[+] Strata Revamp Kicks In to Curb Hold-Outs

The end is nigh for ageing and dilapidated residential towers in Queensland with the introduction into parliament of long-awaited reforms to strata legislation that will unlock prime sites for redevelopment. Under the proposed changes, it is estimated “north of 100 buildings”—predominantly older medium-rise blocks as well as high-rises past their lifespan and beyond repair—will likely come into play as potential infill opportunities. The state’s strata laws have remained relatively unaltered for two-and-a-half decades and the move comes as it grapples with an acute housing shortage. Key to the reforms is the requirement for termination of a community titles scheme being reduced from 100 per cent of lot owners giving consent to 75 per cent. It will mean that a single or minority of dissenting lot owners can no longer block the termination of “uneconomic” community titles schemes that have unsustainable ongoing maintenance costs. Waiting in the wings is a bevy of body corporates facing bills of hundreds of thousands, if not millions, of dollars to keep their “crumbling” buildings up to a liveable standard, as well frustrated developers, who have criticised the prevailing rules as a major roadblock to urban renewal and the provision of much-needed residential stock. Strata title legal specialist Clayton Glenister, managing partner with Gold Coast-based MBA Lawyers, says it is the strongest reform to Queensland’s Body Corporate and Community Management Act since its inception in 1997. “I’d say there are probably north of 100 buildings in Queensland that have been looking at this and it might apply to,” he says. ▲ North of 100 buildings to go: Strata title legal specialist Clayton Glenister. “A lot of them are older-type buildings developed in the 1970s and past their use-by date. “I mean, most buildings really only have a lifespan of 40-odd years and then you have to spend inordinate amounts of money to up-keep them. But it’s just putting lipstick on a pig.” Glenister also chairs the legislative reform committee for the Australian College of Strata Lawyers that has been making submissions to the Queensland government about the proposed changes. He says many developers have been deterred in the past from going down the path of securing contracts and options with building lot owners to redevelop sites “because they can spend a lot of money for no results”. “They’ve gone in there trying to negotiate and 95 per cent of the owners have gone to the negotiating table and come out with a result they’re happy with and then 5 per cent have just refused to accept any offer no matter even if it’s well over the market value. “However, no one’s really had the political will to do anything about it … but this is finally it and developers know that there is now a mechanism to overcome those recalcitrant lot owners. “So it actually presents a significant opportunity for developers and I think it's going to create renewed energy. “We’ll have prime redevelopment sites that were deemed off-limits but with these changes will now be potentially unlocked in terms of density ... and go some way to assisting with the housing crisis that we're faced with.” But the devil is in the detail. ▲ Strata Community Association Qld general manager Laura Bos. Termination of a community titles scheme will only be permitted if it is not economically viable, or will not be economically viable within five years, to carry out repairs or maintenance to parts of the property the body corporate is responsible for. Protections and safeguards for lot owners also will be part of the new process, including requirements for professional reports and other information to inform decision making about economic reasons. As well, there will also be minimum compensation requirements for lot owners, and review and dispute resolution pathways including provisions to reduce lot owners’ exposure to costs associated with proceedings relating to a proposed termination. In all other situations, termination of a community titles scheme will still require either that the body corporate pass a resolution without dissent or that an order of the District Court is obtained. In Queensland, there are about 530,000 strata and community-titled lots with an insured value of $250 billion across more than 50,000 body corporate schemes involving about 1.5 million people. Strata Community Association Queensland general manager Laura Bos says the reform strikes the right balance between protecting the rights of both owners in the minority and the overwhelming majority. “A threshold of 100 per cent is unreasonable and lets one lot owner hold 100 others to ransom, which has frustrated development, while a threshold which is too low is obviously prejudicial to owners property rights.” Bos agrees the reduction in the threshold to terminate a body corporate scheme is “one of the biggest levers governments could pull to begin easing the Queensland housing crisis”. “In established parts of all Queensland’s major cities there are schemes that are simply not making full use of the land they take up. There is a capacity for us to better use these existing development footprints in these existing urban areas, particularly along public transport spines without impacting amenity. “This change will make it much easier to renew our urban areas with well-designed strata development which will benefit all members of our community. ▲ Property Council Queensland executive director Jen Williams says the reforms will go a long way to achieving the housing targets in the draft South-East Queensland Regional Plan. “It just makes sense to use land which is already being used for housing to create more stock, it is much more economically efficient than greenfield development and is a critical part of protecting our environment.” Property Council Queensland executive director Jen Williams says the strata law reform will bring Queensland in line with other jurisdictions nationally and internationally. And she says progressing the legislation is an important outcome from last year’s landmark Queensland housing summit. “Given the drastic undersupply of housing and the pace of growth in Queensland, reforms such as these are urgently needed to unlock development in our urban core,” she says. “These sensible reforms will go a long way in achieving the housing targets articulated in the draft South-East Queensland Regional Plan, and ensure new homes are being delivered in close proximity to existing infrastructure and amenity.” You are currently experiencing The Urban Developer Plus (TUD+), our premium membership for property professionals. Click here to learn more.

[+] Strata Revamp Kicks In to Curb Hold-Outs

Want to read more?

From Underground to Skyline: The Sydney Metro Transformation

Moreton Bay Reveals Sprawl-Free Future for Surging Population

Beyond Energy Efficiency: Cutting Carbon Property’s New Frontier

Mirvac Monopoly: BtR Pioneer Plots East Coast Domination

Keeping the Lights On: Growing Pains Jeopardise Industrial Boom

Fireside Chat | Inside GemLife With Adrian Puljich

Building Australia's Newest Airport: Multiplex

The Makers Of The Mondrian | Design, Vision And Delivery Behind One Of Australia’s Most Anticipated Luxury Hotels

Next Gen Now | How Emerging Developers Are Redefining The Game

Wests Tigers Gears Up for Long-Awaited $95m Hotel Scheme

Inner West Infill Project Approved in Eight Weeks

State Issues Call-In Notice for Dreamworld Masterplan

Court Rejects Bid for 158-Home Estate at Agnes Water

Commercial Real Estate Summit

Urban Leader Awards

Property Development Masterclass Series

Long Lunch Series