First Reading
Bill introduced on motion by Mr Anoulack Chanthivong, read a first time and printed.
Second Reading Speech
Mr ANOULACK CHANTHIVONG (Macquarie Fields—Minister for Better Regulation and Fair Trading, Minister for Industry and Trade, Minister for Innovation, Science and Technology, Minister for Building, and Minister for Corrections) (14:49): I move:
That this bill be now read a second time.
I am pleased to introduce the Strata Schemes Legislation Amendment (Miscellaneous) Bill 2025. Housing affordability and availability are among the most pressing challenges facing New South Wales today. The Minns Labor Government is committed to tackling these challenges head-on by driving meaningful reforms and delivering more homes in the places where people want to live. Strata schemes are playing an increasingly vital role in that solution. More than 1.2 million people now call strata home in over 87,000 schemes across New South Wales. Strata title is a cornerstone in our housing landscape. It is crucial that the rights and obligations in strata laws help boost confidence in strata living. Ensuring that strata is well functioning, transparent and fair is fundamental to supporting the Government's broader housing delivery strategy. That is why the Government is committed to strengthening the strata laws.
The proposed reforms in the bill will modernise laws, improve consumer protections and improve transparency and accountability. The changes will also reduce the regulatory burden for strata owners and strata managing agents. The bill implements 28 recommendations from the 2021 statutory review of the Strata Schemes Development Act 2015 and the Strata Schemes Management Act 2015. It represents the Government's third and final legislative response to the recommendations of the statutory review, which were ignored by the former Government. The bill also makes additional changes to improve strata laws and respond to stakeholder concerns raised since the statutory review concluded.
These important additional reforms include: delivering on the Government's commitment in the Consumer Energy Strategy to introduce a right for strata owners to install electric vehicle [EV] charging stations in strata schemes, reducing regulatory burden for two-lot strata schemes by introducing a simplified decision-making process, improving consumer protections by stopping embedded network providers from inappropriately recouping infrastructure costs from owners' corporations, increasing transparency by allowing NSW Fair Trading to require managing agents to use a standard form for disclosures at annual general meetings, and allowing compliance action taken by NSW Fair Trading against an owners' corporation to be published so prospective buyers can know if there are any issues with repairs and maintenance in the building. Importantly, the reforms to strata laws are mirrored in the Community Land Management Act 2021 and the Conveyancing Act 1919, where applicable, to ensure consistency between the frameworks.
I turn to the major reforms in this bill. Owners' corporations place their trust in building managers to deliver critical safety and maintenance services, and expect them to act in the best interests of the scheme. Sadly, some building managers abuse that trust and act in their own self-interest. The statutory review considered how to improve the accountability of building managers, including a shorter term of appointment. Feedback from key stakeholders generally supported building managers' maximum terms of appointment matching those for managing agents. However, industry feedback has highlighted the unique case of building management and letting rights businesses in New South Wales.
These businesses usually have substantial up-front investment costs that require longer minimum terms to recoup. Without a longer term of appointment, there is evidence that these businesses may not be viable. The bill will impose maximum terms of appointment for building managers appointed by an owners' corporation that reflect those for managing agents. Building manager appointments entered before the first annual general meeting will continue to end at that meeting. However, if the building manager is appointed at the first annual general meeting, the appointment will now end at the next annual general meeting. In any other case, the appointment will end after three years.
The bill also allows the regulations to prescribe a different term of appointment for a specified class of building manager. Any exception will be targeted and narrow to strike the right balance between consumer protections and the needs of businesses. Finally, the bill will allow the NSW Civil and Administrative Tribunal, or NCAT, to order termination of an agreement with a building manager if the manager has breached a duty prescribed by the regulations—for example, not notifying the owners' corporation if the building manager will receive a commission. For a regulatory framework to be effective and deliver intended outcomes, it must, first and foremost, be complied with. To encourage compliance, the bill increases existing penalties and introduces new ones. This sends a clear message that the Government is serious about safeguarding strata communities and that penalties should match the risk of harm.
