In October 2015, major legislation was introduced, and subsequently passed in New South Wales parliament. It pertains to strata real estate, and was essentially a reworking of how the entire process works.
It’s important new information for anyone looking at a unit or apartment developer, and can actually make the investment process much simpler. Let’s take a closer look at the changes.
Making additions or renovations to an investment property is a great way to add value or boost its appeal for tenants. However, this has been quite a difficult process for owners of strata property. Under the new laws, NSW Fair Trading points out that minor cosmetic alterations will no longer require approval.
If you want to make more significant changes, this requires approval of the body corporate, but only 50 per cent. If you’re doing something that changes the look or structure of the entire building, you need 75 per cent support from the body corporate.
Reasonable payments to developers
Sometimes, developers overcharge in their levies during the construction phase of strata property. With the new legislation in place, it is a requirement that developers charge reasonable levies from the point when one-third of the units in a project are sold, and keep them at this level for the following year.
This prevents investors from being hamstrung by fees during the development phase.
Accountability for builders and developers
It doesn’t happen often, but developers can leave you short-changed in the long run when you invest in a strata project. Now, they face greater accountability. Developers have to front up a bond to cover any defective work, to the value of 2 per cent of the total project’s value.
Additionally, the developers have to agree with the owners’ corporation on the selection of an independent contractor to inspect the building for defects at some point between 12 and 18 months after construction is completed.
Maintenance schedules will also be necessary, to provide transparency when it comes to the owners’ rights and responsibilities.
These are just three of the changes that are inbound, but they’re important for anyone looking to invest. Identifying poor practices and fixing them is key to making sure your money is spent safely. Another way of identifying and protecting yourself against bad work is to check up on other peoples’ recommendations.