Changing the strata law and improving outcomes for property owners


By Nick Allingame – UDIA WA President

Strata title reform is imminent in Western Australia as new legislation is set to be introduced to state parliament in the next few weeks.

The reforms will cover a broad range of strata-related issues, including introducing two new forms of land ownership – leasehold schemes and community schemes – which will provide new and more flexible frameworks for the delivery of mixed use and other strata developments.

The legislation will also provide more flexibility for staged subdivisions, improve strata management practices, simplify dispute resolution processes, improve information regarding strata schemes for buyers and implement rigorous safeguarding measures for the termination of schemes.

The changes around the termination of schemes in particular has prompted some concerns within the community due to the move away from the requirement for a unanimous resolution of all owners to terminate a scheme.

Under the new legislation, a scheme with four or more lots will require at least 75% of lots in favour of a termination. In the case of a three-lot scheme, at least two lots in favour and for a two-lot scheme, at least one in favour.

It is important to note rigorous measures are being put in place to protect owners and ensure all owners’ rights are taken into consideration in the case of a proposal to terminate a scheme. In fact, the new legislation introduces more safeguards than are currently in place, particularly for vulnerable owners.

The new process will be transparent, will need a detailed proposal to be prepared and will require a full review by the State Administrative Tribunal (SAT). Vulnerable owners will also have access to funding for assistance to respond to the termination proposal, including legal advice.

This means that even after owners have voted on a proposal for the termination of a scheme and the required number of votes is attained, the SAT is still required to review that decision.

In reviewing a proposal, SAT will consider a range of factors including whether the termination process was properly followed and if a proposal is ‘just and equitable’. SAT must also be satisfied each owner who objects to the proposal will receive at least fair market value for their property and be no worse off financially.

In determining if a proposal is ‘just and equitable’, SAT must consider the interests of all owners, occupiers and mortgagees and ensure that there has not been any impropriety in voting or giving of false information. SAT also needs to weigh up the benefits and detriments of the termination for relevant parties.

The proposed strata reforms provide an opportunity to ensure our legislation is keeping up with the evolving needs of the community and facilitates the best possible outcomes for future development.

What Side Of The Fence Are You On


Building or replacing a dividing fence between two properties requires knowledge and planning. This is because the fence is governed by a series of by-laws with fairly explicit boundaries put in place to protect both you and your neighbour’s rights. A dividing fence separates the land between two owners whether the fence is on the common boundary of adjoining lands or on a line other than the common boundary as set out by Landgate.

Do not commence construction of the fence until you have a clear agreement, preferably in writing with the adjoining owner. Legal action is costly and is likely to damage the relationship you have with your neighbours. The Act recognises a dividing fence as a barrier that separates the land of adjoining properties. The fence can be a structure of any material, a ditch, and embankment or even a vegetative barrier like a hedge, but does not include a retaining wall. Adjoining land owners are liable to share the cost of fencing work if the finished product is a sufficient dividing fence. Each of the owners of adjoining land is obligated to pay half the cost of erecting or repairing a “sufficient” fence to divide their properties. If only one owner wants a fence of a higher standard than the sufficient dividing fence, then that owner must meet the extra cost.

Before you proceed, check with your council to determine if there are local laws that regulate the type of fence that is required in your suburb otherwise owners can decide on the type of fence they want. If the fence is in need of repair the owners of either side of the common boundary are liable to pay half the cost of those repairs. The Act defines the word “repair” as including “re-erect and realign” so the provisions that deal with repairing a dividing fence apply in the same way to fences which need realignment or re-erection.

If you wish to have a dividing fence repaired, you must give the other owner a notice describing the repairs to be made, saying where and stating you are prepared:-

  • To repair the fence and pay half the cost if the other owner will pay half the cost; or
  • That you permit the other owner to repair the fence and you will pay half the cost; or
  • That you agree to pay half the cost of having the fence repaired by a third party.

The other owner then has 14 days within which to object and must notify you in writing of the objection. If you and your neighbour cannot agree, mediation may help. It can get tricky, but the important thing to consider is the value of good working relationships with your neighbours.

