth corridors in NSW.
  • The recent and improved light rail construction in Sydney has seen many properties in close vicinity to the new network flooded with investors and interest.
  • Trends towards property purchases in the inner city of Sydney remain the top draw for buyers. See our post about the Top 10 most desirable suburbs here.
  • The affordability of properties and availability of high-quality amenities are also pushing the apartment market forward in the Northern Beaches and eastern regions.
  • Housing shortages are contributing and keeping demand high in inner Sydney as the population grows.
  • Low-rise suburban apartments near activity centres remain a profitable option for investors.

If you would like to talk to one of our experts about how the above effects you and how Sydney Strata Specialists can help manage your property, call us today for an obligation free review of your current Strata plan. Contact us via the website or the following if you want to ensure your property is in the most capable hands:

CONTACT US

PO Box 7421
BONDI BEACH NSW 2026

info@sydneystrataspecialists.com.au
02 8005 3850

Owners Corporation Renewal

Owners corporations may receive strata renewal proposals under Part 10 of the Strata Schemes Development Act 2015.

What do they need to do?

The key steps are as follows:

  • If the scheme was an existing scheme when the new legislation commenced on 30 November 2016, it needs to convene a general meeting to pass a resolution opting into Part 10. Otherwise, Part 10 will have no application to the scheme.
  • If the scheme receives a strata renewal proposal, it needs to convene a strata committee meeting to consider whether the proposal warrants further consideration. It must convene a meeting as soon as practicable, but not more than 30 days after receiving the proposal.
  • If the strata committee decides that the proposal warrants further consideration, it must convene a general meeting to consider whether the proposal warrants further consideration. It must convene a meeting as soon as practical, but not more than 30 days after the strata committee meeting.
  • If the owners corporation decides that the proposal warrants further consideration, it must convene a strata renewal committee and elect its members. That can be done at the same meeting, but this would often be done at a separate meeting. This is very complicated process with many significant steps and tasks which are not listed above this should not be embarked upon without specialist legal representation from the outset.

Some of the pitfalls include, the failure to have meeting(s) at the appropriate time can cause the strata renew proposal to lapse. If it lapses, a person cannot give the proposal, or another strata renewal proposal that is substantially similar to that proposal, to an owners corporation within 12 months after the day the proposal or plan lapses

Steps for collective sale and or renewal

A collective sale or redevelopment process has specific stages.

1. Vote to opt into the process

The owners corporation must first opt in. This applies to strata schemes registered before 30 November 2016. If most owners (more than 50%) do not support opting in, the process stops.

2. Initiate the collective sale/renewal process

The strata committee must consider a proposal to sell or redevelop a scheme. The secretary then calls a meeting of the owners corporation to consider it.

3. Form a strata renewal committee

Most owners (more than 50%) must agree to go ahead with a proposal. Next, a strata renewal committee is elected to investigate and develop it. The committee can appoint valuers, lawyers, tax experts and other professionals to help.

4. Develop a strata renewal plan

The strata renewal committee develops a strata renewal plan. This will inform the lot owners’ decisions about the sale or redevelopment. The strata renewal committee and the owners corporation can meet to discuss and further develop the plan.

The plan must include:

  • a general overview of the proposal
  • a full and frank statement by the proposed purchaser or developer. This will state how they intend to use the strata parcel (the building/s and land)
  • when owners must vacate their units
  • the amount each owner will receive. This must be no less than the compensation value for their unit.

An independent valuer’s report should accompany the plan. It will show the market value of the whole strata complex and compensation value of each unit.

Find out how to prepare a strata renewal plan on the Office of Registrar General website.

5. Consider the plan

The owners corporation elects an independent returning officer. Their role is to oversee voting on the plan.

Owners must have at least 60 days to consider the plan and seek independent advice. Owners in favour must give the independent returning officer a signed support notice. The plan lapses within 3 months if the owners of at least 75% of the lots do not support it.

