Introduction
In 2025, New South Wales (NSW) is introducing significant strata law reforms through the Strata Schemes Legislation Amendment Act 2025 (NSW), which will be rolled out in stages. A major focus of these key changes is to establish new protections for strata owners experiencing financial hardship, creating a more balanced and fair approach to strata levy recovery.
These changes to strata laws introduce new rights for owners and revised obligations for owners corporations and strata committees. This guide provides crucial information on these new protections, detailing how owners can access them and how committees can navigate their updated responsibilities when managing unpaid levies and financial hardship requests.
Understanding the Key 2025 Reforms for Financial Hardship
Mandatory Consideration & Approval of Payment Plans
The 2025 NSW strata law reforms introduce a significant change in how requests for payment plans are handled. Owners corporations are now required to consider all requests from strata owners who have unpaid levies. This means they can no longer pass a resolution to refuse to enter into payment plans altogether.
Under the new laws, an owners corporation must enter into a payment plan with an owner who requests one. A refusal is only permitted for specific reasons allowed under the new legislation. These changes aim to provide a more supportive framework for strata owners facing financial hardship.
Empowering Strata Committees to Approve Payment Plans
A key change in the 2025 strata law reforms is the empowerment of strata committees to directly manage payment plans. Previously, the approval of a payment plan for an owner in financial hardship required a resolution at an owners corporation general meeting.
This responsibility has now shifted, allowing the strata committee to enter into a payment plan directly with the owner. As a result, the process is streamlined, making it:
- Quicker for strata owners to arrange plans
- More accessible for managing unpaid levies
- No longer dependent on waiting for a general meeting
A Fairer Approach to Allocating Overdue Payments
The reforms establish a mandatory and fairer method for allocating payments made by owners who are in arrears. This new process ensures that owners are not disadvantaged by unfair allocation practices when trying to clear their strata debt.
When an owner makes a payment towards their overdue account, the funds must be allocated in a specific order:
| Allocation Order | Payment Applied To |
|---|---|
| First | Outstanding contributions or levies |
| Second | Any interest accrued on the unpaid levies |
| Third | Any debt recovery costs incurred by the owners |
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New Requirements for Strata Levy Notices
The Financial Hardship Information Statement
Under the 2025 NSW strata law reforms, all levy notices must include a “Financial Hardship Information Statement.” This new requirement, commencing later in 2025, ensures strata owners have clear information about their options if they are unable to pay their levies, which can be a particular challenge when addressing high strata levies.
The statement is designed to help owners get assistance early and understand the support available. It will provide key details on several topics, including:
| Component | Description |
|---|---|
| How to make an enquiry | Provides clear contact points for owners who have questions about their levies. |
| Payment plans | Contains information about the availability of payment plans for owners experiencing financial hardship. |
| Dispute resolution | Outlines options for resolving disputes, such as the free mediation service offered by NSW Fair Trading. |
| Translated information | Includes details on how to access translated versions of the information statement. |
Including Contact Details for the National Debt Helpline
A specific requirement of the NSW strata reforms is that all levy notices must now include the contact details for the National Debt Helpline. This provides strata owners with a direct link to crucial support if they are struggling with their payments.
The National Debt Helpline is a free, confidential, and independent financial counselling service. Including this information on every levy notice ensures that owners are aware of and can easily access professional assistance to manage financial hardship before the situation escalates to debt recovery action.
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The Revised Debt Recovery Process for Your Strata Committee
Offering a Payment Plan Before Commencing Action
Under the 2025 NSW strata law reforms, one of the most significant changes to the strata debt recovery process is the introduction of a new precondition. An owners corporation is now only permitted to commence recovery action for unpaid levies after it has first offered the lot owner the option of entering into a payment plan.
This change encourages a more conciliatory approach to managing strata debt. It ensures that strata owners experiencing financial hardship are given a formal opportunity to make arrangements for payment before legal proceedings are initiated. As a result, this reform aims to balance:
- The financial needs of the owners corporation
- Fairness towards individual owners who may be facing temporary financial difficulties
Extended Notice Period Before Legal Action
The 2025 strata law changes also extend the notification period that must be provided to a lot owner before an owners corporation can take legal action. The timeframe for an owner to respond to a notification of intended recovery action has been increased from 21 days to at least 30 days.
This extension provides strata owners with additional time to:
- Address their overdue levies
- Make suitable payment arrangements
- Consult with financial advisors if needed
For strata committees, this means adjusting their debt recovery timelines to accommodate the new, longer notice period, ensuring compliance with the updated NSW strata laws. This change further supports the more balanced approach to debt recovery introduced by these reforms.
Formally Requesting a Payment Plan from Your Strata Committee
The 2025 NSW strata law reforms have significantly streamlined the process for managing unpaid levies. One of the key changes is that strata owners can now make payment plan requests directly to their strata committee, rather than waiting for approval at an owners corporation general meeting.
This new streamlined process offers several advantages:
- Direct communication with your strata committee
- Quicker resolution for financial hardship situations
- No need to wait for a general meeting to be scheduled
Strata committees now have the authority to consider and enter into payment plans with owners experiencing financial difficulties, making the entire process more efficient and responsive to owners’ needs.
Your Rights if a Payment Plan Request is Unreasonably Refused
Under the 2025 strata law changes, owners corporations must consider all payment plan requests fairly. They are required to enter into payment plans unless there is a legally permitted reason for refusal. Furthermore, the reforms explicitly prohibit owners corporations from passing general resolutions that refuse to enter into payment plans.
If you believe your request has been unreasonably denied, you have clear recourse options, as this is one of the common strata disputes that can arise. The NSW strata law reforms provide you with the right to apply to the NSW Civil and Administrative Tribunal (NCAT) for an order that compels the owners corporation to enter into a payment plan.
This important protection ensures that:
- All strata owners receive fair treatment when facing financial hardship
- There is a formal process to challenge unreasonable refusals
- The system provides genuine support for those experiencing financial difficulties
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Conclusion
The 2025 NSW strata law reforms introduce vital new protections for strata owners facing financial hardship, establishing mandatory payment plans and a fairer debt recovery process. These key changes create a more balanced system by outlining new rights for owners and revised obligations for strata committees.
Navigating these significant strata reforms requires a clear understanding of your new rights and responsibilities. For trusted expertise and guidance tailored to your situation, contact the specialised strata law firm at PBL Law Group today to ensure you are fully prepared for these changes.
