The landscape of levy collection in New South Wales is set for a significant transformation, with a number of changes to practice and procedures in 2025. These changes are due to amendments made to the Strata Schemes Management Act 2015.

Here is a summary of the key 9 changes:

1. A levy notice will now need to be accompanied by the information approved by the Commissioner for Fair Trading.  There is no such information as yet.

2. A strata manager or strata committee will now be able to approve a payment plan for payment of overdue levies with an owner.  A resolution at a general meeting to approve a payment plan with a specific owner will no longer be necessary.

3. An owners corporation will be entitled to reject a request made by an owner for a payment plan for overdue levies but it will need to have a reasonable basis for doing so.  An owner will be entitled to apply to NCAT for an order forcing the owners corporation to agree to the owner’s request for a payment plan if NCAT considers the rejection of the plan by the owners corporation was unreasonable.

4. The strata regulations may contain guidance on what constitutes a reasonable refusal of a payment plan by an owners corporation.  But it is not clear whether and, if so, when, those regulations will be written.

5. The strata regulations may also prescribe the requirements for payment plans including what a payment plan needs to contain.  But again, it is not clear whether and, if so, when, those regulations will be written.

6. An owners corporation will not be able to sue an owner for levy arrears if the arrears are being dealt with under a payment plan that is being complied with by the owner.

7. An owners corporation will only be able to take legal action to recover interest on overdue levies and levy recovery expenses if the owners corporation offers the owner in arrears the option of entering into a payment plan and NCAT or a Court awards the interest and costs.

8. An owners corporation will now need to give a 30 day notice (rather than a 21 day notice) to an owner who is in levy arrears before being able to take legal action against the owner to recover the levy arrears.

9. Payments made by an owner in levy arrears will now need to be applied firstly to overdue levies in order of due date, then to interest and then to levy recovery expenses but only where those expenses are ordered to be paid by NCAT or a Court.  This rule will not apply where the owner in arrears specifies how payments must be applied or a Court or NCAT has made an order specifying how those payments should be applied.

Key Actions: Preparing for Levy Collection Changes

Audit current levy collection policies for compliance with new requirements on notices and payment plans.

• Develop clear internal guidelines for assessing and approving payment plan requests to avoid disputes.
• Train strata committees and managers on their new authority for payment plan approvals and updated debt recovery notice periods.
• Monitor for new Strata Regulations that will offer further guidance on payment plans.
• Seek expert legal advice to ensure full compliance and effective strategy in the new environment.

By acting now, owners corporations can prepare now and ensure a smooth transition and minimise legal challenges under the updated legislation.