NSW Strata Reforms: New Rules for Debt Recovery and Payment Plans
The Strata Schemes Legislation Amendment Act 2025 (the Amendment Act) was passed by the NSW Parliament on 18 February 2025. It contained sweeping changes to numerous sections of the Strata Schemes Management Act 2015 and the Community Land Management Act 2021. While some of these changes came into effect on 1 July 2025, NSW Fair Trading announced on 23 September 2025 that the bulk of the changes will commence on 27 October 2025 and others on 1 April 2026.
A key reform taking effect on 27 October 2025 involves updated provisions for debt recovery and payment plans under the Strata and Community Schemes legislation.
The main changes include:
Levy Notices
All levy notices must be accompanied by a Financial Hardship Information Statement.
Payment Plans
An owners corporation and an owner may agree to a payment plan for the payment of overdue contributions.
A payment plan is limited to a period of 12 months but a further plan may be agreed to.
An owners corporation must not, by resolution, refuse to enter into payment plans for the payment of overdue contributions.
An owners corporation may refuse to enter into payment plans for the payment of overdue contributions in particular cases.
A request by an owner to enter into a payment plan (the request) may be reasonably refused by the owners corporation.
The Regulations will prescribe what constitutes a reasonable refusal in relation to payment plans.
The Regulations may include:
The main reason to reasonably refuse a payment plan is whether the non-payment of levies by that owner will specifically result in a deficit to the administrative or capital works fund or that such a deficit will result in a failure of the owners corporation to comply with its obligations to repair and maintain common property.
When proposing a payment plan, a lot owner must submit their proposal to the owners corporation using the basic payment plan form prescribed by the Regulations.
The owners corporation or the committee of the owners corporation must determine a payment plan request and provide its written decision to the lot owner within 28 days after receiving the payment plan form.
Any payment plan request that is refused must include written reasons for the refusal and why those reasons apply in that specific instance.
The owners corporation must not request the owner to provide information or evidence in support of a request other than the information set out in the prescribed form.
An owners corporation cannot charge a payment plan fee or any other charge related to making or entering into a payment plan.
A lot owner may apply to the Tribunal to review an owners corporation’s refusal of a proposed payment plan.
Debt Recovery Action
An owners corporation may only take action to recover the reasonable expenses of the owners corporation incurred in recovering unpaid contributions and any interest payable on unpaid contributions if the owners corporation has offered the owner the option of entering into a payment plan for the payment of the unpaid contributions, and pursuant to an order of the Tribunal or a court.
An owners corporation must not pursue recovery of levies, interest or costs while the amount is subject to a payment plan that the owner is complying with.
Payment Allocations
All payments must be applied as directed by the lot owner or if ordered by a Court or Tribunal.
Otherwise all payments by a lot owner must be applied in the following order:
Levies (oldest first); then
Interest; then
Costs
Debt Recovery Proceedings
Recovery proceedings for arrears must not commence without providing the debtor at least 30 days’ notice—an increase from the previous 21-day requirement.
Summary
Significant reforms to strata debt recovery in NSW will take effect from 27 October 2025 under the Strata Schemes Legislation Amendment Act 2025. Key changes include mandatory hardship information with levy notices, stricter protocols for offering and refusing payment plans and clearer procedures for plan approval. Owners corporations must provide 30 days’ notice before commencing recovery proceedings and cannot pursue debts while a compliant payment plan is in place. These reforms aim to enhance fairness, transparency and financial accountability.
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