The strata industry is growing. In NSW each year, newer and complex developments are added to the housing market. According to research by the University of New South Wales, it is the ‘fastest growing form of residential property ownership in Australia with forecasting seeing half new dwellings in metropolitan areas over the next decade being strata titled’. Strata is important for any startup looking to engage with the residential property market. In particular, it is highly relevant to greentech startups. This article will explain what greentech is, the state of the strata market, the legal reforms impacting greentechs, and how greentechs can get involved.

What is Greentech?

Greentech is the short form of ‘green technology’. Startups involved in greentech are those building environmentally friendly and technology-enabled products, services and processes designed to limit the adverse impact of humans. Some common examples might include wind turbines or waste management systems.

The State of the Market

In NSW, the growth of the strata market will be accelerated by large-scale strata law reform. In November this year, the strata laws will change, making it easier for new startups to get a foothold in the market. The new laws include a raft of changes that enhance voting, boost transparency and encourage owners to understand and leverage their investments.

If you’re a greentech startup, these reforms provide a fresh platform to talk about holistic, sustainable tech solutions that can be applied to new and existing developments.

For greentechs looking for a large slice of the pie, the focus should be on existing developments. While significant developers such as Mirvac and Lend Lease have turned their attention to larger new developments to provide solar, water conservation and more sustainable designs, few players are looking at pre-existing schemes. Those players are primarily focused on solar and the ability to lean on government rebate schemes to make the installation of solar cost effective for owners.

The strata market is ripe for disruption. Below we examine some of the key changes to the laws and explore how greentechs can exploit the opportunities those reforms create.

A Closer Look at the Changes

The following six legal reforms provide opportunities for greentechs:

  1. Voting Flexibility;
  2. Requirements on Strata Managers;
  3. Tenant Meetings;
  4. New Obligations on Strata Committees;
  5. Minor Works Approval;
  6. New Termination Provisions

1. Voting Flexibility

The new laws change the way strata schemes can vote. They open the door to electronic voting and in many ways allow schemes to self-regulate how owners vote. The new laws mean it is now acceptable to vote online and transmit meeting agendas electronically.

While the ability to vote electronically has been around for a while, voting for general meetings could only happen in person or by proxy.

Further, the papers for the meeting had to be sent by post, which, in today’s market is a real barrier to communication. Relying on these methods meant relying on the strata manager or owners to explain your concept.

These hurdles have been a natural deterrent for startups looking to tap into the industry. The reforms sit naturally with greentech startups, who will be able to convey their brand and technical solutions digitally.

2. Requirements on Strata Managers

Strata managers will be required to inform owners when their management agreement is coming to the end of its term.

The management agreement sets out the role of the strata manager, and what powers they have to make decisions on behalf of the owners. This reform is important for greentech startups for a number of reasons:

Firstly, this change will impose greater transparency and communication between greentechs and strata managers. As greentechs need to foster positive relationships with strata managers to be successful, this is highly relevant.

Secondly, these reforms make the strata management market more competitive. Strata managers will consequently need to provide a stronger value proposition. It provides an ample opportunity for greentechs to deflect scrutiny by offering solutions that foster cost savings, sustainability and community engagement within strata schemes.

However, greentechs should not only rely on managers alone. A good product needs to drive community engagement. That means appealing to all players within schemes, earning their trust, respect and votes.

3. Tenant Meetings

The new laws enable tenants to meet and discuss things that are happening on the ground in a given scheme.

Although tenants are not granted voting rights to affect the strata scheme, these meetings provide an essential feedback loop for greentech startups.

Tenant meetings are an essential tool for greentech startups who now have direct access to tenants. Involving tenants is a great way to stir up the support of a business proposition. It may also result in contributions by tenants to green solutions for their building that directly impact them.

4. New Obligations on Strata Committees

The act has changed the language and obligations for committees. Executive committees will now be called strata committees and importantly, will need to act in the best interests of the owner’s corporation with due care and diligence when carrying out their functions.

These new obligations add scrutiny to the behaviour of the committee and the decisions it makes for the scheme. A committee will now be called to consider the future of the scheme and the improvements it invests in.

A targeted green solution can use these provisions as a springboard to discussions with committees, and can use the language of the new laws to add gravitas to the need for competent innovations.

5. Minor Works Approval

Previously, all renovations that altered, added to or erected a new structure on the common property required a by-law. A by-law is a contract between the owner and the strata scheme. It permits owners to alter the common property in situations such as a renovation.

Alterations often required a special resolution. Special resolutions are complex procedures – to be successful they first require a majority (over 50%) vote and a no vote of less than 25%.

The new laws have simplified this process to include certain works (such as some small renovations) as minor works. Minor works only require a majority vote of the owners at a general meeting. Certain tech solutions may fall into this category of works making it easier for startups to get approval for their products.

6. New Termination Provisions

The new Strata Schemes Development Act introduces the ability for owners to sell or redevelop their strata scheme without the unanimous approval of the owners. Greentechs can use this process to provide holistic innovation solutions to strata schemes that have a better chance of receiving voting approval and going ahead.

Aren’t Strata Schemes Notoriously Costs Adverse?

Although strata schemes can be cost adverse, it is not a barrier to entry nor a reason to quit on your startup.

It is often difficult to convince strata schemes (especially small schemes) to spend money upgrading things. However, with higher risk comes higher reward. The strata market is an industry with few players, ready and able to reform, and has the potential to be a lucrative market.

Schemes will initially want to see the benefit for them, not necessarily the environment. Greentech has the potential to:

  • Reduce costs on utilities
  • Place the strata scheme at the forefront of technological innovations;
  • Boost investments; and
  • Reduce tax payments.

You could be on to a winner.

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Strata is a niche area of law. At LegalVision, our strata and startup lawyers can help you navigate the essential concepts in the new laws. If you have any questions, get in touch on 1300 544 755.

Paul Loccisano

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