Co-authored by Chloe Ferreira
As the property landscape in New South Wales continues to evolve, the government has introduced a major set of reforms aimed at enhancing the management, transparency, and accountability of strata schemes. With the Strata Schemes Legislation Amendment Act 2025 now in effect, property owners, investors, and other stakeholders need to be prepared for the changes that are impacting the management of their buildings and the rights and obligations of owners’ corporations.
If you’re involved in a strata scheme, it’s critical to understand the impact these reforms have on day-to-day operations. This article sets out a comprehensive overview of the key changes and emphasises the importance of seeking expert legal guidance to ensure your compliance with the new regulations.
Increased transparency and accountability in strata management
A major focus of the reforms is the drive for greater transparency and accountability within strata management. Since 1 July 2025, owners’ corporations and strata committees have been subject to more stringent governance requirements.
There are now enhanced reporting obligations for key strata documents, which must now be made available to all owners promptly after meetings.
Owners’ corporations are now required to provide:
- updated financial statements more promptly after meetings, so owners can see how funds are being managed;
- copies of the 10-year capital works fund plan, annual budgets, and quarterly financial statements; and
- minutes of all meetings, distributed within 14 days, ensuring owners remain informed and able to raise issues quickly.
These obligations aim to ensure all residents have a clearer understanding of how their strata scheme is being managed and the opportunity to voice any concerns or suggestions. In addition, new rules make it easier for owners to access important documents relating to building management, including contracts, budgets, and meeting minutes. These new rules include:
- strata documents must be kept in electronic form (unless impractical), making it easier for owners to request and receive records;
- a new 10-day time limit applies for strata managers or owners’ corporations to produce documents once requested, tightening the previous “reasonable period” standard; and
- certain documents (e.g. by-laws, insurance certificates, meeting minutes, financial statements) must be made available for electronic inspection.
These changes are designed to reduce conflicts and ensure decision-making processes are more transparent and inclusive.
Strata managers are also subject to tighter regulations, with new requirements surrounding their appointment including:
- mandatory disclosure of commissions and benefits received from third parties (e.g. insurers or contractors);
- new limits on contract terms, including:
- a maximum term of 3 years for initial strata management agreements (reduced from 10 years);
- rolling contracts limited to 12 months unless approved at a general meeting; and
- mandatory written agency agreements clearly defining services, fees, and termination rights.
This is particularly important for ensuring that owners’ corporations are not exposed to conflicts of interest and that decisions are made in the best interests of the owners’ corporation.
Strata debt recovery reforms
One of the most significant changes has been the overhaul of strata debt recovery procedures. Unpaid levies have long been a point of contention in strata communities, often leading to financial strain and legal disputes.
The 2025 reforms introduce notable changes, including:
- owners’ corporations must offer payment plans to owners with overdue payments before commencing legal recovery action. Payment plans can last up to 12 months and must be fair and reasonable;
- interest on unpaid levies is capped at 6% per annum, down from 10%, reducing the financial burden on owners experiencing hardship; and
- costs recoverable from owners for debt recovery proceedings are now limited to “reasonable” costs, preventing excessive legal charges.
These reforms aim to balance the financial stability of owners’ corporations with fairness towards those facing genuine hardship, providing clearer avenues to negotiate with the owners’ corporation, ensuring a more balanced and fair approach to debt management.
Changes to strata committee composition and governance
These reforms also bring about changes to how strata committees are composed and managed. From 1 July 2025, the eligibility criteria for committee members has expanded, allowing:
- banks or lenders that have taken over a property to nominate representatives;
- corporations or businesses that own lots to nominate directors or employees; and
- non-owner occupiers to stand for election in certain circumstances, where permitted by by-laws.
These changes aim to improve diversity and ensure committees better represent the community. There will also be a stronger emphasis on the professionalism of committees.
A statutory Code of Conduct for strata committee members imposes:
- clear duties to act in good faith and in the best interests of the owners’ corporation;
- requirements to avoid conflicts of interest and to disclose relevant personal interests; and
- prohibitions on using confidential information for personal gain.
For those looking to establish or reform their strata committee, it’s important to understand these new guidelines and ensure that the right individuals are appointed to help guide the scheme’s governance.
Enhanced insurance requirements for strata schemes
Strata schemes are now required to take out more comprehensive insurance policies, addressing the growing concerns about damage to common property, natural disasters, and public liability.
Strata schemes must now ensure:
- insurance policies cover the full replacement value of buildings and common property, including increased allowances for professional fees, demolition, and debris removal;
- policies adequately cover damage from natural disasters and extreme weather, reflecting the increased risk of bushfires, floods, and storms in NSW; and
- transparency in insurance commissions and premiums, with strata managers required to disclose commissions earned and provide owners with clearer information about insurance costs and coverage.
Previously, there were fewer requirements for detailed disclosure about insurance arrangements and commissions. The reforms now ensure owners have a better understanding of their cover and costs, enabling more informed decision-making.
Regulations for short-term rentals in strata schemes
As the rise of short-term rentals continues, the reforms introduce new regulations specifically targeting the practice within strata buildings. Since 1 July 2025:
- owners must seek approval from the owners’ corporation via a general meeting before they can list their property on short-term rental platforms like Airbnb or Stayz if:
- the property is not their principal place of residence; or
- the owners’ corporation has adopted by-laws restricting short-term letting;
- strata schemes can also pass by-laws imposing:
- limits on the number of days per year a lot may be let;
- requirements for registration of short-term letting arrangements; and
- conditions to address safety, security, and amenity impacts.
The new rules are designed to address concerns about the impact of short-term rentals on the community, including issues related to safety, security, and building amenity. The reforms aim to balance the rights of property owners with the interests of other residents by introducing a more structured approach to the approval of short-term letting within strata schemes.
This shift requires careful management by owners’ corporations, and it’s crucial for property managers to be aware of these new regulations in order to avoid potential disputes.
Further changes expected later in 2025
While the initial stages of reform are already in effect, additional changes are expected to be implemented later in 2025. These include stronger obligations for owners’ corporations to maintain and repair common property, as well as improved strata committee governance requirements. Further measures will also be introduced to assist owners in financial hardship and ensure developer accountability for new strata schemes.
One of the more notable future changes will be a push towards improving building manager conduct requirements, and additional disclosure requirements regarding private utility networks linked to the purchase. These changes will continue to shape the strata landscape and require proactive management by owners’ corporations to remain compliant and prepared for the evolving regulatory environment.
What does this mean for you?
The strata reforms are reshaping the way strata schemes are governed and managed in NSW. Property owners, investors, and developers must take action to ensure that their schemes comply with the new laws. Failure to do so could lead to unnecessary disputes, legal challenges, and financial penalties.
As the strata landscape evolves, it’s crucial to understand how these changes are impacting the day-to-day management of your property, from financial management and debt recovery to insurance obligations and short-term rentals.
Whether you’re seeking assistance with navigating the new reforms, managing strata disputes, or exploring strategic opportunities in the strata sector, we’re here to help. To find out more about how these reforms could affect you, or if you have any questions about strata law, please contact Coleman Greig’s Property Law team today.