I turn to the reforms that address recommendations to deliver clearer laws and promote consumer protections, good governance and safety in strata schemes. The statutory review highlighted that some owners' corporations are charging fees and bonds well beyond the level needed to recover their costs. The bill sets fair limits on when an owners' corporation can charge residents a bond or fee. Any such bond must be reasonable, while fees must not be more than the owners' corporation's reasonable costs to provide the goods or service. The statutory review also found there was a lack of clarity around the rules for renovation work in strata schemes. This often leads to conflicts between individual owners and the owners' corporation. Cosmetic work does not need any owners' corporation approval, while minor works need at least 50 per cent of owners at a general meeting to agree.
New definitions for "cosmetic work" and "minor work" will clarify which activities are included in each category. The bill will also allow regulations to specify the activities for each category, making the rules clearer and more adaptable to future developments. Window safety locks are needed to avoid the tragedy of people, particularly young children, falling out of windows. Recommendation No. 113 of the statutory review indicated there was some ambiguity about whether lot owners or owners' corporations were responsible for repairing and maintaining window safety devices. The bill will clarify it is the owners' corporation's role to maintain window safety devices, consistent with their broader duty to repair and maintain common property. Further, owners' corporations will have to regularly inspect window safety devices. The regulations will set out how frequently that must happen.
The management Act's meeting procedures for owners' corporations and strata committees will move to the regulations. These processes need to be flexible and easily updated so they can support owners to make good decisions and manage their schemes as seamlessly as possible. Similarly, the bill will support alternative ways for owners' corporations to execute documents rather than by affixing the common seal. The management Act already allows the regulations to set out alternative ways to execute documents. The bill will enable the regulations to require necessary records to be kept if such an alternative is used. These records will be available for inspection under the existing inspection regime. This ensures that any increased flexibility for owners comes with appropriate controls to ensure transparency and probity. The bill also makes it clear that the tribunal can award damages for breach of statutory duties under sections 26, 106 and 140 of the management Act, and may apportion monetary amounts for proceedings.
Another key clarification in the bill is to section 50 of the management Act, which sets out the term of appointment of managing agents and how these terms may be extended. In line with recommendation No. 64 of the statutory review, the bill amends section 50 so it more clearly sets out the process and ensures the timing of notices work. If the owners' corporation fails to give an agent written notice of their intention not to reappoint them at least two months before the end of the appointment, or does not extend the management agreement, then the agent will have the option to extend their term by three months. To do that, an agent must give the owners' corporation at least one month's notice of the extension before their term of appointment expires.
I now highlight additional critical reforms to the management Act that have been developed in consultation with stakeholders. The Government's reforms to the strata laws that commenced in October increase support for owners who struggle to pay their strata levies. The bill builds on those reforms by requiring owners' corporations to send out at least one reminder notice to an owner between seven and 10 days from when a levy becomes overdue. That notice will contain information such as the amount owing, interest charged and payment details. The bill also allows the regulations to prescribe when an owners' corporation may or may not take action to recover unpaid contributions. This will ensure that debt recovery action is not taken prematurely or inappropriately. The bill also makes two minor clarifications to the October 2025 reforms: first, that payment plans can apply to both current and future contributions; and, secondly, that the contribution of an owner in arrears must be used to repay all debts in a certain order, not only those subject to a tribunal or court order. Together, these reforms balance owners' need to have adequate opportunity to pay their debts, while minimising the administrative burden and costs for owners' corporations.
The Government is aware of instances where electricity embedded network providers provide embedded network infrastructure at a discounted price, or even free, to developers during a building's construction. Providers do that on the basis that they will make their money back through the supply contract with the owners' corporation. Since July this year, electricity supply agreements for embedded networks in strata schemes have a maximum term of three years, unless renewed. The bill builds on that protection and will ban network providers from recovering capital costs for embedded network infrastructure from owners' corporations. Such costs should have been paid as a part of the build and sale of the finished product.
These reforms encompass other services provided by embedded networks, called exclusive supply networks in the bill, such as for gas and water, to ensure that the same protections apply to all embedded networks. It is not the Government's intention to see embedded network providers unfairly out of pocket. I recognise a transitional arrangement may be needed where, before the proposed changes commence, network providers have installed embedded networks in new buildings thinking they can recoup their costs from the owners' corporation under a utility supply agreement, but have not yet done so. Network providers should be able to recoup infrastructure costs from the developer in those instances. These transitional arrangements will be set out in the regulations.
