NSW Embedded Network Disclosure Laws in 2025 – Are You Ready?

What Are Embedded Networks?

Embedded networks are private utility networks within multi-tenanted buildings—think residential apartment complexes, retirement villages, or even modern builds with EV chargers and solar arrays. Instead of each lot having its own direct bill from a utility (like electricity or hot water), these supplies are delivered “in bulk” to the building and then on-sold to individual lots through a private metering system.

Common Utilities in Embedded Networks:

Electricity (most common)

Hot water

Centralized air conditioning

Potable water

EV chargers and solar energy (increasingly common)

How Do They Work?

Imagine a main “gate” meter that measures the total utility used by the building. Downstream, each apartment has its own “child” meter, which tracks individual usage.

This arrangement creates a private network inside the building’s boundaries. The operator buys energy at a large-scale (usually cheaper) rate, then sells it to the individual occupants—sometimes at better rates than they could negotiate alone. But it also means unique rules around contracts, choice of supplier, and consumer protection.

The Size of the Sector

There’s little public data, but estimates suggest there are over a million residential strata lots in embedded networks across Australia, with around 300,000-400,000 in NSW alone. That’s potentially 2 million+ people.

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Why The Reforms? Background & Objectives

From around 2010–2012, embedded networks started popping up in new developments all over NSW. They offered efficiencies and the promise of savings, but the framework for consumer protection, transparency, and contract fairness often lagged behind.

Key Problems Identified:

• Owners being locked into long contracts—sometimes 10+ years—without clear competitive review points.
• Developers making opaque decisions that benefitted themselves or the initial operator, not future owners.
• Hidden, non-competitive agreements leading to inflated charges.
• Buyers being caught off guard by “surprise” network arrangements when moving into a building.

In 2021, the NSW Government reviewed the Strata Schemes Management Act to update it for the rapidly expanding strata sector, culminating in significant changes enacted from July 2024.

“These reforms are good news for consumers because they aim to prevent owners from being locked into long term contracts, non-competitive utility agreements, and ensure that buyers are fully informed before they purchase a lot.”

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Key Changes to Embedded Network Laws

Let’s break down the major changes you need to know about:

1. Contract Term Limits

Old Situation: Developers and Owners Corporations (OCs) could enter into long-term (10+ years!) contracts with embedded network suppliers, often with automatic rollover clauses.

New Law:

• Maximum 3-year term for any embedded network contract, whether initial or renewed.
• No more 10+ year agreements or sneaky rollovers—contracts must be actively reviewed and market-tested at least every three years.
• Applies to both new contracts and renewals signed after 1 July 2024.

Why is This Important?

• Owners and committees retain more control.
• Providers must stay competitive—no more “set-and-forget” at the owner’s expense.
• Asset valuations and liabilities must be checked at each renewal—no value “siphoned off” by operators via inflated buyouts.

What You Need to Do:

• Review your current agreement. If it’s longer than three years (signed after 1 July 2024), it’s non-compliant.
• Get legal or professional advice if you’re unsure.

2. Disclosure in Sales Contracts

For Owners Selling an Apartment:

• Mandatory disclosure: Every sales contract for a lot in a building with an embedded network must state that fact, plus the utility types (electricity, hot water, EV charging, etc.).
• Disclosure is the responsibility of the individual owner selling, not just the Owners Corporation or committee. This applies to both owner-occupiers and investors.

If You Don’t Comply:

• Buyers may have the right to rescind the contract.
• Strata managers, property lawyers, and real estate agents must understand these rules to help their clients stay compliant.

3. Off-the-plan Sales: Developer Obligations

For Developers:

• Off-the-plan sales must now also disclose all embedded network arrangements, including:
  • The types of networks present/planned (electricity, hot water, EV, etc.)
  • The provider(s)
  • Any special conditions or contract terms
• Buyers must be informed well before settlement.

What This Fixes:
Buyers aren’t caught off guard at the first AGM with a long, technical document about a 10-year network contract they never heard of.

“In the past, property developers in NSW had no obligation to disclose embedded networks. Now those days are over—non-disclosure can give buyers grounds to walk away.”

4. Strata Information Certificates

Section 184 certificates (strata information certificates) now must disclose:

• Whether an embedded network exists
• What contract terms apply (length, conditions, provider)
• All affected utilities
• If there are multiple operators (e.g., one for electricity, one for hot water)

Responsibility:

• Falls on strata managers and OCs, but ignorance is no excuse—get informed to avoid delays or penalties at sale time.

5. The Options for Owners & OCs

The system is built for flexibility. You’re not locked in forever:

• Owners Corporations can change embedded network providers—often through simple tender processes.
• At the end of a 3-year term (or earlier, with proper notice), you can run a tender or initiate a self-managed model.
• When changing providers, be vigilant about asset “buyout” clauses, valuations, and depreciation schedules.

