Developers in Queensland are urging changes to the state’s “antiquated” strata title rules as part of measures to solve the housing shortage.
Under the current laws, unanimous approval is required from all owners in an apartment building. It means that a single apartment owner can prevent the majority from making changes or repairs, or selling the building for redevelopment.
Despite similar legislation in New South Wales being changed in 2015 to allow a 75 per cent agreement threshold, state government-commissioned recommendation in 2017, and hints at the Housing Summit last year, the Queensland government has dragged its heels on implementing changes.
Queensland Property Council executive director Jen Williams says that reducing the threshold in the state is a priority. She says it would help facilitate the redevelopment of old apartment buildings and be a positive response to the state’s housing crisis.
“Now with government and industry committed to responding to the state’s housing crisis it is the perfect time to implement this much needed reform.”
A spokesperson for the Office of Fair Trading told The Urban Developer that the Queensland government had committed to establishing a Community Titles Legislation Working Group to consider opportunities for reform.
“The working group, made up of key community titles sector stakeholders, has been established to provide its views on issues relevant to community titles, including insurance, pets, and scheme termination.”
The government is considering the feedback of working group stakeholders on a number of issues, they say.
A key outcome of the Queensland government’s 2022 Housing Summit was to reform body corporate legislation to allow for terminating “uneconomical community titles schemes” and facilitate renewal and redevelopment.
“This will form part of the government’s package to modernise Queensland’s community titles legislation, with the first bill expected to be introduced in the first half of this year,” the spokesperson said.
Right to repair, right to sell
Whether any changes will be made is yet to be seen, but the real-world impacts of this delay are obvious.
“You only have to drive through the Gold Coast and you will see countless unit blocks in high-density areas that are not only small and underutilised but also dilapidated and sometimes unsafe for residents,” Williams says.
“In these instances, the vast majority of unit owners want to wrap up their strata scheme and cash in on their investment but are all too frequently locked in by a single owner who believes that by being the last one in the building to hold out they will be able to get more money.”
This has led to a small number of high-profile court cases, such as Miami’s Nobby’s Outlook in 2013, a Gold Coast residential building built in 1967 that needed $3.8 million in repairs, which were initially rejected when one out of 45 votes cast opposed the redevelopment.
The body corporate was forced to apply to the District Court for a termination order, which was eventually granted, highlighting the difficult interplay between strata title and body corporate requirements.
“The body corporate owns all communal areas but also the walls and the bricks, but you might as a strata title owner own the internal space, so it becomes really complicated to come up with another arrangement, unless you can buy everyone out and start again,” McCullogh Robertson chair of partners Kristan Conlon.
“In the past there have been outspoken advocates that suggest taking away these strata rules implies they are taking away their rights to do with their property what they will, and that’s a political issue.
“But there is lots of concrete cancer, particularly some examples on the Sunshine and Gold coasts. Changes to strata title rules would unlock sites, help improve density, which is good in terms of stock you can have available
“Affordable housing at any level helps everyone, regardless of whether that is social housing or not.”
The Queensland government could learn a lot from the experiences of NSW, property law specialist and partner at the Gold Coast’s MinterEllison, Bryce Melville says.
“To guard against unintended consequences, NSW created a regime with the requirement that it be signed off by the Land and Environment Court,” he says.
“There are financial safeguards, procedural safeguards and it is subject to review after five years, so there are now plans to simplify it as well.
“They were first movers, they were facing the same scrutiny as the Queensland government will face and they invested in these changes.
“The NSW legislation has unlocked numerous lots and increased the willingness of apartment owners to redevelop due to a greater awareness of the new threshold.
“The results from NSW highlight that Queensland no longer needs to approach this exercise with first-mover hesitancy but can legislate this reform with confidence knowing that it has been tried and tested.”
GV Group principal and director Antonio Mercuri says that there are differences between the states but the end result for all will be to unlock land for much-needed housing.
“The big difference between NSW and Queensland is land supply and density. On the Gold Coast for example, there’s a lot of older buildings which eventually need to go or be redeveloped, but they don’t have that supply of older buildings in Bondi, for example.
“But because of these strata title rules, we might have worked with say 38 unit owners, but the 38th doesn’t agree and the deal can’t proceed.
“Because of the age of the buildings, a lot of money needs to be spent to get them up to code for insurance purposes.
“It happens every day and we’re coming up against it every day, but the opportunities are there if everyone is on board.
“We certainly want this to be on the agenda at least as a trial mode, especially for those buildings that are in disrepair, it’s a fair and reasonable request and a good move in the long term.
“We will run out of land in the long term, it’s all medium-high density, we need to start the process now rather than when it’s too late.”
The Queensland Housing Summit offered an ideal moment in which to implement change.
“There’s a housing crisis,” Melville says. People are being priced out in terms of both buying and renting.
“If you can use this legislation to unlock under-developed parcels of land, take old strata sites and use them to increase the density and create for example a build-to-rent product, you can use this legislation for good.”
Article source: www.theurbandeveloper.com