Major Strata Law Changes Coming to NSW from 27 October 2025

From 27 October 2025, significant reforms to NSW strata laws will take effect. These changes are designed to strengthen compliance, support owners in financial hardship, and clarify the role of building managers. If you are part of a strata scheme, it is important to understand what is changing and how it may affect you.

Stronger compliance powers for repairs and maintenance

NSW Fair Trading will gain new investigative and enforcement powers to ensure owners corporations meet their legal duty to repair and maintain common property.

Fair Trading will be able to:

• Require documents and answers
• Record conversations and make records
• Enter premises to investigate potential breaches

If a breach is found, Fair Trading can:

• Seek an enforceable undertaking. A formal commitment to fix issues
• Issue compliance notices that require specific actions such as repairs or the use of licensed trades
• Issue penalty infringement notices for breaches
• Apply to the Tribunal for orders, including the compulsory appointment of a strata managing agent
• Initiate prosecution in court where it serves the public interest

What schemes need to do

• Review common property maintenance against your duty to repair and maintain
• Use the Strata Building Health Check to identify and prioritise issues
• Ensure your records, invoices, and maintenance logs are up to date and accessible

Supporting owners in financial hardship

From 27 October 2025, all levy notices must include a Financial Hardship Information Statement with contact details for the National Debt Helpline, a free and independent financial counselling service.

What schemes need to do

• Include the Financial Hardship Information Statement with all levy notices from 27 October 2025
• Consider adopting the statement earlier to support owners sooner
• Ensure strata committees and managing agents understand the process for assisting owners in hardship

Standardised payment plans for overdue levies

Owners who wish to enter into a payment plan must use the new Request for a Payment Plan for Overdue Contributions standard form.

Key points:

• Plans can run for up to 12 months. A new plan can be agreed after the previous plan ends
• Owners corporations must consider requests and cannot pass blanket resolutions refusing all plans
• No fees can be charged for requesting, starting, or continuing a plan
• A written response is required within 28 days
• If refused, written reasons must be provided that address the owner’s request

About refusals:

• A request can be reasonably refused if the plan would leave the capital works fund or administrative fund with insufficient funds. For example:
  • The fund would be in deficit
  • There would not be enough money to repair and maintain common property
  • There would not be enough money to pay expenses
  • There would not be enough money to comply with an enforceable undertaking, a Fair Trading compliance notice, or another order

If an owner believes a refusal was not reasonable:

• The owner can apply to NSW Fair Trading for mediation
• The owner can apply to the Tribunal for an order
• If the Tribunal finds the refusal was unreasonable, the owners corporation must agree to a payment plan

Other changes:

• Repayments under a plan must be applied in this order unless otherwise specified by a Court, Tribunal, or the owner: overdue levies by due date, then interest, then recovery costs
• Action to recover overdue levies cannot proceed while a valid plan is in place and being followed
• If recovery action will be taken, the owner must receive at least 30 days’ notice

What schemes need to do

• Download and share the standard request form with owners who need it
• Update internal processes to meet the 28 day response requirement
• Train the treasurer and managing agent on repayment allocation rules and recovery restrictions

Clarifying the role and new duties of building managers

Legal definition of building managers (Section 66)

Under the Strata Schemes Management Act 2015, a building manager is legally defined as:

“A building manager is a person who assists in exercising any one or more of the following functions of the owners corporation— (a) managing common property, (b) controlling the use of common property by persons other than the owners and occupiers of lots, (c) maintaining and repairing common property.”

However, the Act specifically excludes certain people from being classified as building managers:

“A person is not a building manager if the person exercises those functions only on a voluntary or casual basis or as a member of the strata committee.”

This clarification means that service providers such as electricians, gardeners, cleaners, or plumbers are not building managers if they only perform specific repairs or maintenance and do not manage or control common property under a building manager agreement.

The legislation also confirms that:

• A person may be both a building manager and an on-site residential property manager
• A building manager may be entitled to exclusive possession of a lot or common property in the strata scheme
• The title doesn’t matter - whether called “building manager”, “caretaker”, “resident manager” or any other title, if they meet the definition above, they are legally considered a building manager

Appointment and terms (Sections 67-68)

Building manager appointments must be made through a formal process:

For new schemes: The original owner can execute a building manager agreement before the strata scheme commences.

For existing schemes: Appointments require “a resolution passed at a general meeting of the owners corporation of the strata scheme”.

Agreement terms: All building manager agreements have specific expiry rules:

• If executed before the first annual general meeting: expires “at the conclusion of the first annual general meeting”
• All other agreements: expire “when 10 years have expired after it commenced to authorise the building manager to act under it”

The Act allows for reappointment at the end of an agreement and termination “in accordance with the building manager agreement, if authorised by a resolution at a general meeting of the owners corporation”.

