In 2009, a report was issued by the Land Tenure Committee advocating the introduction of a community titles system in Western Australia.
Community titles systems have been introduced in other states and are essential to enable the proper delivery of complex developments that combine different land uses.
A community titles system in Western Australia is now more important than ever given the complex precinct developments planned for Perth city. A community titles system would also encourage urban infill and higher density development in line with Western Australian planning policies.
This update gives a high level overview of the community titling system and details why a community titling system is a valuable development tool that can supplement green title and strata/survey-strata subdivision.
What are community titling arrangements?
Community schemes allow for a variety of land tenures to be included within one community scheme. This is achieved by the creation of “schemes within schemes”.
The community scheme and each scheme within the community scheme has its own management body (similar to a strata company) and by-laws.
A simple community scheme could, for instance, comprise a high rise strata titled apartment building and low rise survey-strata titled houses. The community scheme would include common property available for the use of all owners (being owners of houses and apartments). Such common property may include access roads, landscaped areas and recreational facilities (parks, playgrounds, golf courses etc). All owners would contribute towards the costs of maintaining this “scheme property” in proportion to their unit entitlement within the community scheme. The management body of the community scheme would be responsible for maintaining the scheme property and the use of scheme property would be regulated by the scheme by-laws.
Each subsidiary scheme may also have common property that may only be used by owners within that subsidiary scheme. For instance, apartment owners would have the exclusive right to use the lift and gym facilities within the apartment building and they would also be responsible for maintaining these facilities (in proportion to the unit entitlement of the strata scheme).
This example is very simple as there are only two subsidiary schemes within the community scheme. However, the proposed community titles legislation does not limit the number of schemes that may be created within a community scheme and also contemplates that vacant development lots may be created within a community scheme.
What are the benefits of community schemes?
Creation of common property for the community scheme
One of the principal benefits that we see with a community scheme is that it enables the effective sharing and management of common facilities between different land tenures. These different land tenures are linked by the overarching community scheme.
Currently, a strata titled apartment building and survey-strata houses could only be created by the registration of two separate schemes (being a strata scheme and a survey-strata scheme).
For common facilities to be available for the use of owners within both schemes, contractual arrangements would need to be entered into between the strata companies for each scheme. Difficulties in effectively documenting binding contractual arrangements may arise if the common facilities are to be shared by a large number of schemes or if the schemes are to be created by the developer in a staged manner.
For larger community schemes, owners can retain control of infrastructure and open space that would ordinarily be controlled initially by the developer and then handed over to the local government. This enables owners to ensure that infrastructure and open space within their community scheme is maintained to the standard desired by the owners and in accordance with any desired theme (such as a native bushland theme). It also reduces the developer’s costs given the developer is not required to maintain such infrastructure/open space for an initial period after the completion of the development but before handover to the local government.
Owners concerned to ensure the security of their community could also have the body corporate arrange regular security patrols within the community scheme at the cost of the owners (this would clearly be more feasible in larger community schemes).
Redevelopment within schemes
Completing staged strata titled developments is an onerous process for developers as the Strata Titles Act 1985 (WA), in effect, requires the developer to have finalised building plans for each stage at the commencement of the development. If the developer makes even minor amendments to its building plans for subsequent stages of the development, all owners (and other registered interest holders) in the strata scheme must consent to the creation of strata titles for those stages.
This leaves developers with very little flexibility to adapt development plans to changing market conditions and planning policies. As a result, it is often more prudent for developers to create a separate strata scheme for each stage of the development rather than undertake a staged development within a single strata scheme. This means that common property is not available to be shared between each strata scheme, absent complex contractual arrangements between the strata companies for the strata schemes which may be cumbersome to administer.
Community schemes will overcome these issues by affording the developer autonomy regarding subdivision of development lots created within the community scheme. Such certainty would significantly enhance the feasibility of staged high rise developments in Western Australia.
Cost sharing arrangements within schemes
By creating multiple schemes and separate management bodies for each scheme, community schemes allow for the efficient allocation of costs and regulation of uses within mixed use developments.
For instance, a high rise mixed use strata development could create separate subsidiary schemes for different levels of the building (for example retail, commercial, residential and short stay components within the building). At its simplest, this could allow for the efficient and equitable sharing of costs between a retail scheme, located on the ground floor, and a residential scheme, located on the floors above, by removing the lifts and gym area, used exclusively by the residential owners, from the subsidiary retail scheme. Although such arrangements can currently be effected within a strata scheme by drafting appropriate exclusive use and cost centre by-laws, the creation of two distinct subsidiary schemes with different management bodies provides for a simpler and more transparent method of regulating the uses of, and allocating costs within and between, the retail and residential schemes.
Lavan Legal comment
The development industry in Western Australia does not currently enjoy the flexibility afforded to other states by the availability of community schemes.
The introduction of community titles legislation in Western Australia should be a priority as it would give developers the opportunity to create larger and more innovative developments that allow for better linkages between different land uses.
Community titles schemes could benefit both high rise and flat land subdivisions. In particular, complex projects which contain different precincts, such as the Perth City Link and Elizabeth Quay, would likely have benefitted from the availability of a community titles system.
Unfortunately, the introduction of community titles legislation appears to be some way off. This is to the cost of efficient and innovative land development in Western Australia.
The introduction of a community titles system is still being explored and a further consultation paper fleshing out the issues associated with introducing a community titles system in Western Australia will likely be issued sometime this year. Lavan Legal looks forward to providing input into this consultation process.