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The last three years have seen extensive reforms to strata across NSW. In a discussion with Broker Daily, Holding Redlich partner Elly Ashley and lawyer Caitlyn Trussell delved into the changes and how they’re likely to impact stakeholders of property in larger building complexes.
“Improved governance” was seen as a major reason for the sweeping reforms, said the pair. This includes changes to the Strata Managing Agents Legislation Amendment Act 2024 (NSW) (Agents Act).
The changes are reportedly the “most stringent” laws governing strata managing agents in the country.
“The Agents Act, introduced to address insurance commission scandals in the strata industry, seeks to improve accountability and confidence in strata managing agents and protect owners from agents’ misconduct by ensuring they act in the best interests of the owners corporation or association,” said Ashley and Trussell.
“Since 3 February 2025, strata managing agents are liable to further disclosures and reporting obligations under the Strata Schemes Management Act 2015 (NSW) (SSMA), the Property and Stock Agents Act 2002 (NSW) and their respective regulations.”
Under these reforms, agents are now required to:
- Disclose any commissions received or to be received in their capacity as agent for the owners corporation.
- Report to the owners corporation whether the receipt of those commissions is in the owners corporation’s best interests.
- Provide a minimum of three insurance quotes to the owners corporation, along with a breakdown of the charges and details of any commissions to be paid to the agent.
There are further changes slated once the Strata Schemes Legislation Amendment Bill 2025 (NSW) (2025 Reforms) has been enacted. This will affect building and facility managers.
“Reforms passed in 2023 under the Strata Legislation Amendment Act 2023 (NSW) introduced several changes to the SSMA and the Strata Schemes Development Act 2016 (NSW), including the process for nominating, appointing and electing strata committee members and members’ disclosure obligations,” said Ashley and Trussell.
“The 2025 Reforms will make significant changes to the SSMA, with the aim of improving accountability and confidence in strata schemes, protecting owners from unfair contract terms, and improving the governance of strata and association committees.”
The implications of these changes vary between home owners, renters, and investors. Changes to the Residential Tenancies Act 2010 (NSW) have created better protections for renters, with a major addition being the removal of ‘no grounds’ terminations. These reforms come into effect from 19 May 2025.
“Whether these changes will effectively assist renters in limiting rent increases, keeping pets in homes, or preventing lease terminations will only become evident once implemented,” Ashley and Trussell said.
“Positively, it will be easier for homeowners to pass special resolutions for accessibility infrastructure, meaning infrastructure to facilitate disabled persons having access to the property. The SSMA will only require a majority to pass the resolution, rather than 75 per cent, under the 2025 Reforms.
“The 2025 Reforms also implemented several changes relating to embedded networks, also known as an ‘exclusive supply network’, for the purpose of protecting consumers from lock-in contracts and unfair contract terms for the supply of utility services. NSW Parliament took the position that these embedded networks may protect owners from entering into more competitive contracts. However, owners must beware when selling their property as the 2025 Reforms are set to insert a new prescribed warranty under the Conveyancing Act: that the property does not include an exclusive supply network, unless disclosed in the contract. Failure to disclose this could grant the purchaser a right of rescission. This warranty cannot be contracted out of.”
Under the 2025 reforms, developers will reportedly be hit with the most obligations. This includes:
- Further obligations for developers as the original owners of multistorey schemes to provide an initial maintenance schedule and estimates of contributions to the administrative and capital works fund.
- Further changes to the initial maintenance schedule and the obligation for developers, as the original owners, to engage an independent certified or chartered quantity surveyor to review and certify the initial maintenance schedule before providing it to the owners corporation.
- Disclosing whether a development includes, or is likely to include, an embedded network in the disclosure statement attached to the off-the-plan contract.
These introductions could disillusion already frustrated investors. Ashley and Trussell have urged developers to be aware of the changes as the penalties can be significant.
“The 2025 Reforms introduce further compliance mechanisms, including continuing penalty offences for each day the developer fails to comply with, for example, holding the first annual general meeting of the owners corporation within two months of the initial period. The reforms may also caution developers away from utilising utility supply contracts and embedded networks, particularly in off-the-plan developments,” they said.
However, the pair believe the reforms “place an emphasis on accessibility and sustainable infrastructure,” which could result in more care and attention in future developments.