If the required level of support is obtained, the owners corporation may decide to apply to the Land and Environment Court. This involves applying for an order to give effect to the plan. The plan lapses if the owners corporation decides not to apply.

6. Approve the plan

The Land and Environment Court must approve the strata renewal plan before it can be carried out. Before approving it, the Court would:

  • consider if the process has been properly followed
  • initially seek to resolve any disputes through conciliation or mediation.

The Court can reject a strata renewal plan if:

  • it was not developed in ‘good faith’, or
  • the process has not been properly followed.

The Court would check on the compensation value for each unit. The terms of settlement provided by the plan must be just and equitable in all the circumstances.

If a strata renewal plan lapses (for any reason), there is delay before the owners corporation can reconsider the plan or a similar one. This is 12 months from the day after the plan originally lapsed.

Sydney comes in second globally

Sydney Median Property Prices

In a recent report, Sydney had placed second globally for the least affordable city and property prices.

The recent global report comprehensively ranked middle-income housing affordability using a “median multiple” score, which is calculated by dividing the average house price by the average household income.

Any city that has a score of 5.1 and over is considered “severely unaffordable”.

Sydney is second to HongKong globally and below is a quick breakdown of the ranked global top 10:

0124-least-affordable-cities

 

Here are the median property and rental prices for Sydney in 2017:

HOUSE AND UNIT PURCHASE PRICE

HOUSE/UNITS MEDIAN PURCHASE PRICE
Average $880,000
1 Bedroom $727,500
2 Bedroom $1,243,000
3 Bedroom $1,915,000

HOUSE AND UNIT WEEKLY RENT

HOUSE/UNITS MEDIAN WEEKLY RENT
Average $750
1 Bedroom $640
2 Bedroom $900
3 Bedroom $1,600

Air BNB Requirements

Short term letting / Air BNB Update.

The Parliamentary Inquiry into the Adequacy of Regulation for Short Term Holiday Letting handed rejected requests that allowed Owners Corporations to prohibit Short Term/Airbnb letting within strata schemes.

If an owners corporation desires to prohibit or at least regulate the management of Airbnb short letting arrangements within its strata scheme the following needs to be considered:

  • Will the letting be prohibited by environmental planning laws?  There is likely to be more regulatory controls placed on such arrangements by Local Councils and this may assist owners corporations.
  • If planning approval is required by council or a private certifier, the owners corporation’s consent may need to be provided before the Council or a Private Certifier can give consent.
  • If an Owners corporation refuses to give consent the NSW Civil and Administrative Tribunal may overturn that decision.
  • Owners corporations, when considering such applications may need to consider:
  1. The necessity to upgrade services and amenities within the common property of the strata scheme including fire services, disability services, caparking facilities, etc;
  2. The potential for increased cost of maintenance and repair obligations for the owners corporation as a result of increased traffic through the common property areas and damage caused by short term occupants; and
  3. Insurance implications for the owners corporation.
  • If a lot owner does lodge a development application, the owners corporation and other lot owners can lodge objections against the application.

Sydney leads the way in terms of listings in Australia:

City Population Airbnb listings (December 2016)
Greater Sydney 4.9 million 22,000

 

 

NBN Roll Out

The nbn™  network rollout information is updated weekly. Rollout areas and boundaries are subject to change as construction planning is finalised.

You should check the nbn™  site http://www.nbnco.com.au/learn-about-the-nbn/rollout-map.html#  for regular updates.

Services provided over the nbn™ network will be replacing phone and internet services provided over most of the existing landline networks.  What a large amount of people are not aware of is that this switch will affect the operation of important services such as your strata building which has either monitored fire alarm and or lift emergency phones.   Once the network has been upgraded at your building these essential services will not be working unless they also have been upgraded. 

Speak to your strata committee and or Strata Manager about registering your building to streamline your installation process.

