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Owners vs tenants. Who rules the strata roost?

November 23, 2017

With an increase of apartment living in Canberra, we are seeing more tenants moving into unit titled complexes. And whilst tenants are required to pay rent to the landlord and follow the house rules of the complex, they do not contribute financially to ongoing maintenance or upgrades to communal areas. This means there are limits to how much input they have in the decisions made by the Owners’ Corporation.

These limits result in tenants sometimes feeling like they’re out in the cold with no way to be heard when it comes to the complexes they call home. If a tenant wanted something from the Owners’ Corporation, for example, a minor modification to their property or permission to keep a pet, they would need to forward the request to their property manager, who would take it to the landlord, who would raise it with the Owners’ Corporation.

The NSW government identified a need to open communication lines between tenants and the Owner’s Corporation. From 30 November 2016, the Strata Schemes Management Regulation came into force in NSW. It made a number of amendments to the Strata Schemes Management Act (NSW), including some that affect tenant representation.

These changes included rules requiring unit plans to have a tenant committee and a representative who attends general meetings.

Nicole Robb, Strata Operations Manager at Independent, believes there are benefits to these changes but there needs to be a balance to protect both the Owners’ Corporation and tenants:

“A positive working relationship between the Owners’ Corporation and the tenant is very important, any ideas to improve this should be explored. However, there needs to be a balance between what input tenants can have and what is expected of the Owners’ Corporations to meet the wants of tenants. Ultimately, the Owners’ Corporation is who pays for the day to day management of the complex and they need to be assured their financial investments are secure.”

It’s been almost a year since these changes came into play, so how have they affected NSW and would these changes work in the ACT?

What changed?

Previously, only unit owners could be involved in owners’ meetings unless they gave their proxy vote to their tenant.

Under the changes, the procedure is as follows:

  1. Landlords must notify the Owners’ Corporation within 14 days of leasing out their property. This is done via a Tenancy Notice.
  2. If a unit plan has 50% or more of its units occupied by tenants, it must convene a tenants’ meeting. This must be:
  • convened by the same person who convenes the owner’s meeting, which is usually the Secretary.
  • held at least 14 days prior to the Annual General Meeting of the Owner’s Corporation.
  1. Notice of the meeting must be given to all eligible tenants (i.e., those named on the Tenancy Notices) either personally or via a general notice on the strata notice board.
  2. At the meeting, a Tenant Representative must be elected by the eligible tenants. That lucky person then gets to attend all future Owners’ Corporation meetings. The Representative is elected by simple majority vote, and the minimum number of tenants is – wait for it – one.

What can Tenant Representatives do?

Not a lot! They can attend meetings and participate in discussions, but they can’t:

  • Vote on decisions
  • Put forward motions
  • Sit in on meetings where financial matters are being discussed if the owners don’t want them to.

They are entitled to a copy of the agenda and any minutes of meetings held.

So how has it played out in reality?

Strata managers in NSW have had to align their practices with the legislation changes, especially in inner suburb complexes with very high proportions of tenants. Because the changes limit what the Tenant Representative can be present for, “it appears that most owners’ meetings now always have financial matters to discuss”, says Sally. Mysterious.

In effect, what’s happening is that the Tenant Representative is making a brief appearance at the owner’s meeting to bring up any tenant concerns and then being asked to leave for the remainder.

Would it work in the ACT?

Nicole isn’t saying no, but she has some reservations. “At the moment there’s a yours-and-ours mentality”, she says. “I can see what they were trying to achieve, but it’s perhaps not the best option”.

But tenants do deserve a voice. Especially where there’s a large percentage of tenants in a complex or a number of long-term tenants, it’s unsurprising that they want the opportunity to voice their concerns or preferences about what is, after all, their home. “You want your tenant to be engaged and passionate about where they live”, says Nicole, and if – for example – changing the common area from a swimming pool to a barbecue spot makes the tenants happy, it’s worth considering.

The problem is where those concerns financially impact the owners. Where owners are happy for tenants to represent them in full, they can make them a formal proxy. But not everyone does.

Nicole suggests a balance. One possibility might be to set a time at every owners’ meeting for the Tenant Representative to air concerns and have those discussed, then save the rest of the meeting for owners alone. “Sometimes”, Nicole says, “having the tenant there can be a circuit breaker in a long-running dispute”. Just inviting a tenant along to be listened to can go a long way where there are intractable differences, and this model would allow that to happen.

So, while Nicole may have some reservations, she believes these changes are the first step in creating a more collaborative environment.

“Tenants may not make a direct financial contribution to the management of the complex. However, they are emotionally invested in the place they call home. A community where tenants and Owners’ Corporations work together positively is the best outcome for everyone”.

It’s early days yet for the NSW model to really hit its stride, so perhaps it’s wise for the ACT to hold off and see how it goes for now.