The unintentional impact of the NSW Government’s Strata Renewal Reform on Lower-income Earners
Posted 02 November 2018
Category: Strata, Urban Renewal
With the commencement of Part 10 of theĀ Strata Schemes Development Act 2015Ā on 30 November 2016, the NSW Government introduced a reform which is aimed to deal āproactively with the issue of ageing strata schemes and enables strata owners to make collaborative decisions about their strata buildingā¦ā[i]Ā
What trends are we seeing two years later?Ā Will the redevelopment of cheaper strata buildings in high-value areas, now more achievable after the introduction of Part 10, in fact lead to a displacement of lower-income earners?
Will this be the unintended result of the NSW Governmentās reform?
In a series of articles published by āThe Conversationā during 2017Ā [ii]Ā the impact on ālower-income and disadvantaged householdsā in our major cities was raised.
After providing advice for over 45 sites around Sydney for collective sales and acting in two of the first four cases filed in the Land and Environment Court of New South Wales, we are certainly seeing a trend and a trend that will no doubt lead to an increase in the cost of living in presently affordable areas for lower income earners forcing them to re-locate.
The areas we have seen a high interest in potential ācollective salesā are higher-value areas such as Chatswood, Macquarie Park, Sydney city, Lower North Shore and Parramatta.Ā Generally, areas where there are still cheaper properties owned by lower-income earners.Ā Increasing prices of redeveloped properties will, logically, lead to a difficulty of lower income earners remaining in these areas as the prices for the ānewā units increase.
Whilst the aim of the NSW Government of the reform was to provide ānumerous safeguards to prevent intimidation, encourage collaboration and ensure that owners receive compensationā¦āĀ will these safeguards be sufficient for displaced owners to buy a new unit in the same area?
Even though displaced owners may be significantly advantaged by a collective sale of their unit block and be in a strong financial position to remain in the area, neighbouring owners not receiving the inflated prices may struggle and be forced to re-locate to more disadvantaged areas hence starting a cascading effect on the placement of lower-income earners in our cities.
The strata renewal reform may in fact achieve the NSW Governmentās intentions to āempower strata owners to make a collective decisionā¦āĀ and promote redevelopment in the urban areas, but, have they considered the long term impact on the re-shaping of our cities.
[i]Ā Second Reading Speech read by Victor Dominello ā Minister for Innovation and Better Regulation on 14 October 2015
[ii]Ā āWhen a suburbās turn for gentrification comesā¦ā May 4, 2017 Author Sidh Sintusingha, āItās not just the buildings, high-density neighbourhoods make life worse for the poorāĀ August 22, 2017 Authors Laurence Troy, Hazel Easthope and Laura Crommelin and āWhy investor-driven urban density is inevitably linked to disadvantageāĀ August 23, 2017 Author Bill Randolph
***The information contained in this article is general information only and not legal advice. The currency, accuracy and completeness of this article (and its contents) should be checked by obtaining independent legal advice before you take any action or otherwise rely upon its contents in any way.
