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Review your levy processes now to avoid potential complications from October 2025

Posted 10 September 2025

Category: Strata, Levy Recovery

With major changes to levy recovery laws commencing on 27 October 2025, owners corporations need to act swiftly to avoid potentially breaching these new requirements.

The Strata Schemes Legislation Amendment Act 2025 imposes new requirements that will alter the levy recovery process for owners corporations. Understanding these changes and taking action will assist in ensuring that owners corporations are not too impacted during the transition.

What are the key changes for levies?

Section 85(5) of the Strata Schemes Management Act 2015 which will be amended substantially, including:

An owners corporation must not, by resolution, refuse to enter payment plans for the payment of overdue contributions (s85(5AB)).
Despite subsection (5AB) an owners corporation may refuse to enter into payment plans for the payment of overdue contributions in particular cases (5AC).
- Clause 17(K) of the Strata Schemes Management Regulation 2016 (‘the Regulations’) prescribes that a request for a payment plan must be in the form of the document entitled Request for payment plan for overdue contributions published in Government Gazette No 351 of 29 August 2025.
- Clause 18A of the Regulations provides that an owners corporation cannot require an owner to pay a fee or other charge relating to making a request for or entering into a payment plan (Note that there is an apparent error in the proclamation regulation, conceded as such by Fair Trading, in that this provision is proclaimed to commence on 1 April 2026, despite previous announcement that this was intended to commence on 27 October 2025).
- Section 85(5) has been amended to provide that a strata committee can resolve to consider a request for a payment plan and can either refuse to enter or enter into a payment plan with an owner.
- Clause 18B of the Regulations provides that an owners corporation must provide a written response, including written reasons for refusal (if it is refused), within 28 days after receiving a completed request form for a payment plan from an owner (Note that there is an apparent error in the proclamation regulation, conceded as such by Fair Trading, in that this provision is proclaimed to commence on 1 April 2026, despite previous announcement that this was intended to commence on 27 October 2025).
- Section 85(5A) prescribes that a request by an owner to enter a payment plan (the request) may be reasonably refused by the owners corporation.
- Section 85(5B) states that the regulations may prescribe what constitutes a reasonable refusal in relation to payment plans. Clause 17J of the Regulations sets out the reasonable refusals. Basically, if the payment plan would result in a deficit in the capital works or administrative fund, or either fund having insufficient funds to meet required expenses from the relevant fund. It is also reasonable to refuse a payment plan if there are insufficient funds to comply with an undertaking, compliance notice or an order of the Tribunal or a court.

Pursuant to newly enacted section 85(9), the Tribunal, may on application by the owner, order that the owners corporation agree to the owner’s request if the Tribunal is satisfied that the refusal by the owners corporation of the request was not reasonable.

Section 86 of the Strata Schemes Management Act 2015 has been amended including:

Amending 86(4), extending the required notice period before initiating levy recovery proceedings from 21 to 30 days.
Inserting a new 86(2AA) to restrict an owners corporation from recovering its reasonable expenses and any interest payable on unpaid contributions unless:
- the owners corporation has offered the owner the option of entering a payment plan for the payment of the unpaid contributions (a), and;
- pursuant to an order of the Tribunal or a court under this section (b). Note, this change is not due to commence until after 1 April 2026, however it is prudent to offer payment plans, and in any event an option for a payment plan is included in the Financial Hardship Information Statement.

Inserting a new 86(6) expressly limiting an owners corporation from taking action to recover an amount under this section from an owner if:
- the amount is being dealt with under a payment plan (a); and
- the payment plan is being complied with by the owner (b).
Inserting a new 86(7) prescribing how any payments received by owners is to be allocated:
- to contributions, in order of due date,
- to interest;
- to expenses of the owners corporation in recovering contributions ordered to be paid under this section.
Inserting a new 86(8) setting some exceptions to 86(7) where a court of tribunal otherwise orders a different application, or the owner in arrears otherwise specifies how the payment is to be applied.

What will happen immediately on commencement of these changes?

1. From 27 October 2025, a 30-day notice will be required before levy recovery proceedings can commence.

a. Any matters where the previously required 21-day notice had been issued before 27 October 2025 would remain able to be commenced but would need to wait the 30 days.

b. Any matters commenced before 27 October 2025 after issuing a 21-day notice would be validly commenced even if they were filed after 21 days, but before 30 days had passed.

2. Unless otherwise ordered by the court or specified by the debtor, no payments received from owners are able to be put towards expenses:

a. Unless all outstanding levies and interest have been paid; and

b. The expenses have been ordered to be paid.

This does not change the manager’s contract with the owners corporation and the levy collection fees will still be payable by the owners corporation depending on the drafting of the agreement.

For further information about other reforms, please click here.

If you have any enquiries, please reach to out to enquiries@bannermans.com.au or on 02 9929 0226.

***The information contained in this article is general information only and not legal advice. The currency, accuracy and completeness of this article (and its contents) should be checked by obtaining independent legal advice before you take any action or otherwise rely upon its contents in any way.

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