SOS-homes: Save Our Strata Homes

Draft changes to NSW strata law will:

•    remove security of tenure from all NSW strata apartment owners 

•    lead to massive forced sales and eviction of strata home-owners 

•    cause widespread social dislocation and tear communities apart

•    force strata home-owners into the rental market

•    remove affordable housing from NSW •   

•    affect thousands of strata schemes in NSW •   

•    sell out NSW housing stock to developers

Under draft legislation due to come before the New South Wales Parliament  (Strata Schemes Development Bill 2015), if 75% of owners in a strata block want to sell the block to a developer, the remaining owners will be forced to sell. Currently 100% of strata lot owners have to agree to any replacement and redevelopment. The proposed legislation would remove security of tenure from every strata owner in New South Wales.

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See the details of the proposed reform here: http://www.fairtrading.nsw.gov.au/ftw/About_us/Have_your_say/Review_strata_community_scheme_laws/Collective_sale_and_renewal_reforms.page

If this reform is passed, it will lead to compulsory evictions of a huge number of homeowners in New South Wales.  This would wreak havoc on people's lives and tear apart communities, with the devastation particularly hitting less wealthy members of the community who cannot afford to buy freestanding houses.   Under the proposed legislation, an owners’ corporation would not need to demonstrate that a strata building is old or poorly maintained in order to force a sale. The only requirement would be an agreement of 75% of the owners.

One strata owner-occupier says: "Like many owner-occupiers of a strata unit in NSW, I have spent most of my working life trying to pay off my mortgage in a block of 12 units with one majority owner.  If this proposed legislation is passed, I will lose my home. I don't believe the compensation I receive will allow me to buy back into the out-of-control housing market and I don't have funds to pay stamp duty on a new purchase. I am devastated by the idea of being forced back into the runaway market or being thrown out into rental accommodation.  I and thousands of strata unit owners stand to lose everything we have worked for solely to line the pockets of developers. I believe that the people of NSW have to stand up and fight this legislation to save our homes. If we don't, we will see our State sold out  to developers and we will be reduced to pawns in the hands of big business and government."

Sign the petition to demand that the NSW State Government strikes down this amendment now and that the opposition parties work together to block this amendment.  

State Government policies are driving ever-increasing urban consolidation and more and more people in New South Wales live in strata apartments. This is the future of our cities. A home purchase is the largest commitment most people will ever make in their lives and many people work their whole lives to pay off their mortgage. Why should a strata owner have less security of tenure for this investment than the owner of a freestanding house?  

How can land tenure be changed retrospectively? Every existing strata owner in New South Wales bought into a strata block with their security of tenure guaranteed by the existing legislation. To take this security away retrospectively is an attack on all community values of fairness, equity, decency and the rule of law. This proposed legislation attacks every core value of Australian life. If the proposed legislation is brought into law, this will destroy the social fabric of Australian life as we have known it.  

Sign the petition to let the NSW Government know that this proposed assault on the basic rights of residents is unconscionable and must be struck down.

How would this proposed legislation affect you?  

Any scenario you care to imagine leads to lives torn apart. A huge number of people who have spent their working lives to buy into the Australian dream will suddenly find they have been sold out to greedy developers. Scenario 1: A young couple, first-home buyers, spent years saving their deposit and finally bought an apartment in 2015. Nine months later, the owners’ corporation votes to sell the block, despite the objection of 25% of owners. This young couple are now forced back into rental accommodation. It will take them another 3 years to save the stamp duty to buy another apartment, but in the meantime the prices keep rising and they watch their goal slip away.  

Scenario 2: An elderly widow is determined to live independently in her own  home for as long as possible. Thrown out of her home by a forced sale, agreed by 75% of her strata owners’ corporation, she sees everything they worked for crumble around her. On a fixed income there is no way she can save money to pay stamp duty to buy another unit. Frail and vulnerable, she cannot throw herself into the frenzy of the competitive housing market and is driven into an aged care facility far away from family and her established community.

Scenario 3: A middle-aged couple, empty nesters, decided to downsize and move out of the family home into a smaller apartment. Six months later, the owners’ corporation sells their new apartment out from under them and they find themselves in rented accommodation for the first time in decades. After one year of struggling through auction after auction, they finally decide to buy a much smaller unit. Six months after that purchase, once again they face compulsory eviction by a sale to a developer.  What do they do now? They already spent the small nest-egg they had put away on stamp duty for the second apartment. What options do they have?  

Why? Who benefits? What would this reform serve? How would the community benefit from the proposed scheme? Why would a government cut away the rights of a vast number of home-owners of NSW with such an assault? The State government argues that this reform is good for NSW as it will lead to renewal of ageing housing stock. In fact, this reform would net massive profits for developers at the expense of ordinary home owners and massive social dislocation. The burden of this reform will fall disproportionately on home-owners in lower socio-economic groups, young families and the elderly.  

The State Government has no mandate to make such a devastating change to property law in NSW. This legislation was due to come before parliament in 2014. At a time when ICAC was exposing widespread corruption in the Liberal Party by politicians funded by developers, the Baird government delayed the reforms until after the state election. See Property Observer’s analysis of how the State Government’s reform serves the interests of developers: http://www.propertyobserver.com.au/forward-planning/investment-strategy/politics-and-policy/31068-corrupt-influence-backdrop-ought-stall-nsw-strata-and-planning-initiatives.html 

What would this mean in practice? First home-owners would be driven out of the market: Older, cheaper housing stock is often the only option for first-home buyers entering the market. This reform would replace affordable housing stock with new apartment blocks out of reach of first-home buyers.

The reform would transfer the bulk of strata apartments from owner-occupiers to investors.  If a large number of owner-occupiers are forced out of their homes and demolition of existing stock increases dramatically, pressure on an already out-of-control housing market will inevitably increase prices and make it even harder to buy into the market. Compensation for those forcibly evicted would not necessarily allow them to buy into a rising market.  

A large percentage of NSW housing would be lost to foreign ownership: Under Australian law overseas investors are not permitted to buy existing Australian housing stock, but they can buy a new dwelling. Wide-scale demolition of existing housing stock and its replacement by new buildings would open up a huge swathe of housing stock that is currently protected from international buyers.  This would sell out NSW housing to foreign investors.

 What would the legislative change mean for the rental market? As owners displaced by forced evictions scramble to find housing, pressure on an already tight market will increase, forcing prices to rise. As older apartment blocks are torn down and replaced with new apartments, landlords will demand higher rents and affordable housing will vanish from our cities and towns. Homelessness, already at crisis levels in our cities, will increase.  

If NSW falls, other states will follow If the NSW government succumbs to the pressure of the property developers’ lobby and passes this clause in the legislation, other states will surely follow in their footsteps. This is not just an issue for residents of New South Wales.  

Sign the petition to demand that the NSW government strikes out the collective sale and renewal reform from the proposed legislation. Demand that strata owners retain security of tenure for their apartments.