Strata Parking

Strata Parking – The Goalposts Have Moved

The most complained about issue in strata living is Parking. Most strata buildings have one car space per Lot and only a hand full of Visitors Car spaces.  However, most residents have two cars which results with some of them using the Visitors spaces.

In some circumstances residents from other properties have been known to park in a Visitors car space.

Certain buildings that are close to railway stations or bus interchanges seem to have a large number of “Visitors” only arriving on weekdays, and all leave just after 6:00 pm each day.

Until the instigation of the new Strata Schemes Management Act 2015 there was very little that could be done to prevent these serial parking offenders.

The Visitors Car spaces are “common property” and are not for the use of residents, they are strictly for the use of visitors. They are NOT additional Parking spaces.

The provision of a visitor’s car parking area was a condition of the Development Consent, therefore any parking by a non-Visitor or resident is not permitted and they cannot make use of them.

So what has changed?

The new Strata Schemes Management Act 2015 has empowered the Owners Corporation with more teeth, it can now react to Residents and Non-Residents who breach the parking by-laws of the building.

For residents who park vehicles in breach of By-Laws will not only have a Breach of By-Law notice issued but the penalties for breaching by-laws have increased to $1,100. For repeat offenders within the same calendar year, penalties can be as much as $2,200 for each breach.

Previously Owners Corporation where frustrated because if they sort an order from NCAT it not only cost the owners corporation money but any fines imposed by NCAT went to the NSW State Government.  Now however the default position under the new Act is that the penalties are payable to the Owners Corporation, meaning that Owners Corporation are more likely to pursue someone.

The Owners Corporation can also elect to enter an agreement with their local Council whereby the Council agree to providing parking management services.  This means that the Council will have its Parking Officers inspect and manage parking at the property and issue parking infringement notices.

The new Act even goes further –  vehicle left on common property or if it blocks an exit or entrance or otherwise obstructs the use of common property can now be removed if they do not comply with a Notice to remove the vehicle.

While the Owners Corporation can move the offending vehicle to the nearest place to which it may be lawfully moved it can also obtain an Order from NCAT that the owner, pay to the owner’s corporation the reasonable costs incurred by the owner’s corporation in moving the motor vehicle.

Owners Corporations have by-laws prohibiting parking on the common property without written approval and restricting visitors parking. Enforcing these by-laws through NCAT and or having Council rangers policing your parking areas is a game changer.

 

By-Law Consolidation

Increased Administration costs for the administration, creation, lodgement and registration of By-Laws.

 

The Owners Corporation is required to provide a copy of the consolidated by-laws to a Landlord or the Agents as it is a requirement under their tenancy agreement that the landlord provides the tenant within 7 days of entering their agreement a copy of the by-laws applying to the residential premises.

 

The majority of by-laws held by an Owners’ Corporation currently are not in this format, and therefore all the special by-laws and existing by-laws must be consolidated into a word document.

 

Under the Strata Schemes Management Act 2015 all Owners Corporation must undertake a by-law review before 30th November 2017.

 

The process for registering by-laws to be compliant with Strata Schemes Management Act 2015 Strata Schemes Development Regulation 2016 and the Land and Property Information NSW have completely changed.  The LPI will no longer allow by-laws to be registered unless a consolidated version of all by-laws including any new by-laws is lodged for registration. The consolidated version of the by-laws must include any relevant model by-laws.

 

Any attempt to register a change in the by-laws without the consolidated version of the by‑laws, Land and Property Information will simply reject the application. This will only serve to increase administration costs and delay the registration.

 

Once the consolidated version of the by-laws is registered, all current notifications of by-laws appearing on the common property title are to be removed and the common property title will be updated to refer to the consolidated version only.

 

When the consolidated by-laws are prepared, it is to be registered. The Land and Property Information do not examine the consolidated by-laws against the existing set to confirm that it is accurate. If the consolidated set of by-laws is correct or up to date any person aggrieved by the error may make a claim against the Owners’ Corporation or strata manager who registered the incorrect consolidated set of by-laws.