nsw high rise strata title expenses

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    High rises on way for upkeep of apartments
    By Linda Morris
    September 27, 2003

    High-rise flat owners will be required to set aside substantial funds for repairs over 10 years under changes to strata management laws being considered by the State Government.

    Medium-density living has taken off in Sydney with the property boom. With it has come a rise in disputes over the management of multi-storey communities.

    The number of strata schemes in NSW is estimated to be more than 65,000 - 61 per cent in Sydney - with 10 new strata plans registered every day, varying from two-lot semis to 700-unit blocks.

    The Government is expected to act on industry recommendations to make it mandatory for owners corporations to set aside enough funds for maintenance projects over 10 years to avoid the imposition of one-off special levies.

    This follows claims by the Institute of Strata Managers that sinking funds set up for some older unit blocks are virtually empty and owner corporations are ill-prepared for emergencies.

    A Department of Fair Trading issues paper, which has been issued for public consultation, also tackles the recent trend of buying investment units off the plan before a building goes up. Some owners have complained that developers have given away exclusive rights to common areas, such as a roof terrace.

    They say it is difficult to set aside or vary long-term management contracts developers arrange with caretakers and building managers.

    The annual operating budgets of the state's largest strata schemes exceed $1 million and the paper suggests licensing special administrators or financial controllers to manage high-rise schemes better.

    The push comes after 653 owners of the Regis Towers complex went to the Consumer, Trader and Tenancy Tribunal to have their owners' corporation executive committee and their strata title manager removed. The tribunal determined that the building, Australia's largest strata title scheme, was insolvent, poorly maintained and mismanaged.

    In February the Department of Fair Trading amended the Strata Schemes Management Act devised in the days of the 1970s walk-up blocks to set out the rights and responsibilities of the owners' corporation.

    The new laws recognised the rights of caretakers under limited contracts of 10 years and gave new powers to the tribunal to deal with disputes over caretaker contracts and unfair charges.

    A spokesman for the Special Minister of State, John Della Bosca, said proposed amendments had yet to be considered by cabinet. But the strata management industry expected new provisions for sinking funds to be introduced to tower blocks of 100 units or more.

    The departmental issues paper also considers simpler ways for individual owners to terminate a strata scheme to allow for a building in disrepair to be demolished. The vote must be unanimous.

    The general manager of the Institute of Strata Management, Bruce Wheeler, said it was only common sense that all owners corporations bring in professionals to provide 10-year estimates of maintenance bills. The institute, representing strata managers, says the vote to demolish deteriorating buildings should also be relaxed where buildings are aged 20 years or older.

    "There is a need to introduce compulsory sinking fund analysis because of the number of units ageing and the number of units that have inadequate financial reserves," he said. "Without it there will be an increasing preponderance for special levies which some owners, due to personal circumstances, will be unable to afford, resulting in 'forced' sale of units."

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