Two Lot Strata Schemes in NSW and the Changes from 1 October 2026
A practical guide for duplex owners across Sydney
The short answer for two lot owners
From 1 October 2026, a strata scheme containing only two lots will no longer have to complete annual reporting through the NSW Strata Hub. Two lot committee members will also be excluded from the new annual strata committee training requirement that begins on the same date.
Those changes remove two administrative tasks. They do not abolish the owners corporation, cancel the scheme's by-laws or turn a strata-titled duplex into two completely independent houses. In most cases, the owners must still hold an annual general meeting, set a budget, raise levies, maintain records, deal with insurance, manage common property and make decisions using the procedures required by NSW strata law.
That distinction matters for owners of duplexes, semi-detached dwellings, paired villas and older houses converted into two strata lots. A scheme may feel informal because only two households are involved, but significant legal and financial obligations can still sit behind the shared roof, driveway, wall, drainage system, foundations or insurance arrangements.
The NSW Government guide to the 2026 strata law changes confirms the reforms commencing on 1 October. Owners should use the change as an opportunity to simplify unnecessary administration while checking that the remaining essentials are properly organised.
Why this issue is especially relevant across Sydney
Two lot schemes appear in many different forms across Sydney. In Marrickville, Newtown, Enmore, Petersham, Dulwich Hill, Balmain and Leichhardt, they can include attached terraces, semi-detached homes, warehouse conversions or older houses divided into an upper and lower residence. The common property may be limited on paper but practically important, including a shared roof, external walls, front path, sewer line or rear access.
In Coogee, Randwick, Maroubra, Clovelly, Kensington and Bondi Junction, a two lot property may have shared waterproofing, balconies, retaining elements or stormwater infrastructure. Salt exposure, wind-driven rain and ageing masonry can make repair responsibility and adequate insurance more important than the small lot count suggests.
Across North Sydney, Neutral Bay, Cremorne, Cammeray, Crows Nest, Wollstonecraft and Waverton, two lot schemes may occupy sloping sites with shared stairs, retaining walls, driveways and drainage. A disagreement about one leaking pipe or unstable wall can affect both homes and cannot always be solved by each owner arranging work within their own lot.
The October reform is therefore useful, but the real value of this guide is explaining what a two lot owners corporation must continue to do after the reporting exemption begins.
What is a two lot strata scheme
A two lot strata scheme is a registered strata scheme containing exactly two lots. Many are duplexes, but the legal description is more important than the street appearance. A property that looks like a duplex may instead be Torrens title, company title, community title or two separate houses with an easement. Conversely, a building that looks like a single house may have been legally subdivided into two strata lots.
The starting point is the registered strata plan. It identifies lot boundaries, common property and unit entitlements. The title, registered by-laws and any common property rights by-laws may add further information about access, exclusive use or maintenance responsibilities.
Owners should not assume that the midpoint of a shared wall or the visible fence line is necessarily the legal boundary. Floors, ceilings, roofs, external walls, pipes and courtyards can be treated differently depending on the plan and the date or method of registration. When responsibility is uncertain, obtain the current strata plan and by-laws before authorising work or dividing a bill.
The two lot owners collectively form the owners corporation. The NSW Government explanation of strata roles states that a two lot committee includes one owner from each property. The owners still act in different capacities: sometimes as individual lot owners and sometimes together as the owners corporation responsible for the scheme.
What changes on 1 October 2026
The October changes provide two clear forms of relief for two lot schemes.
First, they will no longer have to lodge the annual strata report. Until commencement, the NSW Government's strata annual reporting guidance says schemes report within three months after the annual general meeting and provide prescribed information through the Strata Hub. From 1 October 2026, two lot schemes are exempt from that annual reporting requirement.
Second, committee members in two lot schemes will not have to complete the new annual online committee training. For other affected committee members, the training is a one-hour course to be completed within three months of appointment and repeated each year. The government has expressly excluded two lot committee members from that requirement.
The practical result is less time spent entering information and completing formal education. It also removes the annual reporting fee for these schemes. However, it is important to distinguish reporting to the Strata Hub from the owners corporation's internal administration. The exemption does not remove the need to keep information, accounts and decisions in order.
