Concerns Canberra strata laws inadequate for mixed-use precincts

The ACT’s “one-size-fits-all” approach to strata legislation is inadequate for Canberra’s mixed-use precincts and discouraging investment in the territory, property and legal experts say.

The inflexibility of the legislation convinced Coles Vintage Cellars to pull out of a significant lease at the Kingston Foreshore because it did not want to be part of a body corporate.

Strata Community ACT president Chris Miller said problems arose because current legislation placed residents and businesses under one body corporate, forcing them to share costs and abide by the same rules, despite using a building in very different ways.

“Currently, we have residential owners contributing to the cost of cleaning commercial foyers and outdoor eating areas as well as commercial water consumption, which is a burden that should rightly sit with the commercial property owners,” Mr Miller said.

“Similarly, the commercial owners are paying for the upkeep of pools and lifts that they have no use for.”

Developer Englobo Group is behind several Kingston Foreshore projects, including the new Element building.

Englobo director John Susa said the legislation wasn’t designed for the complex, mixed-use strata developments being built in Canberra.

He said a mixed-use building at the Kingston Foreshore was subject to the same laws as a small strata duplex in the outer suburbs.

“They are very simplistic and address the most basic of issues with no consideration of mixed building uses,” Mr Susa said.

“Changes can be made to the default bylaws. However as the hurdles for making these changes are so high, it is almost impossible. Consequently, owners’ corporations are left with the default rules to manage these complex buildings.”

Mr Miller said NSW, Victoria and Queensland had developed models that catered to the mixed nature of these developments.

Stratum subdivision allows developers to create separate titles for residential and commercial units.

Mr Miller said several significant projects that contemplated stratum subdivision had recently been lodged for development approval in anticipation of potential law changes.

“The ACT government has been reviewing options to accommodate a better model,” Mr Miller said.

“There is growing consensus in the legal community that changes are required as our market matures, particularly in response to large projects such as the arts precinct in Kingston, City to the Lake, Campbell 5 and [the] Northbourne corridor.”

Moulis Legal senior lawyer Lauren Gray said the legal framework surrounding ACT strata buildings needed to be addressed.

She said any legislation reform should address the costs of running a mixed-use precinct, as well as the rules that governed it.

“The ACT doesn’t really allow much flexibility for developers to set the ground rules for how the precinct will work,” Ms Gray said.

“If there was a management statement in place from the outset, it would deal with how those complaints would be handled and resolved.

“[The legislation] doesn’t recognise that different parts of the building will have different uses, needs or operational times. Having that clarity at the start would help manage disputes later on.”

Ms Gray said changes to the legal framework would help boost investment and development in the capital.

“It’s hard enough for our private residential developers in Canberra to get their head around, and these developers are used to the system,” Ms Gray said.

“When you get your large, interstate developers and investors wanting to put money into Canberra’s buildings and developments and they come across this framework, it’s a big discouragement.”

Land Development Agency deputy chief executive Ben Ponton said the government was aware of the concerns regarding the ACT strata laws and was “conducting preliminary scoping and planning work with a view to potentially initiating a suitable reform program”.

Mr Ponton said the government was studying recent strata reform programs in NSW and Western Australia and considering the reforms that might work in the ACT.

“Any reform program the government may establish will involve considerable community and industry engagement,” Mr Ponton said.

“This will ensure we get a model that suits Canberra and takes into account views across our community. We want to ensure that any potential reforms are done properly, so that Canberra can be both an innovative and a liveable city into the future.”