NSW Embedded Network Reforms 2025: What You Need to Know

Last week’s LookUpStrata webinar tackled substantial NSW embedded network reforms under the new Strata Schemes Legislation Amendment Act 2025, now in effect. The session was co-presented by Joseph Arena, founder of Embedded Network Arena and Arena Energy Consulting, and Rod Smith, director of The Strata Collective. Together, they delivered valuable insights into how the legislation will affect owners, strata managers and developers, both now and in the years to come.

NSW: Embedded network disclosure laws in 2025 – are you ready? | Joseph Arena, Embedded Network Arena + Rod Smith, The Strata Collective

Why the NSW Embedded Network Reforms Matter

Introduced on 1 July 2025, the NSW embedded network reforms are designed to increase consumer protection and transparency within embedded network arrangements, particularly where owners were previously locked into long-term and often uncompetitive contracts. The changes represent a shift in regulatory culture, aligning state-level strata obligations with broader national consumer and energy reform efforts.

The webinar opened with a reminder that if your strata scheme is part of an embedded network — or considering one — it is now essential to understand and act on the new rules. The presenters stressed that while the changes are complex, they offer real opportunities for cost savings, improved sustainability, and better governance if handled proactively.

Key Legislative Changes

Joseph Arena outlined four major areas affected by the legislation:

1. Contract Term Limits

Section 132A of the Strata Schemes Management Act 2015 has been amended to limit embedded network contracts to a maximum of three years, including renewals. This addresses the historic problem of 10+ year agreements with automatic rollovers, often signed by developers before lot owners took control.

Action Point: Owners corporations must review existing contracts and should not sign or renew embedded network agreements longer than three years. Independent legal or technical advice is strongly recommended.

2. Disclosure in Sales Contracts

Vendors now must disclose whether a lot is part of an embedded network in the contract of sale. Failure to do so correctly gives buyers a legal right to rescind the purchase.

Action Point: Property owners, conveyancers, lawyers, agents and strata managers all need to update sales documentation and marketing collateral to comply with disclosure obligations.

3. Disclosure for Off-the-Plan Sales

With the NSW embedded network reforms, developers must disclose embedded network details upfront in off-the-plan sales. This includes the type of utility, likely costs, and any changes prior to settlement.

Action Point: Developers must build embedded network disclosures into their scheme documents and sales processes, or risk contract rescission and reputation damage.

4. Strata Information Certificates (Section 184)

Strata schemes must now disclose embedded network arrangements in strata information certificates, including service type, provider, and contract terms.

Action Point: Strata managers must update record-keeping and disclosure practices to reflect these new legal duties.

Embedded Networks in Practice: Case Studies

Rod Smith presented three case studies from his experience, highlighting both the benefits and risks of embedded networks.

Best Case

A community housing provider retained ownership of most units and ensured the scheme was set up with transparent pricing and ethical providers. This resulted in:

• 45% discounts off market rates
• Significantly reduced common power costs (under $50,000 annually for 270 apartments)
• A win-win for both the strata and residents

Worst Case

A profit-share model was poorly executed by a small operator. Misaligned assumptions, inaccurate air conditioning metering, and lack of transparency led to hundreds of thousands in losses. After intervention by Embedded Network Arena, the building:

• Received a $300,000 payout to terminate the failing contract
• Secured an annual $70,000 rebate under a new provider
• Started to see reductions in strata levies

Change Case

In a mid-sized block, the existing setup wasn’t a disaster but residents were dissatisfied. After auditing and market testing, the committee:

• Secured guaranteed discounts on hot water and electricity
• Had EV charging infrastructure installed
• Took greater ownership of their scheme’s future

These real-world examples illustrated that proactive, informed action can turn even problematic embedded networks into valuable assets for schemes.

Key Takeaways

• You own the infrastructure: The embedded network belongs to the owners corporation, not the operator. That means you can — and should — take control.
• Choice exists: Changing embedded network providers is straightforward. Tender processes are now common and can deliver substantial savings.
• Legal compliance is mandatory: Ignorance is no longer a defence. Owners, committees, and strata managers must meet the new disclosure requirements or risk legal and financial consequences.
• Market testing is essential: Re-contracting without testing the market could mean missing out on better deals, greener infrastructure, or lower levies.
• Support is available: Independent experts offer audits, contract reviews and tenders tailored to your building’s needs.

Final Thoughts

Joseph Arena closed with a powerful reminder: “The owners of the building own the embedded network.” With the right advice and a strategic approach, strata schemes can use these reforms to regain control, unlock hidden value, and improve outcomes for all residents. This is a point often mentioned in LookUpStrata webinars. Owners have the power and can make informed choices.

As Rod Smith emphasised, now is the time for committees and strata managers to “lift the bonnet” on their embedded networks, understand their position, and take advantage of the opportunity to modernise.

Presentation slides

Download the slide pack from the presentation here: New NSW Strata Laws and Embedded Networks

Presenters

Joseph Arena
Embedded Network Arena
E: [email protected]
P: 1300 987 147

Rod Smith
The Strata Collective
E: [email protected]
P: 02 9879 3547

This post appears in Strata News #754.

Let us know if your scheme has undertaken a recent review or change to its embedded network setup — we’d love to hear how it went.

Further reading

• Section 132A of the Strata Schemes Management Act 2015
• NSW: Q&A Embedded networks, contract terms, terminations and renewals
• NSW: Major NSW Strata Reforms Incoming: First Stage Rolls Out 1 July 2025

Visit Maintenance and Common Property OR NSW Strata Legislation pages.

Looking for strata information concerning your state? For state-specific strata information, take a look here.

Are you not sure about some of the strata terms used in this article? Take a look at our NSW Strata Glossary to help with your understanding.

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