Owners should also remember the commencement date. The exemption begins on 1 October 2026; it should not be treated as retrospective permission to ignore an earlier obligation or unresolved compliance issue. If a scheme is unsure whether a report was required before commencement, it should check its position against current NSW Fair Trading guidance rather than simply assuming the new exemption erases the past.
What does not change in October
The reform does not remove the legal existence of the owners corporation or its responsibility for the scheme. In practical terms, two lot owners should continue to address the following matters:
holding the required annual meeting and recording decisions;
preparing and approving a yearly budget;
raising levies to meet shared expenses;
maintaining financial, insurance, meeting and correspondence records;
arranging required insurance unless every condition for a limited exemption is satisfied;
maintaining and repairing common property;
following the registered by-laws;
obtaining the correct approval for renovations affecting common property;
managing contractors, safety issues and shared services; and
following proper dispute resolution procedures when agreement cannot be reached.
The change should make administration proportionate to the scheme's size. It should not encourage informality where written records and clear decisions protect both owners. In a two lot building, each owner carries a large share of every expense. Poor records, uninsured damage or an unresolved maintenance issue can therefore have a more immediate financial effect than in a large scheme where costs are spread across many lots.
Two lot schemes still need an annual general meeting
Removing Strata Hub reporting does not remove the AGM. NSW Government guidance says strata schemes need to hold an AGM each year, and its simple guide to holding an AGM in a two lot scheme specifically explains the process for duplex-style schemes.
The AGM is where the owners can formally review the past year and approve the next one. Typical business includes:
confirming the previous minutes;
reviewing financial statements and outstanding contributions;
approving administrative and capital works budgets where applicable;
determining levies and payment dates;
considering insurance and the current replacement value;
reviewing repairs, maintenance and the capital works plan;
confirming office-bearer and committee arrangements; and
considering any motions submitted by either owner.
For a friendly pair of neighbours, a formal agenda may feel excessive. It is nevertheless useful. Ownership changes, relationships deteriorate and memories differ. A short, accurate set of minutes can establish what was approved, who will arrange the work, how it will be funded and whether an owner accepted an ongoing maintenance obligation.
The ETSM NSW strata AGM checklist provides a broader meeting checklist that can be adapted for a small scheme. A two lot AGM does not need to be long, but it should be properly noticed, documented and followed through.
Budgets levies and financial records remain important
Every shared expense needs a lawful and practical funding path. The owners corporation should estimate its coming costs, approve a budget and determine contributions according to the scheme's requirements and unit entitlements. Common expenses can include building insurance, public liability cover, shared electricity, gardening, gutter cleaning, pest treatment, fire-safety work, bank fees, professional advice and repairs.
The annual reporting exemption is not an exemption from keeping financial records. The NSW guidance on levies finances and insurance explains that financial records must generally be kept for at least seven years and that records created from 11 June 2024 must be kept electronically. Two lot accounts and financial statements do not have to be audited, but they should still be accurate and available.
Informal arrangements create predictable problems. One owner may repeatedly pay a contractor directly, while the other reimburses them months later. A future purchaser may then find no clear accounts, invoices or levy history. A better approach is to approve expenses, issue levy notices where required, pay owners corporation expenses from the correct account and retain the supporting documents.
Owners should also keep personal payments separate from owners corporation money. The owners corporation is a separate legal entity, even when its membership consists of only two neighbours. Clear separation makes annual budgeting, insurance claims, property sales and dispute resolution considerably easier.
Capital works funds and the limited two lot exemption
Most strata schemes require a capital works fund and a 10-year capital works fund plan. These arrangements help owners prepare for major expenditure such as roof replacement, painting, waterproofing, drainage renewal or structural repairs.
A two lot scheme may qualify for an exemption, but the exemption is conditional. NSW Government financial and insurance guidance for committees states that the buildings must be physically detached, no building or part of a building can be situated outside the lots, and the owners corporation must unanimously resolve not to establish the capital works fund.
