Under proposed changes to the New South Wales strata laws, strata schemes will no longer require unanimous agreement amongst members to demolish the property and rebuild with a new construction.

The Government argues that complete consensus is a barrier to renewal, citing the need for urban consolidation. Transforming low-density strata schemes has been identified as a method to accommodate Sydney’s growing population and meet housing targets. Modern building practices and environmentally friendly innovations are also difficult—or too costly—to retrofit into older buildings.

Why the Change?

Fair Trading outlined its intentions in a discussion paper titled Making NSW No. 1 Again: Shaping Future Communities. It argued that:

“There is a strong argument for the ongoing renewal of some existing housing stock. Where land is held in single ownership an owner can renovate and update a building to ensure it meets environmental and aesthetic standards. Once a building has been strata subdivided this becomes much more difficult to achieve.”

The paper also noted that owners seeking renewal can currently be blocked by a single individual, preventing both residents and the wider community from benefiting from a modern redevelopment.

How Will Majority Rules Work?

Internationally, most legislation requires around 80% support to terminate a strata scheme. In NSW, discussions have focused on lowering that threshold to 75%.

The Sydney Morning Herald reported that if the laws take effect, the threshold will indeed be set at 75%. While this represents a clear majority, it also means that up to 25% of owners could be compelled to sell their homes as part of the process.

Safeguards for Owners

It is anticipated that safeguards will be introduced, such as:

• Independent valuations to ensure fair compensation
• An ‘extinguishment commissioner’ to hear appeals against unfair payments
• Options for affected owners to buy into the new scheme
• Assistance with temporary or permanent relocation

What This Means for Owners

If adopted, these reforms could make it easier for older strata schemes to be redeveloped, but they will also raise concerns about fairness and security for minority owners who may be forced to sell.