Strata buildings are ready for re-development

Strata buildings are ready for re-development

June 2018
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Strata buildings are ready for re-development

“There’s plenty of small strata buildings, they just need to be redeveloped. We’ve experienced a massive uptick in that type of work in the last 12-months. The legislation is set up in a way that promotes redevelopment. Essentially you need a proposal to be put forward and it could be a collective sale, or it could be a redevelopment.” - Duane Keighran.

At our recent industry event, Duane Keighran of Colin Biggers & Paisley talked about his experiences redeveloping strata-titled buildings. Australia has seen an increase in their availability for redevelopment and here we discuss why this is and what to be aware of when dealing with a strata title.


What is Strata?

The concept of strata was first used in NSW around 50 years ago, since then it has spread across Australia and overseas. A strata-title is known as a community-title in Queensland.

Strata allows for individual ownership of a part of a property called ‘lots’; generally apartments, townhouses or unit. Individuals also share ownership of common grounds upon which the lot is situated; foyers, driveways, gardens etc.).

The concept is important as prior to strata agreements, the co-ownership agreements of the land did not confer the individual ownership of the lots. Essentially this made it difficult for banks and building societies to approve loans, with interest rates generally offered at much higher than houses.


Legislation in favour of redevelopment

Duane Keighran’s comment at the Development Ready industry event, regarding strata-scheme legislation that is set-up to promote re-development, is specific to NSW legislation.

Prior to the Strata Schemes Development Act 2015 (SSD), if you were the owner of a lot within a Strata Scheme in NSW you could not be forced to sell that lot.

Now, if a minimum of 75% of the appropriate lots vote in favour of a proposal for sale, those who do not concede may be forced to sell regardless.

Queensland are in the process of adopting similar legislation. The Queensland University of Technology has put forward amendment proposals that the state Government now has open for review.

In Victoria, there is no forced sale provision that would force a lot owner to sell their own lot. The Victorian Government is likely to revisit this subject later in 2018 as it reviews significant changes to the Owners Corporation Act.



Under the SSD Act, an owner who doesn’t wish to sell within a strata scheme where they sit within a 25% minority, may be forced to sell and is regarded as a dissenting owner. The SSD Act stipulates a ‘compensation value of the property’ that the developer/purchaser must pay.

The value can be defined by referencing the Land Acquisition (Just Terms Compensation) Act 1991. This acts as a guide and covers the market value for their lot plus an amount to cover any loss caused by the disturbance. This includes legal and valuation costs and moving costs, as well as compensation for stamp duty.


Negotiators will triumph

When dealing with a collective sale or redevelopment of a strata title, legislation is turning in favour of developers.

Keighran and his team at Colin Biggers & Paisley have noticed that there are opportunities for developers to rejuvenate weathered strata properties. In this instance a strata scheme might consider to collectively sell rather than pay for extensive repairs if their building is old and requires it.

When developers go knocking, it is important that they approach the strata title members with educated and fair prices for the proposed lots.

*NOTE: This article is not a definitive assessment as to the overall state of the market, but should serve as a guide to highlight how respective sectors of the property market are dealing with change

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