Vic strata laws set for massive shake-up

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This column has often said how wonderful it would be if all the states had similar strata laws – not just to make it easier for people moving interstate, but to get a sense of fundamental rights (and wrongs) in strata.

Well, it’s getting closer, with Victorians nearing the end of a public consultation period for major changes to their existing Owners Corporation Act.

The proposals adopt many of the recent changes in NSW but we shouldn’t get too excited – they include as many differences as they do similarities, with changes ranging from fundamental to finnicky.  Even so, there is enough new meat on the bones to have strata reformers salivating.

For instance, the new laws would divide strata schemes into four tiers which would have slightly different regulations that recognise the different demands of different sized schemes.

These would be: Tier one – 51 “occupiable” lots or more; Tier two –  10 to 50 lots: Tier three – three to nine lots; Tier four – two lots.

What are some of the proposed differences?  Significantly, a Tier 1 scheme MUST have a maintenance plan for future repairs and replacement of common property, whereas Tier 2, 3 and 4 schemes MAY have a maintenance plan.

However, any scheme that has a plan must put the money into the funds to cover expected costs.

Also Tier One and Two schemes MUST elect a committee while three and four may have one. And committees are reduced to a maximum of seven members (from 12) unless the owners at a general meeting decide they want more.

Queensland and NSW-style restrictions on proxy voting – whereby owners can hold a maximum of one proxy per 20 lots – are also proposed.

One of the subtle but significant changes is lowering the threshold for taking legal advice.  Currently, this requires a special resolution which has to be approved by a 75 percent vote at a general meeting.  Under these proposals, a simple majority can agree to take legal action at Tribunal or Magistrate’s Court level.

Speaking of legal action, proposed laws would make individual owners liable for extra charges – like repairs and additional insurance charges – that are a result of the way they use their apartments.

That’s a big chunk of potential costs for landlords who have listed their residential apartments on holiday let websites like Airbnb. Other proposed changes in this area are a clear attempt to tighten the currently loose regulations on holiday letting.

There’s a general crackdown on dodgy strata managers proposed, with restrictions on those with criminal records as well as a demand that the honest ones reveal prior relationships with the developers in new schemes, and any benefits they accrue from service providers.

Falling into line with NSW, strata managers’ contracts in new schemes can only run for the first year and for a maximum of three years thereafter in all schemes.

However, just in case you thought these changes would simplify matters, Tier One blocks with more than 100 lots (not just 51-plus) must appoint a strata manager, unless they decide by 75 per cent vote not to do so, a decision which can later be overturned by a simple majority. OK?

To be fair, this article is just scratching the surface of what would be a profound revamp of Victoria’s strata laws, with changes that adopt the best of other states’ laws and point the way for the future too.

You can read all the proposals plus summaries at consumer.vic.gov.au/OCBill and interested parties, including Victorian residents, have until May 10 to respond.

This column first appeared in the Australian Financial Review.

One Reply to “Vic strata laws set for massive shake-up”

  1. Avatar Jimmy-T says:

    This is now being discussed in the Flat Chat Forum

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