It’s now more favourable to buy in Perth than rent


by Hayden Groves – REIWA President

Choosing whether to buy or rent a property is a big decision. For many people, this choice largely depends on the individual and whether they are willing and able to handle such a large financial commitment.

Although personal circumstances are an important consideration when weighing up this decision there are other factors to consider too, like how the property market is performing and what the past and current trends are in the economic climate.

To help with this decision, REIWA and Curtin University launched the Buy-Rent Index last year, a tool which assesses whether it’s a better time to buy or rent in Perth.

Based on formulated economic assumptions, it identifies the annual house price growth rate required for home ownership to be more financially advantageous than renting.

The latest index, released in May for the March 2018 quarter, shows Perth is currently experiencing the best buying environment it has seen in 5 years, with the annual rate of house price growth required over the next 10 years for buyers to break even declining from 3.3% to 3.1% over the quarter.

To put that figure into perspective, Perth’s annual average house price growth rate has been 5.9% for the last 15 years.

Based on the findings of the latest index, house prices in Perth would now only need to grow by more than 3.1% annually for buying to be considered more financially beneficial than renting.

The improvement in buying conditions across the metropolitan area can be attributed to a number of factors, such as Perth’s median house price softening by 1.9% during the March quarter and the median house rent price increasing $5 to $360 per week.

We’ve also seen the 10 year average mortgage rate drop to 6.43%, which means homeowners are paying less on their mortgage repayments than they previously were.

So, if you’ve been thinking about buying a house now is the time to take advantage of the favourable market conditions.

Ultimately though, the decision to buy or rent is an individual one, dependent on a multitude of financial and personal circumstances.

If you’re weighing up which is the right decision for you, I recommend speaking with a local REIWA agent and seeking their advice about what is the most beneficial for your situation.

Two new magistrates a win for landlords and tenants


by Hayden Groves – REIWA President

One of the biggest pain-points for property managers, tenants and landlords when dealing with disagreements arising from residential property management is delays in the court process.

REIWA has long been an advocate for streamlining this process and finding ways to make dealing with the courts more efficient for all parties involved.

When the 2018-19 State Budget was handed down on May 10, it was a big win for the WA property industry when the Treasurer Ben Wyatt MLA announced the WA Government would be adding two new magistrates to the Magistrates Court.

These two new magistrates (as well as two additional support staff) will be funded at a cost of $4.2 million over 2018-19 to 2021-22. The WA Government stated this would address current and emerging demand pressures in the court.

While the majority of residential tenancy agreements conclude with landlords and tenants parting ways amicably, when things do go wrong, a fair and efficient court system is essential to ensure fair outcomes are reached for all parties.

For too long, both landlords and tenants have suffered through lengthy delays in the court process, causing financial hardship and undue stress for all parties involved.

The additional two magistrates will cost the state, but this cost will be offset by an increase in court and tribunal fees by 7.5% in 2018-19. The increase in court costs to cover the additional magistrates is a necessary evil and something the real estate industry is willing to pay, if it means residential cases are seen to and resolved sooner.

Both landlords and tenants are set to benefit from this budget win. For landlords, many face financial hardship when tenants fail to pay rent, and lengthy court delays can leave them thousands of dollars out of pocket, as tenants are often three or four months in arrears before a resolution can be made in the court.

For tenants, it means getting your bond money (usually the equivalent of four weeks rent) back quickly, something that has previously caused undue stress, as tenants must front up a bond for a new property before having received their old bond money back.

REIWA is pleased the WA Government is taking steps to help improve the process. It is essential the two new magistrates dedicate adequate time to seeing residential cases and ensure the private rental market remains a viable option for both landlords and tenants.


Market Still Viable

By Hayden Groves – REIWA President

The Perth property market remains stable, with the median house price and median rent holding steady for the third and fifth consecutive month respectively.

In data for the three months to September, the median house price decreased marginally by 1 per cent to $510,000. The median rent price was unchanged at $350 per week.

