Unit Titles (Strengthening Body Corporate Governance and Other Matters) Amendment Bill

Thank you—

💬 Matt Doocey: Point of order. In the member’s speech—sorry, in the previous debate—the member said that he was going to lodge a shortened report-back date.

💬 Kieran McAnulty: Speaking to the point of order, no motion was moved; so there’s no instruction to the committee.

Thank you, Madam Speaker. I rise as a member of the Finance and Expenditure Committee in support of the second reading of the Unit Titles (Strengthening Body Corporate Governance and Other Matters) Amendment Bill.

Now, members’ bills can be unique creatures. This particular bill is even more unique—not just because it is a member’s bill but because it is technical in nature and covers a range of issues to strengthen and update the Unit Titles Act 2010. As the chair of the Finance and Expenditure Committee, Dr Duncan Webb, said earlier in this debate, it is an important bill. It might be seen as more of a tidy up, but its importance can’t be understated, because, ultimately, we need to make sure that people who purchase homes which are in unit titles can do so with a degree of confidence.

I’d like to acknowledge the member whose name is on the bill, Nicola Willis, and also acknowledge the Hon Nikki Kaye and the Hon Judith Collins, whom Nicola Willis referred to as “mothers of this bill”. If they are the mothers of this bill, I would also like to acknowledge the aunties of this bill—aunties, in a more colloquial setting, are seen as wise counsel and, generally, the person who you can confide in to help solve your issues without getting in trouble with your mother. So, to the aunties of this bill—Helen White and the Associate Minister of this bill, the Hon Poto Williams—I acknowledge both your efforts. Helen White has had a significant interest in unit titles over the last few years. The member was quite focused during the deliberation of this bill on ensuring that there was balance between what the member had heard over the years and what was in submissions, the practicalities of such changes, and, ultimately, the policy that made the cut in this revised, tracked version of the bill. The Associate Minister allowed us to lean on her officials so that the committee had the technical support to consider the 85 submissions we received.

So why does this side of the House support this bill in the name of a member of the Opposition? As mentioned in previous speeches in this debate, the Unit Titles Act 2010 provided a framework for the ownership and management of properties that were divided into unit titles. High-density property arrangements have become increasingly common in New Zealand, but when the Act came into being, it was less common. For example, in Auckland alone, the number of multi-unit housing developments increased from just over 15 percent of new houses in 2010 to more than 40 percent in 2017. In response to this growth, a review of the Act was initiated in 2016, which recommended changes to the unit title regime. This side of the House supports the bill as the member’s bill makes some of the changes we would like to see.

The bill is definitely in a much different shape than when it was introduced, and it was good to work constructively across the House in the select committee stage. As advised earlier in this debate, there were 85 submissions received on the bill. We also held a hearing in Auckland to hear a number of submissions over one day. There were detailed submissions across the key reform areas, including submissions from both individuals, bodies corporate, body corporate managers, the insurance industry, and local authorities. Submitters had a range of views but were broadly supportive of greater transparency, accountability, and protection for the unit title holders. Key changes in this version of the bill include retaining the requirement for pre-settlement disclosure, removing the proxy limitation, removing the ability for the buyer to request additional disclosure, and, in amongst other things, an amendment to the list of documents required by regulation 33 and 34 for pre-contract and pre-settlement disclosures.

In relation to pre-purchase disclosure, disclosure for a prospective buyer is an integral part of the Unit Titles Act. When someone buys a standalone property with no communal obligations, it’s quite straightforward for the prospective buyer to obtain the relevant information about the property: they could go through physical inspections, they could get a valuation easily, and they can also obtain local authority records. However, for unit title developments, a prospective buyer cannot access all the relevant information about their future obligations and potential liabilities. For example, it’s really easy to inspect the roof cavity of a single improvement but less so if there are unit titles in many layers of the actual unit titles.

Forty submitters commented in relation to the changes to the pre-disclosure regime, and they all recommended retaining pre-settlement disclosure. Many noted that the time between pre-contract disclosure and final settlement can be a year or more. Pre-settlement disclosure requires a seller to provide updated information, which protects buyers’ interests and strengthens the overall disclosure regime. Other submitters commented that pre-settlement disclosures protect the body corporate’s interests too. Sellers currently need to request information from the body corporate to meet their pre-disclosure settlement obligations, but if the seller owed outstanding levies to the body corporate, it could withhold this information until the levies were paid. We agreed with submitters that pre-settlement disclosure is an important part of the Act, so the select committee has proposed retaining the disclosure requirements. The information sellers must provide would remain the same as under the Act at present—as set out in proposed regulation 33, set out in clause 37. That would include issues in relation to weather tightness, earthquake-prone issues, and any other significant defects in the land that may require remediation.

Another area I wanted to touch on is in relation to body corporate governance rules—particularly in relation to proxies. The bill as reported back still makes several changes to the existing body corporate governance provisions. The changes seek to create better transparency and accountability for unit holders while ensuring there is sufficient flexibility and autonomy for bodies corporate to govern their unit title developments. The changes are intended to strike a balance between benefits for unit holders and additional compliance costs on the body corporate. The majority of the select committee recommended that clause 10, included in the bill as introduced, be removed. Now, clause 10 proposed a limit to the number of proxies a person can hold. Now, the current Act provides that unit title owners can nominate another person to vote on their behalf. Currently there are no limits to the number of proxies a person can hold. In clause 10, it proposed that a proxy cannot act for more than one principal unit owner if there are fewer than 20 principal units—for developments with 20 or more units, hold more than 5 percent of the total number of votes. Submissions received on this matter were less than universal.

Seven submitters—mostly individuals and resident-owner groups—supported having limits on proxies. The mischief they were concerned about was that unlimited proxies can allow for the abuse of the voting process. In contrast, 18 submitters opposed having proxy limits. These submitters did include body corporate managers, other professionals, and the unit title working group. These submitters were concerned that limiting proxies could limit the ability of unit title owners to have a representation at a meeting. This is particularly difficult for time-share owners, who may actually not know who the other owners are. Therefore, their usual practice is to appoint the chairperson as their proxy. Submitters were also concerned about the risk that having proxy limits would mean that some bodies corporate would struggle to meet their quorum requirements. If a quorum is not met at a general meeting, the meeting can be held one week later at the same time whether or not quorum is met. This may reduce the ability of unit owners to attend and will increase administration costs, as officials have told us.

So the select committee had to think and had to consider, “Is there a problem?” And we recognised that some submitters are concerned about proxy farming, which may reflect their personal experiences. However, there were many submitters who did not support proxy limits who were body corporate managers and other professionals. The committee took the advice of the officials and agreed that these submitters cumulatively have experience across a large number of bodies corporate and were not concerned. Without strong evidence of a widespread concern, the select committee returned that the limits on proxies be removed from this bill. It is possible that the number of proxies that could be given will reduce over time anyway, as officials advised us, and that’s due to the ability to attend by remote access, which this bill allows. There are also many other ways for interested unit owners to get involved in the meeting: they can attend in person, the current law and proposed amendments allow them to attend by remote access, and they can make a postal vote. The motions proposed for a general meeting are provided for with the agenda. So, therefore, the committee, by majority, did not agree to proxy limits, and we agreed to remove clause 10—as recommended in the revised, tracked version of the bill.

So, again, in summary, Labour supports the reform of the Unit Titles Act 2010. This bill makes some of the changes that we would like to see—particularly in regards to corporate governance; transparency; and, as I’ve set out, the proxy limits. So, therefore, I would like to commend this bill to the House.