Site fee increases in land lease communities
As a home owner in a residential land lease community you have rights under the Residential (Land Lease) Communities Act 2013 and Residential (Land Lease) Communities Regulation 2015. This factsheet explains the law in NSW regarding site fee increases.
There are two methods to increase site fees for home owners in land lease communities: fixed method and increase by notice.
Fixed method
A fixed method increase must be written into the site agreement. Your site agreement should specify only one method of increase – if there is more than one, the method that results in the lowest increase is the one that applies.>
A fixed method increase can apply for a specified period of time or the duration of occupancy.
The operator must provide you with a valid notice of increase at least 14 days prior to each scheduled increase.
A fixed method increase cannot be challenged as excessive under the Residential (Land Lease) Communities Act 2013 (the Act).
If the fixed method expires a home owner can negotiate a new fixed method with the operator or they can choose the increase by notice method (non-fixed method).
If the home owner negotiates a new fixed method increase there is no requirement to sign a new site agreement. The new fixed method increase should be in writing and signed by both parties.
Changes to fixed method increases from 25th September 2024
All new fixed method site fee increases entered into after the 24th September 2024 can only have a fixed calculation which contains one element to calculate the fixed method increase. For example a dollar amount, a set percentage or any increase in CPI since the last increase. It cannot be a combination of these elements.
The site fee can only increase once per year unless the method of increase is a fixed calculation that uses changes in the age pension.
For existing fixed method site fee increases that do not comply with these changes there will be a 12 month transition period which ends on the 24th September 2025. Operators and home owners can negotiate a new fixed method that is compliant in the transition period. If there is no agreement reached on a new fixed method increase then at the end of the transition period a home owner will automatically be on the increase by notice method.
Increase by notice
If you do not have a fixed method increase in your site agreement your site fees can only be increased once each year by notice.
The operator must issue a notice of increase to every home owner in the community (other than those on a fixed method increase) at the same time. The notice must:
- give you at least 60 days notice of the proposed increase, and
- If the increase is wholly or partially due to an increase in costs of specific items the operator will need to provide details about the item, the increase in the costs of the item and how the operator has apportioned the costs for this item when calculating the increase.
The effective date of the proposed increase must be the same for all home owners. A proposed site fee increase can only be challenged as excessive if at least 25 percent (25%) of home owners who received the increase notice agree to challenge it.
Mediation
If at least 25% of home owners want to challenge a proposed site fee increase the first step is to make an application for mediation to the Commissioner for Fair Trading. Mediation is compulsory and the application must be made within 30 days of receipt of the increase notice. This time limit cannot be later extended by NCAT.
NSW Fair Trading will appoint a mediator who will contact the parties to arrange a suitable time for mediation. Mediation usually takes place in the community or somewhere nearby. Mediation can also be conducted by telephone or via audio visual link.
The role of the mediator is to bring the parties together with the aim of reaching an agreement about the proposed increase. If an agreement cannot be reached home owners can then apply to the NSW Civil and Administrative Tribunal (NCAT). This application must be made within 14 days of a failed mediation and accompanied by a notice from the mediator.
NCAT
In deciding whether an increase is excessive NCAT may consider the following factors:
- the frequency and amount of past increases in site fees
- any actual or projected increase in the outgoings and operating expenses for the community
- repairs or improvements either planned or carried out by the operator since the last increase
- the general condition of the community including its common areas
- the range and average level of site fees within the community
- the value of any improvements to the community (including common areas) paid for or carried out by home owners
- any explanation for the increase provided by the operator by notice in writing to the affected home owners
- variations in the Consumer Price Index (All Groups Index) for Sydney
- whether the increase is fair and equitable in the operation of the community
- any other matters prescribed by the regulations.
NCAT can make an order declaring the increase is excessive, reducing the amount of increase or setting aside the increase.
NCAT cannot make an order that would result in an increase lower than necessary to cover any actual or projected increase (established to the satisfaction of the Tribunal) in the outgoings and operating expenses for the community.
The orders may apply to individual participating home owners, groups of participating home owners, or all participating home owners.
Individual application
An individual home owner can apply to NCAT only if their proposed site fee increase is substantially excessive when compared with increases for similar residential sites in the community.
Factsheet updated 25 September 2024.
This factsheet is intended as a guide to the law and should not be used as a substitute for legal advice. It applies to people who live in, or are affected by, the law as it applies in New South Wales, Australia. © Tenants’ Union of NSW.
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