Functions and limitations (Section 70)

Under the legislation, building managers have specific functional boundaries:

“A building manager may, in accordance with the building manager agreement appointing the building manager, assist in exercising one or more of the functions of the owners corporation of managing and controlling the use of common property (otherwise than by the owners or occupiers of lots) and of maintaining and repairing common property.”

Importantly, the Act preserves the owners corporation’s authority:

“However, the owners corporation may continue to exercise all or any of those functions, subject to the building manager agreement.”

The Act also clarifies that:

“A person is not a strata managing agent for the purposes of this or any other Act only because the person is a building manager acting in accordance with a building manager agreement.”

Transfer of building manager functions (Section 69)

Building managers can transfer their role, but with strict conditions:

“A building manager may transfer his or her functions as a building manager to another person, but only if the transfer is authorised by a resolution at a general meeting of the owners corporation.”

When a transfer occurs:

• The new person is automatically considered appointed under the original building manager agreement
• The appointment term ends on the same date as the original building manager’s term would have ended

New duties for building managers

A person appointed as a building manager must:

• Act in the owners corporation’s best interest unless doing so would be unlawful
• Act promptly and with due diligence to:
  • Bring attention to maintenance, repair, or safety issues with common property that they are aware of or ought to be aware of
  • Propose how identified issues should be addressed, including both short term and long term solutions
• Give written notice of benefits and connections when recommending contracts for goods or services
  • Include who will provide any benefit and the value or method of calculating it
  • Disclose any connection with a proposed supplier and the nature of the relationship
• Disclose promptly any relationships and financial interests
  • Connections with suppliers or the original owner
  • Any direct or indirect financial interest in the scheme, with the nature of that interest

Mandatory disclosure requirements (Section 71)

The Act sets out strict disclosure requirements with significant penalties for non-compliance. Any person appointed as a building manager must disclose specific interests to the owners corporation before appointment.

Penalty for non-disclosure:

• For a corporation: 500 penalty units
• For individuals: 100 penalty units

Required disclosures include:

“(a) that the person is connected with the original owner, (b) any direct or indirect pecuniary interest in the strata scheme (other than an interest arising only from the prospective appointment), (c) that the person is connected with another person (the supplier) who routinely supplies goods or services for other strata schemes for which the person is the strata managing agent, (d) that the person gave advice, whether under a formal contract or not, to the original owner during the previous 2 years about the strata plan or another strata plan or a community plan, (e) another interest prescribed by the regulations.”

Disclosure requirements:

• Must be made in writing
• For supplier connections, must include details about the relationship and the goods/services provided

Rules for building manager candidates

A candidate for building manager must give written notice if they may receive any benefit that affects their fees. Examples include referral fees or commissions from suppliers they propose to use. This helps owners compare candidates more fairly.

Tribunal powers to terminate or vary agreements (Section 72)

The Tribunal has extensive powers to deal with problematic building manager agreements. Upon application by an owners corporation, the Tribunal may make the following orders:

“(a) an order terminating the agreement, (b) an order requiring the payment of compensation to a party to the agreement, (c) an order varying the term, or varying or declaring void any of the conditions, of the agreement, (d) an order that a party to the agreement take any action or not take any action under the agreement, (e) an order dismissing the application.”

Document return requirement: If the Tribunal terminates an agreement, it may also order the building manager to return all documents and records relating to the strata scheme within a specified period.

Grounds for Tribunal orders:

The Tribunal may act on any of the following grounds:

“(a) that the strata managing agent or building manager has refused or failed to perform the agreement or has performed it unsatisfactorily, (b) that charges payable by the owners corporation under the agreement are unfair, (c) that the strata managing agent has contravened section 57(2), (d) that the strata managing agent has failed to disclose commissions or training services (including estimated commissions or value of training services or variations and explanations for variations) in accordance with section 60 or has failed to make the disclosures in good faith, (e) that the strata managing agent or building manager has failed to disclose an interest under section 71, (f) that the agreement is, in the circumstances of the case, otherwise harsh, oppressive, unconscionable or unreasonable.”

From 27 October 2025, owners corporations will have additional grounds to seek Tribunal orders where the manager has acted unlawfully. This ground also applies to strata management agreements for strata managing agents.

What schemes need to do

• Confirm current building managers understand their new duties and disclosure requirements
• Update procurement templates to require disclosures of benefits and connections
• For upcoming tenders, require candidates to declare any benefits affecting their fees

What this means for strata schemes

These reforms improve transparency, fairness, and accountability. Stronger enforcement will help ensure timely maintenance of common property. Standardised payment plans and hardship information support owners to manage levies. Clearer building manager duties set expectations for proactive maintenance, disclosure, and governance.

Now is the time to prepare

• Review maintenance programs and records
• Update levy notice templates to include the hardship statement
• Adopt the standard payment plan request form and update response workflows
• Brief building managers and update tender and contract templates

At Onsite, we help strata managers and committees stay on top of compliance, communication, and maintenance. With the new rules commencing on 27 October 2025, we can help your scheme get ready and stay compliant.