Electric vehicles are increasing in prevalence across New South Wales, creating a growing demand from strata to be able to charge their EVs on their own lot. The Government has committed under the Consumer Energy Strategy to introduce a right for owners to install EV charging stations in their buildings. The bill establishes a simplified process to allow an EV charging station to be installed on an owner's lot. Owners must give written notice to the strata committee of their intention to install an EV charger on their lot. The strata committee will have a set period to tell the owner in writing if they object or do not object. The strata committee will only be able to object to an installation if reasonable. The regulations will set out what is reasonable or unreasonable. If the strata committee does not provide the required response notice in the set time, the owners can proceed with their proposed installation.
This new right for owners comes with checks and balances to ensure that their strata buildings remain safe and that other owners are not unfairly impacted. For example, owners who want to install EV chargers will have to provide supporting information as required in the regulations. This information could include documents to show that the installation will be completed by an appropriately licensed electrician. Strata schemes take on many forms, ranging from two-lot duplexes and townhouses through to soaring modern apartment towers. Two-lot schemes make up more than 30 per cent of all strata schemes. While there is a need for consistent strata laws, it is important that the regulatory framework also recognises that some schemes are lower risk and less complex. That is why current strata laws recognise that smaller, two-lot schemes can opt out of some obligations such as requiring combined insurances. Stakeholder feedback indicates that the Government should further reduce the regulatory burden on two-lot schemes.
The bill responds to this feedback by exempting two-lot schemes from requirements to hold meetings and pass resolutions, to establish a strata committee, to prepare a 10-year capital works plan and to report information on the Strata Hub. To replace the decisions that are normally made by owners at meetings, the bill introduces a simpler process. Owners of two-lot schemes will need to agree in writing on any decision or action that would normally have been made by the owners' corporation at a meeting. For example, two-lot scheme owners will need to agree in writing to the estimated costs for maintenance and repairs for common areas and what they will each contribute. They will also need to complete a written resolution to agree to what they will pay for out of their administrative fund. Regulation-making powers are also provided to enable further exemptions or alternative arrangements where appropriate. These reforms will provide right-sized regulation for smaller strata schemes, ensuring that two-lot schemes remain attractive for home owners.
For all reforms where more details will be set out in the regulations, I make it clear that stakeholders will be consulted as a part of the process to develop the regulations to ensure that they are fit for purpose. Finally, in relation to management Act reforms, the bill will allow a special deposit account to be established to collect and retain fees that owners pay when they report information to the Strata Hub. The Strata Hub is a digital platform for centralising key information about the State's strata schemes. This change will ensure that the Strata Hub can be developed for the benefit of all owners in New South Wales well into the future, including to deliver education and training to owners. The bill introduces important reforms for part-strata buildings and mixed-use schemes under the Strata Schemes Development Act and the Conveyancing Act.
A part-strata scheme is one that divides only part of a building. A building can contain more than one strata scheme and can include areas that are separately owned, outside of any strata scheme. These schemes allow a mix of uses within the one building, combining residential, commercial and community spaces in one vibrant community. They are essential for meeting government housing goals and making efficient use of valuable land. For part-strata developments, the overall coordination between the strata schemes and the commercial owners is guided by a building management committee. The building management committee is the decision-making body for the shared components of the development. It brings together representatives from the different parts of the building—the strata schemes, commercial lots and retail sections—to make sure everyone has a say in how the building is run and maintained. This committee oversees day-to-day management, ensures that shared facilities are looked after and addresses issues that affect everyone in the building.
Alongside the committee, a registered management statement acts as the rulebook for the scheme. This statement sets out how shared facilities, like lifts, gardens or carparks, are to be used and maintained. It explains how costs are shared fairly between different owners. It is there to make sure that everyone knows their rights and responsibilities, and to help prevent disputes. The building management committee and management statement provide the structure that keeps part‑strata buildings running smoothly and fairly. A central theme in the bill is fairness in the allocation of shared costs among stakeholders in part-strata schemes. Under the current law, management statements must already provide for the regular review of cost allocations every five years or whenever there is a change affecting the shared facilities and services. The bill will strengthen that process by introducing a two-step review system that will make it easier to make changes where a cost allocation is found to be unfair.
