One-size-fits-all legislative approach not the solution

Strata8

Strata law isn’t the sexiest issue, but it has significant consequences for an increasingly large proportion of the urban population in Australia.

Last month, the NSW parliament passed a raft of amendments to the strata regime that operates in the state. Perhaps the most significant change contained in the bill was a provision allowing for the demolition of an apartment block where 75 per cent of owners agree.

Concerns were raised about the impact of the proposed laws back in July this year:

One of the most controversial proposals will be the ability of strata owners to terminate the scheme – and sell or redevelop the building – and if 75 per cent of the strata owners agree, based on one vote per unit, not on different unit entitlements.

At the moment 100 per cent agreement is required and many apartment owners, particularly older residents, will be discomforted by the thought that the building could be sold from under them – even with safeguards on the fairness and transparency of the process.

It’s clear that certain apartment blocks are in desperate need of urban renewal. However, the issue of imposing development on apartment owners via strata law is one that raises questions about property rights.

What is the appropriate threshold point at which the majority can override the wishes of the minority?

This is obviously a question that needs to be resolved in a strata agreement, but is it a question that needs to be resolved by government?

To my mind, this is something that ought to be left to contracting parties. There’s no need for a one size fits all legislative approach – allow for different strata to determine their own thresholds. Choosing to buy into an apartment building is a decision based on a range of factors, and the rules of the strata agreement should be one of those factors. Those with a preference for development are likely to want to buy into a building that stipulates a lower majority than those who wish to buy and hold over the long term.

The current 100 per cent threshold is not for everyone. But neither is the new 75 per cent figure. The NSW government should give more room to strata flexibility.

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