That means an attached duplex should not assume it is exempt. A scheme with a common roof, common structure or building element on common property may fail the conditions. Even where the legal exemption is available, the owners should consider whether maintaining a reserve is financially sensible. A private agreement to split a $40,000 repair when it arises is not the same as having funds available when the work becomes urgent.
The ETSM guide to the 10-year capital works fund plan explains the planning process in more detail. For a two lot property, the plan can be proportionate and straightforward: identify shared assets, estimate their useful lives, allow for escalation and decide how contributions will be accumulated.
Insurance obligations do not automatically disappear
Strata insurance is generally mandatory in NSW. Two lot schemes can have a limited building-insurance exemption, but the conditions are similar to the capital works exception. The buildings must be physically detached, no building or part of a building may be located outside the lots, and the owners corporation must unanimously resolve that strata building insurance is not required. The owners may then arrange individual building insurance.
An attached duplex, vertically divided building or conversion with shared structural elements should not cancel its strata policy merely because annual reporting ends. The exemption depends on the physical and legal arrangement, not simply the number of lots.
Even where separate building policies are permitted, owners should check for gaps and overlaps. Questions include whether shared fences, retaining walls, driveways, services and public liability exposures are covered; whether both policies use compatible rebuilding assumptions; and what happens when one event damages both lots.
NSW guidance also identifies public liability insurance with a minimum cover amount of $20 million as a required form of strata insurance. Contents inside each home are generally the responsibility of the individual owner or resident. Owners should obtain advice from a qualified insurance professional before relying on an exemption, changing policies or assuming that another owner's cover protects the scheme.
For coastal buildings around Coogee, Clovelly and Maroubra, rebuilding estimates should reflect access, demolition, professional fees and current construction costs rather than a rough sale-price comparison. On tight Inner West or Lower North Shore sites, traffic control, difficult access and neighbouring-property protection may also influence reinstatement cost.
Common property repair duties continue
The owners corporation's duty to maintain common property remains one of the most important obligations after 1 October. The reporting exemption does not allow owners to leave a shared roof leaking, a common drain blocked or an unsafe retaining wall unattended.
The NSW strata repairs and maintenance guidance states that the owners corporation is responsible for common property while owners are responsible for property within their lots. It also confirms that schemes, regardless of size, must obtain at least two independent quotes when approving work valued above $30,000.
Responsibility should be determined from the strata plan, by-laws and the nature of the affected building element. For example:
a shared tiled roof over two attached Marrickville homes may be common property;
a stormwater line serving both Randwick lots may require owners corporation action;
a retaining wall supporting common access in Cammeray may affect both homes even if it appears closer to one lot;
a balcony membrane in a converted Coogee building may involve common property, lot property or a registered maintenance by-law; and
tree roots or drainage on a Waverton slope may require investigation before responsibility can be allocated.
The ETSM article on maintaining common property under NSW strata law provides additional context. The practical lesson is to investigate first, document the decision and avoid asking one owner to pay merely because the damage is most visible from their home.
Renovations can expose the limits of two owner decision making
Renovations are a common source of tension because one owner's project may affect the only other owner. Replacing flooring, moving plumbing, opening a wall, installing air conditioning, changing windows or adding a deck can affect structure, waterproofing, noise, appearance or shared services.
Approval depends on the work and the scheme's by-laws. Cosmetic work may not require owners corporation approval, minor renovations follow a particular approval pathway, and major work affecting common property can require a special resolution and a by-law. NSW Government strata renovation guidance states that both owners in a two lot scheme must agree for a special resolution to pass.
This makes early disclosure important. The proposing owner should provide plans, contractor details, licences, insurance, work hours, access arrangements, waste controls and a clear description of any common property affected. If the owner will take responsibility for future maintenance, the approval and by-law should express that responsibility accurately.
There is a specific distinction for accessibility infrastructure. Current government guidance says the relevant accessibility resolution requires at least 50 per cent support and, in a two lot scheme, only one owner needs to agree. Because voting rules can depend on the resolution and circumstances, owners should not assume every proposal requires the same threshold.
For Inner West renovation issues, see the ETSM guide to apartment renovation approval in Balmain Leichhardt and Marrickville.