Where a reassessment recommends a change to the allocation of shared costs or responsibilities, the management statement will need to be updated to reflect the new arrangement. Ordinarily, all committee members must approve a change to the management statement. The bill removes the requirement for unanimous approval for changes of this kind, so that a single dissenting member can no longer hold up reasonable changes. Too often those who benefit from the existing arrangement have been able to block much-needed adjustments to shared costs.
Another important change the bill will make is to set a maximum five-year term for managing agents appointed by the building management committee, though agents can be reappointed. Building management committees will have the opportunity to regularly review arrangements and decide if their agent is still the right fit. Although the term of appointment differs from the limits established by the Management Act for managing agent and building manager appointments, this provision strikes a balance between the need for regular reviews of arrangements and the advantages of a longer term relationship within the complex part-strata ownership structure. To address issues with meeting procedures, the bill sets default quorum requirements and timelines for adjourned meetings, preventing extended delays to meetings of the building management committee. It also clarifies representation on building management committees, requiring owners' corporations to be represented by a member of the strata committee who must vote according to written directions.
Record keeping requirements are currently determined by individual part-strata schemes themselves, leading to a large variance between developments. The bill establishes clear baseline standards. Building management committees will have to maintain electronic records of key documents and keep them for at least seven years. In practice, this means that owners and other parties prescribed in the legislation will have reliable access to the vital information they need about the building's management and financial health. To ensure a smooth transition, committees will have six months after the commencement date to bring their record keeping up to standard. This is about lifting the bar for transparency and accountability. A new optional statutory novation process is introduced for building management committees, allowing for the transfer of contractual rights and obligations through a prescribed form. This simplifies the process for new purchasers and ensures smoother ownership transitions.
In the current system, executing a deed of novation typically requires each party to the original contract to sign a formal legal document. This can cause significant delays, particularly where there are numerous parties involved or when parties are difficult to contact, which is often the case in large part-strata developments. By introducing a process that relies on a standardised form, the bill removes the administrative burden and potential bottlenecks associated with gathering multiple signatures for each transaction. This expedites the novation process and reduces legal costs. Ultimately, the reform provides greater certainty and efficiency, while maintaining protections for the parties involved. The bill also clarifies the authority of the Supreme Court of New South Wales to amend management statements, empowering the court to direct amendments when necessary. This ensures a fair and efficient process for resolving disputes and prevents delays that could impact building governance.
Under the transitional provisions in the bill, building management committees are afforded a generous five-year period to thoroughly review and, where necessary, amend their management statements. We have designed this to give committees the time and flexibility needed to adapt to new standards without undue pressure. Importantly, the reforms do not just apply to new developments; they are extended to all existing part‑strata schemes, including those established many years ago. The Government is committed to ensuring that older part‑strata schemes do not fall through the cracks. By applying the standards universally, the bill ensures that every part‑strata development, regardless of its age, has the opportunity to benefit from modern, robust governance practices.
The Government is delivering for the people of New South Wales. Members may recall that in November 2023 the Government delivered the Strata Legislation Amendment Act 2023, which implemented 31 review recommendations. The Government delivered again in February 2025 with the Strata Schemes Legislation Amendment Act 2025, which implemented a further 37 recommendations. Now with this bill implementing the outstanding 28 recommendations plus many other reforms, the Government has delivered yet again. The Government has delivered the most substantial and sweeping set of reforms to this State's strata laws in the past 10 years.
I take the opportunity to thank key strata sector stakeholders who have supported the development of the bill, including the Strata Community Association (NSW), the Owners Corporation Network, the Real Estate Institute of NSW, the Law Society of New South Wales, the Australian College of Strata Lawyers, Property Council Australia, the Financial Rights Legal Centre, the Marrickville Legal Centre, the Property Owners Association of NSW, the Urban Development Institute of Australia NSW, the Tenants' Union of NSW and the Australian Resident Accommodation Managers Association. I am proud that the future of strata and community land schemes in New South Wales is shining brightly. I commend the bill to the House.
Debate adjourned.
