Heatley Phil: Unit Titles Bill — First Reading 
Heatley Phil: Unit Titles Bill — First Reading 
[Volume:652;Page:1713] 
Hon PHIL HEATLEY (Minister of Housing) 
: 
 I move  
That the Unit Titles Bill be now read a first time. 
 At the appropriate time I intend to move that the Unit Titles Bill be considered by the Social Services Committee. The Unit Titles Act 1972 is the primary legislation that governs multi-unit developments such as apartment blocks townhouses and office buildings. The Act covers the creation and ownership of unit titles by unit owners the establishment of bodies corporate to manage developments and the rights and responsibilities of unit holders and bodies corporate. 
I point out by way of background that that Unit Titles Act 1972 was designed for the simple small-scale residential flats that were prevalent at the time. Often such developments would number—would you believe it—only two or three units. But times have changed. Unit title developments are now much larger and more complex and they are used to meet much more diverse needs. 
The demand for intensive apartment-style living has grown over the last 30 years and the market has responded with some unit title developments containing more than 100 units. Some developments are additionally complex with retail shops bars or restaurants located on street level and apartment dwellers residing above. Unit title developments are also growing in sheer number. It is estimated that there are approximately 16500 unit title developments in New Zealand comprising around—would you believe it—96000 units. This trend is expected both to continue and to accelerate particularly in the Auckland region where it is estimated that within 50 years half a million people will be living in apartments townhouses and high-rise buildings. 
If we compare the existing legislation with its small-scale design with the current needs of the market we see clearly that the 1972 Act does not provide a sound basis for the creation and sustainable management of intensive multi-unit developments. Its inadequacy in the modern environment means among other things that buildings can be insufficiently maintained that bodies corporate can be hampered by time-consuming decision-making processes that disputes between owners are seldom resolved and that there is little consumer information or consumer protection. Furthermore the process for building developments can be inflexible and overly complex. 
The Unit Titles Bill is the result of a comprehensive review of the Act which was announced in November 2003. The review was initiated in response to widespread views held by the Law Commission the Auckland Regional Council and other sector stakeholders that said a review was critical. The Department of Building and Housing has worked closely with officials from the Ministry of Justice and Land Information New Zealand as well as with a cross-section of key stakeholders. 
I am pleased to report that there has been ongoing and widespread support for both the review process and the direction of the proposed changes. This has been demonstrated by the continued engagement and professional goodwill of key stakeholders such as the New Zealand Law Society the Property Council of New Zealand and the New Zealand Institute of Surveyors. The views of those who live and work in unit title developments have also been critical in informing the development of the bill that I am now putting before the House. 
The bill is a fundamental rewrite of the existing legislation. Its key changes include promoting sound property management practices. Sound property management practices are essential to preserve the investment people make when they buy a unit in a development. Best practice will be encouraged by the following provisions. 
Bodies corporate will be required to develop long-term maintenance plans to protect the capital value of the development and the capital value of units within the development. This means owners will be able to plan for big-ticket maintenance items and pay a regular amount over time thus avoiding the need for large one-off lump-sum payments for items such as replacing a lift or for exterior painting. A body corporate needs to be able to act quickly and decisively on behalf of all unit owners and for the good of the development as a whole when repairs and maintenance need to be done. 
This bill provides that the body corporate will own the common property which includes the parts of the development owned collectively. Its responsibilities for repair and maintenance will be widened to include building elements and infrastructure that affects more than a single unit. This will mean for example that if an apartment block has a leaky roof it will be the body corporate’s responsibility to fix it rather than the responsibility of the owner of the top-floor apartment. 
 The second major change will make joint decision-making by the body corporate manageable. A streamlined simple and easily managed way for decisions to be made by all unit owners collectively is a critical component of this legislation. This bill provides just such a process. The cumbersome requirement for unanimity in body corporate decision-making will be removed. Instead decisions will be able to be made based on 75 percent agreement by those who vote at a body corporate meeting. This for example will make it easier to redevelop a unit title property that has become economically unviable or to organise to fix the roof or alter a unit plan. It will also prevent hold-outs and will mean that unit owners who do not vote will not be able to hold up the process. 
Another fundamental key change is in the area of dispute resolution. Many disputes in unit title developments are created because people just do not know what their rights and responsibilities are when they buy an apartment. Owning and living in an apartment comes with a raft of rights and responsibilities that are not usually necessary when one owns a stand-alone house. This bill takes a first step of clarifying and simplifying the rights and responsibilities of unit owners and the obligations of bodies corporate. This is a crucial part of ensuring that disputes do not arise in the first place. But when disputes do arise they will be able to be dealt with through mediation or adjudication through the Tenancy Tribunal in the first instance rather than solely through the courts. This will make resolution faster cheaper and more appropriate to the disputes that tend to arise in multi-unit developments. 
The fourth key change is around the disclosure environment. Educated consumers are a central principle of the bill. Enabling people to make informed and confident decisions helps to ensure that the management of developments runs smoothly and that fewer disputes arise. [ 
Interruption 
] There will not be any violence such as the violence shown by the Hon Trevor Mallard on a number of occasions—we will not see that sort of violence in the unit titles dispute process. 
Disclosure requirements will be introduced for purchasers unit owners and bodies corporate to enable them to make informed choices. For example developers will be required to provide information on the construction systems and infrastructure of buildings to the body corporate. This means that the body corporate will be able to make sound decisions when repair and maintenance needs to be undertaken. Purchasers will be entitled to a list of information they can view on request such as body corporate rules audited accounts and maintenance plans. General information on unit title developments will also be available. This means that there will be no surprises—purchasers will know exactly what they are buying into and what their rights and responsibilities are. 
In terms of technical changes it is important to ensure that the process of building unit title developments does not impose undue constraints or increased costs on developers or call for time-consuming changes and alterations. Each subsidiary body corporate will be a member of a head body corporate responsible for the overall management of the development. 
This bill brings our unit title law up to date in wide-ranging areas. It addresses the changes that have occurred in property development over the past 36 years and it brings our unit title law into the 21st century. The bill will provide broader and more adaptable ways of setting up and managing multi-unit living both now and in the foreseeable future.