By laws records and everyday administration still matter
Registered by-laws continue to regulate the scheme after the October changes. They may address noise, parking, pets, renovations, exclusive use, waste, appearance and conduct affecting another lot or common property.
Two lot schemes have a useful procedural exception. The NSW strata by-law guidance says they do not need a prior resolution before issuing a notice requiring an owner or occupier to comply with a breached by-law. The notice still needs to be based on an actual by-law and use the correct process. It should not be treated as a substitute for clear communication or evidence.
The scheme should retain its registered by-laws, strata plan, meeting notices, minutes, financial statements, invoices, insurance documents, correspondence, contracts, quotations and approvals. Electronic organisation can be simple: use clear folders by financial year and subject, keep final signed or issued versions, and ensure both owners or the appointed manager can locate the authoritative record.
Good records become particularly valuable when a lot is sold. The incoming owner was not part of the informal conversations between the former neighbours. They need to understand existing approvals, maintenance arrangements, levy balances, insurance and unresolved work from the written scheme records.
What happens when the two owners cannot agree
A two lot scheme has no third owner to break a deadlock. Disagreement can stop a special resolution, delay a budget or leave repairs unresolved. The best response is not to abandon the owners corporation process. It is to define the issue, obtain reliable information and use the available dispute pathway.
Start by putting the concern in writing without personal accusations. Identify the affected property, attach photographs or reports, explain the decision required and propose a practical motion. For a building issue, a neutral plumber, engineer, building consultant, surveyor or lawyer may clarify the facts that are causing the disagreement.
The NSW strata dispute guide recommends speaking with the other party, raising the issue formally with the owners corporation, using NSW Fair Trading's free mediation service and, where necessary, applying to the NSW Civil and Administrative Tribunal. Mediation is compulsory before many types of strata applications, although exceptions apply.
Professional strata management can also help keep notices, motions, finances and records separate from the personal relationship between neighbours. A manager cannot manufacture agreement or give legal advice, but can administer the scheme consistently, identify the decision-making process and coordinate qualified advice when the owners need it.
A practical checklist before 1 October 2026
Two lot owners can use the weeks before commencement to complete a focused governance check.
Confirm that the scheme contains exactly two lots by reviewing the registered strata plan.
Check whether any annual report due before 1 October remains outstanding.
Record the new exemption and its commencement date in the next meeting minutes.
Do not cancel the next AGM; prepare a proportionate agenda and yearly budget.
Confirm the owners corporation bank account, levy balances and financial records are current.
Review the building and public liability insurance and obtain professional advice before relying on any exemption.
Confirm whether the capital works fund exemption genuinely applies; do not infer it from the lot count alone.
List shared building elements and any repairs likely within the next three to five years.
Store the strata plan, by-laws, minutes, invoices, reports and insurance records electronically.
Record any renovation or exclusive-use arrangements that have previously been handled only by conversation.
Agree on a practical process for urgent repairs and access to shared property.
Seek early assistance if the owners are deadlocked about insurance, repairs, levies or approvals.
Examples for Sydney two lot schemes
In a Newtown or Enmore converted terrace, the two lots may sit one above the other. Noise, plumbing, floor structures and roof access can link the homes even though each owner occupies a separate level. Ending annual reporting does not resolve who maintains those elements; the plan and by-laws remain central.
In a Marrickville or Dulwich Hill pair of attached homes, each owner may maintain their own interior and garden while the owners corporation remains responsible for the shared roof or structural wall. A coordinated roof inspection can be safer and cheaper than two contractors making inconsistent repairs.
In Coogee, Randwick or Clovelly, waterproofing and coastal exposure may drive the largest future costs. Owners should document investigations carefully because water can enter through one side of a building and appear in the other lot. Responsibility should follow the legal boundary and technical cause, not the location of the visible stain.
In Neutral Bay, Cammeray or Wollstonecraft, the critical common property may be below ground: retaining walls, drainage, stairs, foundations or a steep shared driveway. These elements can require engineering input and long-term funding even when the buildings themselves are detached.
These examples show why small does not always mean simple. The appropriate administration should be efficient, but it must reflect the actual assets and risks of the property.
