New ACT legislation ensures we’re Managing Buildings Better

As the common saying goes, ‘good fences make good neighbours’. In a strata complex, those ‘fences’ are the rules and regulations that ensure everyone has a pleasant place to live.

Canberra is growing by around 7,000 people per year and around 100,000 new homes will be required in the next 25 years. The ACT Planning Strategy sets a target of 70 percent of these homes to be built in existing urban areas, which means that more people will be living and working in mixed-use developments.

In response, the government has introduced a raft of changes to strata title (unit title) buildings. The reforms are known as the Managing Buildings Better reforms.

The changes were legislated in early 2020, with a transitional period to 1 July 2021. As of 1 July, they are all fully operational and in effect. The second package of reforms is planned for the future.

Who do the changes apply to?

The Managing Buildings Better reforms apply to all strata title property, including apartments, townhouses, and mixed-use developments, and commercial units.

Mixed-use developments are those which combine residential and commercial premises. For example, retail outlets or a commercial gym on the ground floor, commercial offices for the owners of those businesses on the first floor, and residential apartments above those.

What do the changes do?

The changes aim to make it easier to effectively manage strata title properties, and to make sure buyers have more access to information about what they’re buying.

“Off-plan developments vary a lot,” says Paul Corazza – Independent Property Group? Licenced Agent & Principal . “Purchasers have the right to understand what they’re buying into, and owners corporations need extra flexibility to make rules that work for their complex.”

Under the new laws:

• Consumers will have more information about their rights and responsibilities when buying off-plan
• Owners corporations will be able to tailor the way they manage their buildings
• Complexes will be able to distribute their building costs, such as water, maintenance, and insurance, more equitably
• There will be an enhanced ability for building residents to own pets

Consumer disclosure for off-plan purchases

If you’re buying off-plan, the developer must give you a disclosure statement as part of the sales contract. This provides information on:

• Proposed levies
• Maintenance requirements
• Any mixed-use throughout the building (for example, if retailers or other businesses will occupy part of the space
• The development and its progress

They must also provide you with update statements when:

• The units plan is registered; and/or
• If any material changes have been made since the contract was signed.

These extra pieces of information help you decide, firstly, whether you want to buy into the development. Secondly, they let you know if there are any changes that might affect whether you want to go ahead.

“Let’s say a buyer signs a contract for an apartment in a mixed-use building, where the ground floor businesses are all daytime operations like a newsagent or a coffee shop,” explains Wayne Harriden, Executive Director of Project Marketing for Independent. “During construction, those businesses change and now you have a 24-hour gym and a wine bar. That really changes the experience for building residents because you have people coming and going during the evening and all through the night. Maybe the buyer doesn’t want to sign up for that, so they have the right to know about it before it’s too late.”

Along with the extra disclosure, you have clearer rights to terminate the contract if there are significant changes. The disclosure includes information on how to rescind the contract if the building is ‘not as described'.

What if you’re buying into an existing development? You’ll get more information as well. The unit title certificate, otherwise known as a section 119 certificate, has been revamped to include more details about:

• All funds held by the owner's corporation
• Any sustainability infrastructure built on the units plan
• All current insurances, warranties, and contracts the owners corporation has entered into.

Just before settlement, you now have the right to request an updated unit title certificate to make sure you know about any changes that may have occurred since you signed the contract.

“Extra disclosure can only be a good thing,” says Wayne. “For buyers, this is their home or one of their most significant assets. They deserve to know exactly what they’re buying.”

Tailored management

In the past, new developments have all had the same set of 11 default rules which are set out by the Unit Titles Management Act 2011. These cover things like reasonable noise limits, not using the property in hazardous or illegal ways, and not making unauthorised changes to the unit. It wasn’t until the first AGM that the owner's corporation could add additional rules. By then, of course, you’ve settled on your purchase.

Under the changes, owners in multi-lease and mixed-use buildings have a new option for managing their buildings.

For new developments, developers can tailor rules from the start, without having to wait for the owner's corporation.

“You might want a rule in place that covers how a shared lobby is used. Or one that puts different expectations in place for upper floors, which are used by residents, as opposed to ground floor common property,” says Ken. “This gives owners a much greater level of certainty about how the development will work in practice, and whether the conditions are acceptable to them, rather than hoping they’ll be able to change things after they’ve settled.”

Equitable distribution

Tailored rules also allow strata buildings to divide running costs more fairly.

“Let’s take a building where there’s a restaurant on the ground floor and residential apartments above. Should they all pay the same amount for water and utilities, even though the restaurant will use far more of both than an individual resident? What about the maintenance of lifts, which the restaurant doesn’t use but residents do? A user-pays system is more flexible and more likely to be fair to all,” says Ken.

Pets

Residents (including tenants) can now enjoy greater certainty about whether they can keep a pet.

“It’s an incredibly common query that we get,” says Wayne. “Someone is thinking of buying off-plan, and naturally they want to know if they can move in with their pet. In the past, we’d have to tell them well, once you move in you can ask permission to get a pet. But that’s not a lot of use to buyers who already have a pet and want that certainty that they can bring them along.”

Under the reforms, a new default pet rule has been created. This permits an animal to be kept in a unit as long as the owner's corporation is given notice of its arrival. Owners corporations can adopt the default pet rule or create its own rule: either way, they’re strongly encouraged to pass pet-friendly rules.

“From recent ACAT rulings, we can infer that the tribunal is likely to be very sympathetic to residents who want to keep a pet. Developments can’t create a blanket rule refusing all pets anymore, and they need a very good reason to say no to animals on a case-by-case basis. If those reasons are compelling, the owner's corporation needs to make sure they’re well documented, because ACAT will require you to explain why in writing,” says Paul.

When do the new rules come into effect?

For new developments, the reforms are now in effect. For existing buildings, there is a transition period.

On 1 November 2020, all owners corporations inherited these rules as part of a plan to make management more consistent across buildings. That said, owners’ corporations can still tailor rules to suit their building, as long as those rules are still consistent with Territory law.

If your owner's corporation amended rules before 1 November 2020 to create ‘non-standard rules’, those rules remain in place until the second annual general meeting held after 1 November 2020. To apply during the transition period, the rules don’t need to be registered.

If you want the rules to continue after that date, though, you must:

• Pass them by special resolution to establish them as alternative rules during the transition period; and
• Register the alternative rules with the Lands Title Office within three months of passing them.

“Strata rules can be very complex,” says Paul. “Independent strata managers undertake ongoing training to make sure that they are up to date with changes to the legislation. If you’re not sure if your owner's corporation is following the rules, give us a call and we’ll be happy to discuss the issue with you.”

For more information on the Managing Buildings Better changes, or any other query about strata management, get in contact with Independent Strata Management