Community Titles Schemes

Transcription

1 Planning Institute of Australia STRATA TITLE REFORM BREAKFAST Community Titles Schemes Opportunities and Challenges By Gary Bugden

2 Overview 1. Opportunities 2. Challenges 3. Some specific issues One Act or Multiple Acts The fit between leasehold and freehold Commercial components and strata companies Long term contracts Developer controlled infrastructure Dedication of roads 4. Summing up

3 Opportunities and Challenges They are similar in horizontal (master planned community) and vertical (high rise) projects.

4 Opportunities To create a controlled real estate environment To create communities rather than subdivisions To share private infrastructure Recreational facilities (pools, tennis courts, Club) Services (security, solar energy, communications) To better manage mixed uses

5 Challenges Title, subdivision and management structuring skills Getting the balance right in mixed uses Entitlements to use common areas Cost sharing Internal regulatory environment Facilitating the creation of community Sympathetic laws The right facilities (hard and soft) Governance and management focus

6 Challenges (continued) Facilitating staged development Allowing the developer sufficient flexibility Protecting the early purchasers (use, density, etc.) Ensuring promises are kept (swimming pool, Club) Political ideology (e.g. elite enclaves) Local government rating policy

7 Some specific issues 1. One Act or Multiple Acts 2. The fit between leasehold and freehold 3. Commercial components and strata companies 4. Long term contracts 5. Developer controlled infrastructure 6. Dedication of roads

8 One Act or Multiple Acts Mixing strata subdivision and community subdivision Mixing strata management and community management Mixing freehold and leasehold Subdivision Management Mixing all of the above Relevance issue Levels of use

9 Leasehold and Freehold The 2 can be in the one Act Differences can be dealt with in the definitions Need for some dedicated sections to deal with leasehold specifics Strata Schemes Development Act 2015 (NSW) and Strata Schemes Management Act 2015 (NSW) are good examples Difficult to mix in the same scheme

10 Commercial Components and Strata Companies General rule keep commercial components outside a strata company The two don t mix well Institutional buyers don t like mixed use strata (strata is a domestic environment) Determining factor is the size of the commercial component There are ways to address the problem

11 Commercial and Strata Companies Options to address the inevitable conflict Volumetric subdivision with Building Management Statement (statutory contract) Limited common property Singapore model (involves a strata company) US model (contractual environment within the by-laws) 2 or 3 tier strata company structure

12 Burj Khalifa Volumetric/BMS Example 163 Floors 829.8m high Burj Khalifa Building Management Group (BMG) Building Management Statement (BMS) Armani Hotel Owner The Club Owner At The Top Owner The Corporate Suites Owners Association External Component Owner The Residences Owners Association At.Mosphere Owner Armani Residences Owners Association Children s Pavillion Owner The Offices Owner Broadcasting Owner Declaration and Constitution Declaration and Constitution Declaration and Constitution Owners Owners Owners

13 Long Term Contracts Great for developers Owner s don t like them There are situations when they are appropriate (up to 25 years) They are difficult to draft They get out of step with the building Source of disputes Queensland has serious issues

14 Developer Controlled Infrastructure Almost the norm in developing countries driven by the absence of infrastructure Becoming more common in larger Australian projects - driven by the cost and complexity of the infrastructure (e.g. embedded solar; trigeneration; grey water recycling, etc.) Key issues Monopoly supplier/pricing Priority supply Step-in arrangements

15 Dedication of Roads Essential where community is gated Some issues Maintenance of road and in-road services is a consideration (standards) Cost differential between private and public Surfacing restrictions (e.g. paving) Legal liability for private roads Use of carts and personal conveyors Common solution only dedicate to the curb Insurance is a practical solution to liability

16 Summing Up The key mechanisms are right Freehold and leasehold Strata and community titles Tiered strata companies Anticipate problems with some mixed use projects pressure for Volumetric/Building Management Statement or limited common property capability The way the mechanisms are used will be critical Two must haves for the future Focus on building community Electronic communications, voting and dealings

17 THANK YOU Good luck with your new legislation By Gary Bugden