The Strata Schemes Management Act 2015 is here… Almost
Although the Act became live on 30 November 2016 the proposed defects bond required under this Act, originally scheduled to commence on 1 July 2017, has now been postponed until 1 January 2018.
As a recap; The aim of the 2016 Act is to raise the quality of residential properties greater than 3-storeys in height and ensure the Owners Corporation (OC) is not only fully informed and prepared for the future operation and maintenance of their new building but also place responsibility on the OC to properly manage the ongoing operation and maintenance of their property.
In the Commercial Real Estate environment, this all relates back to the Asset Management Plan. The Residential Strata community is generally behind the times relating to asset management and often the embedded management structure or the OC are working with very limited information, poorly considered plans and an inherent aversion to spending money. A major part of this new Law requires that the Developer (original owner) and Owners Corporations (OC) are required to jointly appoint an independent defects review of newly constructed properties. The findings from this review triggers the release of a newly introduced defects bond, (to the value of 2% of the property construction value) held by the NSW Fair Trading, to either the developer or the OC. This is the part of the Act that has been deferred until January 2018.
Furthermore, the Law dictates that the OC is responsible for the management and accuracy of the Capital Works Plan, Administration Fund and the Maintenance Management for their communities. The overall aim is to promote timely planning and reduce the occurrence of the dreaded Special Levy! The postponement of the defects bond has thrown doubt into the industry relating to the controls and the outcomes of these defect reviews. Industry has been working with NSW Fair Trading since 2013 to agree a format for the mechanism of review; it appears that no agreement has been reached around the format, hence the delay. The result is that new home owners remain unsupported where shoddy workmanship needs to be addressed within the first 24 months of new builds completion. This leaves many new owners at risk. The OC has always had the responsibility to work in the best interest of the strata community. The Act is now more specific about the need to continually review and improve procedures and focus on capital expenditure planning and the ongoing operational and maintenance expenses.
MBM provides a detailed approach to technical issues associated with both newly constructed and existing properties, bringing transparency and certainty to setting realistic levies and consultancy spend. We do this through up to date technology platforms which enhance our efficiency and accuracy providing relevant reporting outputs and increased client satisfaction. Our approach is to bring a team of experts to share their knowledge and skills, resulting in the best possible outcomes on behalf of owners.
Contact Craig Underwood on 02 9270 1000 (firstname.lastname@example.org) for more information about our services relating to the Strata Schemes Management Act 2015.