Frequently asked questions
1 Do two lot strata schemes stop being owners corporations on 1 October 2026
No. The owners corporation and the registered strata scheme continue. The October reforms remove annual Strata Hub reporting and exclude two lot committee members from the new annual training requirement. Other statutory, financial, meeting, insurance, by-law and common property obligations remain unless a specific exemption applies.
2 Does a two lot scheme still need an AGM after 1 October 2026
Yes. The reporting exemption does not remove the yearly AGM requirement. The meeting remains the proper place to review finances, approve the budget and levies, consider insurance, discuss repairs and record decisions affecting the scheme.
3 Do duplex owners still need to pay strata levies
Usually yes. Shared expenses still need to be funded. The owners corporation approves a budget and contributions, commonly called levies, are raised to meet administrative costs, insurance, repairs and capital expenses. The amount payable by each lot is generally connected to unit entitlement and the approved budget.
4 Can every two lot scheme close its capital works fund
No. The exemption is limited. The buildings must be physically detached, no building or part of a building can be located outside the lots, and the owners corporation must pass a unanimous resolution. An attached duplex should not assume that it qualifies.
5 Can every two lot scheme cancel strata building insurance
No. A limited exemption may apply where the buildings are physically detached, no building or part of a building is outside the lots and the owners unanimously resolve not to obtain strata building insurance. Owners should obtain professional insurance advice before changing cover. Public liability and other risks still need careful consideration.
6 What happens if one owner refuses to approve major renovations
Major renovations commonly require a special resolution. In a two lot scheme, current NSW guidance says both owners must agree for that special resolution to pass. The proposing owner should provide complete information and try to resolve concerns early. Mediation or legal advice may be appropriate if the dispute cannot be resolved.
7 Who pays for a shared roof driveway or retaining wall
Responsibility depends on the registered strata plan, by-laws, any common property rights arrangement and the cause of the work. If the element is common property, the owners corporation will generally arrange and fund the repair. Technical and legal advice may be required where boundaries or maintenance obligations are unclear.
8 Do two lot schemes need professional strata management
There is no general requirement to appoint a professional manager merely because a scheme has two lots. Some owners self-manage successfully. Others use a manager because meetings, levies, insurance, records, contractor coordination or neighbour disagreements are taking too much time or are not being handled consistently.
9 What should owners do before the new exemption begins
Confirm the scheme has exactly two lots, check whether any earlier annual report remains outstanding, keep the next AGM scheduled, review insurance and financial records, verify whether any capital works or insurance exemption actually applies and document shared repair responsibilities. Do not treat 1 October as the end of strata administration.
The practical conclusion
The 1 October 2026 changes are sensible for genuine two lot schemes. They remove recurring Strata Hub reporting and annual committee training from owners who usually manage a smaller and less complex property.
The reform is not a general release from NSW strata law. The owners corporation still needs enough structure to protect the building, the owners and future purchasers. A concise AGM, a realistic budget, appropriate insurance, accurate electronic records and a clear approach to common property will usually matter far more than the reporting task that is disappearing.
For owners across Sydney's Eastern Suburbs, Inner West and Lower North Shore, the best response is to simplify administration without allowing essential governance to lapse. If a two lot scheme has uncertain boundaries, missing records, uninsured risks, overdue repairs or repeated deadlock, those issues should be addressed directly rather than hidden by the new exemption.
Ellouise Tyrrell Strata Management provides practical strata support for owners corporations across Sydney. Learn more about ETSM strata management or contact the team to discuss the needs of a two lot scheme.
Important information
This article provides general information current at September 2026. It is not legal, financial, building or insurance advice. Legislation, commencement arrangements and government guidance can change. Owners should check the current law and obtain advice appropriate to their scheme before relying on an exemption, changing insurance, approving major work or commencing a dispute.
Official resources and useful links
NSW Government guide to strata law changes for committees and owners
NSW Government strata annual reporting guidance
NSW Government guide to an AGM in a two lot scheme
NSW Government levies finances and insurance guidance
NSW Government committee finance and insurance guidance
NSW Government strata repairs and maintenance guidance
NSW Government strata renovation guidance
NSW Government strata by-law guidance
