This article discusses balcony enclosure unit entitlement reassessment in strata and when a change in use may require approval or a review of entitlements.
Question: If a lot owner encloses his balcony to create a room, would this require a resolution for a change in use from a balcony to a liveable space? Could the increase in lot size be a trigger for a reassessment of unit entitlements?
Answer: Applications to change unit entitlements are complicated.
Enclosing a balcony will usually require a by-law because the work will usually change the external appearance of the lot. Additionally, drilling and/or fixing the enclosure into the balcony slab, balustrade, soffit, etc. is not considered minor renovations. Refer to Section 10 of the Strata Schemes Management Act 2015 for examples of minor renovations.
As a first step, you should review the registered by-laws for the scheme and consider whether there are any by-laws that authorise the enclosure or prohibit the enclosure. If there is no by-law authorising the enclosure, it will need to be removed (and the damage to the common property repaired) or a by-law will need to be resolved retrospectively to authorise the enclosure.
Amongst other things, a by-law would usually require the lot owner to have council approval for the enclosure. The council may also require the owners corporation to consent to the application for approval to install the enclosure. If council approval is required and has not been granted, the council may make a development control order requiring removal of the enclosure. The lot owner may apply for a building certificate instead of removing the enclosure. A building certificate may confirm whether the change in use to the balcony is approved, however, it will not resolve the issue that the owners corporation’s authorisation is required to install the enclosure.
Section 236(1)(c) of the Strata Schemes Management Act 2015 provides that the Tribunal may make an order reallocating unit entitlements if it considers the allocation of unit entitlements “became unreasonable because of a change in the permitted land use, being a change (for example, because of a rezoning) in the ways in which the whole or any part of the parcel could lawfully be used, whether with or without planning approval“.
To establish a claim under section 236(1)(c), the applicant will need to prove:
- there has been a change in the permitted land use and
- the change resulted in the unit entitlements becoming unreasonable.
You should obtain evidence that the enclosure of the balcony constitutes a change in the permitted land use. A starting point may be to discuss the issue with the council. For expert advice, it would be best to speak with a town planner or an unrestricted building surveyor. You will need expert advice to support an application to the Tribunal.
In relation to whether the unit entitlements have become unreasonable, applications to change unit entitlements are complicated, numerous factors must be considered, evidence needs to be obtained from a registered valuer and the evidence needs to address a number of specific legal questions. There are also discretionary issues to take into consideration. You should obtain legal advice from a solicitor who specialises in strata law.
Please note this response is based upon assumptions. It is a brief summary and does not cover all issues that need to be considered. You will need to obtain legal advice from a solicitor who specialises in strata law before taking action in relation to the matter.
This post appears in the April 2023 edition of The NSW Strata Magazine.
Shane Williamson
Williamson Lawyers Pty Ltd
E: shane@williamsonlawyers.com.au
P: 0404 045 605
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