Stock levels in both sectors decreased, with properties for sale in Perth down by 1 per cent in September and 8 per cent lower compared to last September.

Listing levels in the rental market declined 3 per cent over the month, falling 9 per cent over the year.

“It’s very encouraging to see stock levels across the market continue to reduce, especially when we compare levels for both sectors on an annual basis,” REIWA president Hayden Groves said. “If this trend continues, we should see a better balance between supply and demand of stock start to emerge.”

Despite mostly stable conditions, activity levels in the sales and rental markets reduced over the month, with 1,481 preliminary sales recorded and 4,266 properties leased.

“Historically, sales transactions tend to slow at the start of spring due to a mixture of school holidays, public holidays and the AFL football finals,” Mr Groves said.

Activity generally starts to ramp up as the warmer weather hits in October, with the peak traditionally occurring in November. “Based on this, we are expecting to see transactional activity increase in the coming weeks,” Mr Groves said.

“Joondalup south was the top performing sub-market in September for sales activity, recording a 24 per cent lift over the month, followed closely by Kwinana with a 21 per cent increase in transactions.” Mr Groves said.

“The Belmont and western suburbs sub-markets also posted strong results, both experiencing an 8 per cent lift in sales.” he said.

In Perth’s rental market, Kalamunda was the top performing sub-market in September for leasing activity, recording a 7.9 per cent increase. Other top performers were Canning, Stirling West and Vincent/Stirling.

Strata Properties – know your obligations


Buying an apartment, duplex or a home within a complex is not the same as buying a freestanding home. Typically, these are strata properties, meaning they come with their own set of rules and fees. These rules are known as by-laws, and they are there to make sure everyone in that community is able to enjoy their home in harmony with their neighbours.

While you may own your apartment, the steps that lead to your front door are likely to belong to everyone, and if you are wishing to make changes to shared property you need to consult others. The Strata Titles Act 1985 is administered by Landgate, and its website https://www.landgate/  features two useful publications – A Guide to Strata Titles and the Strata Titles Practice Manual – for anyone who lives in or owns a unit. As of July this year, the Western Australian Government was progressing the drafting of legislation to reform strata laws in WA.

The reforms aim to fix current problems experienced by strata owners through better dispute resolution, improved management of schemes, regulation of strata managers and safeguards for the termination of schemes.

When you buy a strata property you agree to follow these by-laws and pay a levy. You are also given voting rights at the strata group’s annual general meeting. Strata Community Australia (SCAWA) is a membership organisation for strata managers; it provides the following tips for apartment buyers on its website.

  1. Do your research – When purchasing strata titled properties, the seller is required by law to provide certain notifiable information about the scheme before the purchaser signs the contract. Have a professional search the books and records of the strata company to view finances and any issues the company is facing.
  2. Know what you are buying into – Check the car space or garage you were shown is correctly allocated to the apartment – the strata plan will usually detail this. Strata plan details are available from the seller. You can obtain a copy of the Certificate of Title and copy of the strata plan which relates to the lot you are interested in, from Landgate.
  3. Know your rights – All by-laws are not the same. You should obtain a full copy of the by-laws that are specific to your strata company so you understand the rules you will be required to live by.
  4. Don’t forget the levies – Remember you will have to budget for levies to fund the annual running expenses of the strata company and the building’s long term maintenance. Ultimately, this protects the value of your financial investment.
  5. Be informed – Educate yourself about your rights and responsibilities when living in a strata title property and know who your ‘council of owners’ are. The strata council is regarded as the ‘board of directors’ of the strata company. Councillors are elected at general meetings. Attend the annual general meeting so your voice is heard and consider becoming a member of your building’s strata council.
  6. Know who to call – Find out what emergency arrangements are in place or who to contact on your council if something goes wrong in the building.
  7. Love thy neighbour – In an apartment building your neighbour is just on the other side of the wall, so be considerate of noise levels and disruptions. Keeping on friendly terms will benefit you both.