Strata Reform to Improve Mixed Use Development Outcomes in WA

Written by Warwick Hemsley in Developing on February 2, 2016

Property investors in Western Australia could be treated to an increasing choice of retail, commercial and residential mixed use development in the coming years as Strata Title Reform makes major headway.

In a move to ensure that the property industry can provide the diverse range of housing options that are required to accommodate WA’s growing population, state cabinet approved draft amendments to the Strata Titles Act (STA) on 11 January 2016.

Landgate, WA’s land information authority, is playing the lead role in the reform process and predicts that the new legislation will be introduced to state parliament in spring 2016.

The reform amendments include a range of changes to the 1985 STA including the introduction of Community Title and Leasehold strata as well as a raft of amendments that will clarify the role of strata managers, require the provision of clearer information to purchasers and address the termination of strata schemes.


Community Title

One of the biggest changes that will emerge as a result of reform will be the much anticipated introduction of Community Title in WA.  The NSW government recently approved similar changes and it is widely believed that this new type of strata will encourage the advancement of more mixed used developments that include residential, commercial and retail precincts.
As Landgate explains on their website “currently a strata scheme can only have one strata company and one set of rules (known as ‘by-laws’) that set out standards of behaviour and other management arrangements for that scheme. The introduction of community title will enable multiple schemes to be managed individually under one umbrella management structure; to be known as the community corporation.

This will be particularly beneficial where there are different uses in a single building (such as a mix of retail areas, office spaces and residential apartments), or where common property needs to be restricted to one group or to one building within the strata community.”

In light of extensive precinct development that is currently occurring and will continue to become more prevalent in the future in Perth, the ability to introduce multiple schemes into one development certainly opens the door to more straightforward planning, implementation and ongoing management of such developments.

Architectural details of modern apartment building.

Leasehold Strata
The second new type of strata to be introduced is leasehold strata which will allow certain land owners to develop their land and retain freehold ownership while initiating a strata scheme that can last up to 99 years.  This will allow the landowner to sell to a buyer who will then hold a long term lease over a unit, along with a Certificate of Title.  The unit would be allowed to be on sold without the land owners consent.

These two new types of strata schemes constitute good news for buyers who may benefit from more property choice as well as gain access to a potentially broader range of community facilities within a development.


Termination of Schemes

Another element of the strata reform agenda that has attracted some controversy in recent weeks is in relation to the termination of schemes.  Currently in WA 100 per cent of owners within a strata scheme must agree to the termination of a scheme which has led to the proliferation of strata properties that are in dire need of significant redevelopment, upgrade or complete demolition to make way for more appropriate housing.

Under the proposed amendments, termination will require no less than 75 per cent resolution in favour of termination of a scheme that is made up of four or more lots.

In order to ensure fairness as well as make sure every owner receives fair (or market value) compensation, any resolution to terminate a strata scheme will be reviewed by the State Administrative Tribunal and there will also be an avenue of appeal to the Supreme Court.

It is important to be aware of these changes as a buyer, particularly if you are considering purchasing into an older or rundown strata property.


Further Changes

The more minor changes to the STA will include provisions that are likely to ensure those considering purchasing a strata property will be more confident in the clarity of information provided to them at point of sale, as well as the ongoing management of the property.

Construction crane and skyscraper in the sunlight.

The new requirements will include better clarity of information provided to buyers of strata properties such as in relation to existing levies and funds.  As well as more transparent strata management requirements for strata companies, councils and managers including financial reporting, communication and the implementation of statutory duties for strata managers.

Overall, given the new amendments, the purchase of a strata property in WA is about to become a lot more transparent and buyers could be met with more choice of property types and community facilities than is currently possible.


About the author:
Warwick Hemsley, Chairman QWest Paterson Valuers and Property Consultants.

Warwick is a graduate of both UWA and Curtin University (formerly WAIT) and is also a licensed valuer and Fellow of the Australian Property Institute.

Warwick_Headshot2Warwick has been very involved in the property profession for many years, having served as Managing Director of valuation and commercial property practice DTZ (WA) for some years, Chief Executive Officer of property group Peet Ltd for 17 years, Chairman of the Housing Industry Forecasting Group and President of the Urban Development Institute (WA), amongst various other professional roles.

Warwick is also on the advisory board of the Curtin Business School within which the property studies degree sits.

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