The Community Titles Act 2018 (WA) (Act) came into effect on 30 June 2021, introducing community schemes and titles as a new form of land tenure in Western Australia. A community scheme enables the subdivision of a parcel of freehold land into multiple schemes.
The unique tiered structure of a community scheme allows a more flexible approach to the subdivision and development of land. This is especially for mixed-use developments with retail, commercial, office, residential and recreational components, or for staged land developments with common facilities and infrastructure.
In Community schemes and community titles tenure have finally arrived in WA, we provided an outline of community schemes and community titles tenure and a Quick Reference Guide to published materials.
What is a community scheme?
A community scheme is an opt-in form of land tenure for land in Western Australia. Land can be subdivided by a community scheme if it is freehold land, comprised wholly within a parcel, and is not already subdivided by a strata title scheme. It will enable a single freehold parcel of land to be subdivided into two or more schemes comprising community titles, which all fall under the single umbrella community scheme.
When to use a community scheme – developer considerations
Developers will need to assess whether the benefits of using a community scheme for their proposed development sufficiently outweigh the costs of using this type of tenure. A summary of these considerations is set out below. Whether a community scheme is appropriate will largely depend upon the structure and nature of the proposed development.
Opportunities
Mixed-use developments
Community schemes allow developers to:
- mix building and land schemes within the one development, which cannot be done in strata title schemes;
- have mixed uses in a building or development,
so that different types of schemes and uses can co-exist within the one development.
Community schemes provide better autonomy and efficiency in scheme management, by ensuring governance and decision-making occurs at the most appropriate ownership level.
Apportionment of costs between different uses
A community scheme enables common property to be owned and managed in a way that is more equitable and targeted to the owners in the subsidiary schemes who benefit the most from its use.
For example, a scheme could be structured so that the owners of the lots:
- in the residential tier scheme share in the management and costs of a pool that only they use;
- in a commercial scheme share in the management and costs of an elevator that only they use.
This allows for more equitable management of common property where owners only pay for the common property they use.
'Green' opportunities
The scale of a community scheme may allow developers to embed 'green' opportunities into the community scheme, which might not otherwise be available in smaller individual developments. For example, a sufficiently large development may be able to support an embedded solar network, which can deliver reduced energy costs to the owners.
Impediments
Requirement to comply strictly with the CDS
The Community Development Statement (CDS) gives certainty to:
- the developer as the CDS is binding on subdivision applications during the approval period;
- purchasers of the lots as they have the comfort that the proposed development will need to be carried out in accordance with the CDS.
Despite these benefits, the requirement to comply strictly with the CDS introduces a degree of risk for developers, given that the development will be implemented over a long period of time, and changes in design and the proposal may become necessary during that period. This risk can be alleviated by preparing a generalised CDS, or seeking an amendment to the CDS at a later stage.
Multiple community corporations
There is one community corporation for the community scheme as a whole and one for each subsidiary scheme.
As the number of community corporations increase, so will there be an increase in the time, cost and resources needed to comply with their governance requirements under the Act, in situations where there may be little or no significant benefit to the owners in return.
Developers will need to consider carefully the appropriate number of subsidiary schemes at the outset.
Exit strategy
Investors in a major asset in a community scheme (eg a separate hotel building) may be reluctant to invest if the investor wants to have autonomy over its asset but it is in a community scheme.
Developers will need to consider carefully the most appropriate structure for their development (which may include other forms of subdivision) for the various development components at the outset.
When to use a community scheme - WAPC considerations
The Western Australian Planning Commission (WAPC) is required to determine if a community scheme is the most appropriate form of subdivision for the land. If it decides a community scheme is not the most appropriate form, then the WAPC will not approve the application.
In making its decision, the WAPC will have regard to the following:
- relevant State Planning Policies;
- relevant planning scheme or interim development orders;
- whether some other form of subdivision or no subdivision would be more appropriate in the circumstances to achieve orderly and proper planning, and the preservation of the amenity of the locality in which the land is situated;
- comments received from local government, public authorities and service providers, and public submissions; and
- any other relevant matter, including, local policy or position statements and technical advice.
WAPC Development Control Policy 1.11 (now final) does not provide specific examples of when a community scheme is considered appropriate, but outlines a series of policy objectives and other measures which will be considered by the WAPC in making its decision. These include:
- orderly and proper planning, and consistency with planning frameworks and procedures;
- responsiveness to characteristics of the site such as environmental features and sustainability principles;
- transport standards;
- public utilities and infrastructure;
- a sense of place and conservation of places of Aboriginal and historical heritage;
- adequate and well located public open space and amenity; and
- timely, equitable and coordinated delivery of community infrastructure and facilities.
Landgate's brochure, New Tenure // New Opportunities, provides three examples of instances where community schemes may be considered a suitable form of tenure. These are:
- a mixed subdivision involving land (to create vacant lots) and buildings (to create apartments) within the one development;
- a mixed use building scheme to create a development which has a mix of uses including commercial and residential; and
- a development comprising of 2 separate towers which use shared common property.
These examples indicate that the WAPC is likely to approve proposed developments containing the following features:
- developments with a mix of building and land schemes;
- mixed-use developments;
- requirement for different community corporations and by-laws to ensure efficient decision-making.
CDS and Statement of Reasons
The first step in creating a community scheme is for the developer to lodge a community development statement or CDS with a statement of grounds with the WAPC.
The statement of grounds is an executive summary of the CDS and must identify why subdivision by a community scheme is an appropriate form of subdivision for the land compared to other forms (e.g. green title or strata title).
The Act sets out the requirements that must or may be included in a CDS to guide the subdivision and development of a parcel of land, which includes identifying:
- how the land may be subdivided and developed;
- number of tiers and type of community titles scheme;
- requirements for restricted use conditions, restrictive covenant, open space, road dedication, cash in lieu and development contributions;
- provision of utility services;
- staging and sequencing; and
- any other matter considered appropriate by the WAPC.
A CDS must be refused by the WAPC if it conflicts with any State Planning Policy or the applicable planning scheme or interim development order. The WAPC may waive the requirement for any other plan required under a planning scheme or interim development order if it is satisfied the preparation of the plan is not necessary due to the CDS.
Timing
Once the CDS and statement of grounds are lodged, the WAPC has 120 days to make a determination. This period includes 35 days for referral to the relevant local government (who must advertise it for public comment) and 28 days for referral to public authorities and utility service providers.