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Switching Embedded Network Providers: Why and How

A lot of owners don’t realize that switching your embedded network provider is often both possible and incredibly beneficial. If you’re unhappy—or just unsure if you’re getting the best deal—test the market!

Reasons To Switch:

• Lower tariffs—real-world case studies have shown $300,000+ in savings in the first year for large apartment complexes.
• Ability to negotiate for extras, like free solar installations or EV charger infrastructure.
• Improved service, communication, and management.
• Avoiding “lazy person’s tax”—don’t just blindly roll over for another term.

How To Go To Market:

1. Review your current contract: Check end dates, notice periods, and any exit fees or asset buyout clauses.
2. Communicate with owners and the committee: Transparency is key.
3. Get professional advice or assistance: Consultants like Joseph Arena or your strata manager can guide tenders, valuations, or legal nuances.
4. Tender the market: Multiple providers, competitive rates, room to negotiate terms, including new infrastructure or guaranteed savings.

Bonus:
Some operators will pay you (the OC) a lump sum to take over, or even fund buyouts from the previous supplier if there’s enough value in the new deal.

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Case Studies: Best and Worst Embedded Network Setups

To show just how much these reforms (and good management) matter, let’s look at some real-world scenarios.

Best Case Scenario

Building:

• 270 apartments across two strata plans
• Developer: Ethical, long-term focus—owner of more than half the apartments (affordable housing provider)
• Strategy: Went to several embedded network suppliers up front

Results:

• Negotiated a 45% discount off the bulk energy rate.
• Annual common area energy bills: less than $50,000—astonishingly low for the size.
• Individual apartment owners get better rates than they could find retail, alone.
• Win-win: Both the OC and the owners benefit financially.

“If it’s set up right, the embedded network can provide better rates than you could ever get at home.”

Worst Case Scenario

Building:

• 452 apartments as part of a 700-lot BMC
• Initial setup by a large energy company; relationship soured after initial budgeting errors left the OC with big arrears.

What Went Wrong:

• Switched to a small, unknown provider on a profit-share model.
• Poorly prepared financial feasibility: wildly overestimated usage and returns.
• Couldn’t reconcile actual usage versus budget (e.g., air conditioning couldn’t be billed back accurately).
• Result: OC lost hundreds of thousands of dollars per year.

How It Was Fixed:

• Called in a professional to review contracts and model.
• Terminated the failing contract in the correct window.
• Tendered for new suppliers—received $300,000+ cash up front, a $70,000 annual rebate, and better customer service.
• Strata levies came down, finances stabilized.

Mid-Size Scheme Case Study

Building:

• 43-lot mid-size apartment block
• Original operator, strata manager, and building manager appointed together at first AGM.

Scenario:

• Owners weren’t satisfied—poor rates, weak communication from operator.

Solution:

• Professional audit of existing setup.
• Tendered to market: secured valuable upgrades, including EV charger infrastructure, locked-in tariffs on both electricity and hot water for term.
• Owners regained confidence and felt empowered.

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Tips and Practical Steps for Owners and Committees

1. Review, Review, Review:
Don’t let contracts auto-renew without scrutiny. Three years is now the max—use that time to stay competitive.

2. Understand Your Assets:
Who owns the infrastructure (wiring, distribution boards, etc.)? In almost all cases—you do! Operators only own their metering equipment or special assets.

“The owners of the building own the embedded network. The operators come and go, but you own the infrastructure.”

3. Get Professional Input:
Independent consultants or experienced strata managers can clarify agreements and run tenders.

4. Don’t Ignore Disclosure Requirements:
Ignorance of the law is not an excuse—buyers and sellers both have new, critical obligations under the reforms.

5. Be Wary of Asset Valuations:
If a provider is being bought out, check that asset values and depreciation schedules are realistic—not inflated to your disadvantage down the line.

6. Communication Is Key:
Committees should share information openly with all owners—circulate disclosure documents and share insights from tender reviews.

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FAQs: Embedded Networks and You

Q: Can we get out of our current embedded network contract early?
A: Sometimes—check your contract for termination windows, “convenience” clauses, or seek legal advice on potential options.

Q: Who is responsible for disclosure—the OC, or each owner?
A: For sales contracts, the owner selling the apartment is responsible, not just the Owners Corporation or committee.

Q: What if we have multiple operators in our building?
A: All must be disclosed in the sales contract and in the strata information certificate. Each utility provider must be named, with contract details.

Q: Our contract was signed before July 2024—is it affected?
A: If the contract was signed before 1 July 2024, maximum terms can still be up to 10 years. After that, renewals must be three years or fewer.

Q: Is self-management an option for the embedded network?
A: Yes—but it’s complex! You’re effectively running a utility service. Only attempt with an engaged committee, good technical advice, and clear reporting.

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Final Thoughts

The new disclosure rules and contract limitations for embedded networks mark a turning point for NSW strata schemes. Owners, OCs, and developers now have clearer responsibilities, greater flexibility, and more tools for transparency and competition. The reforms are designed to put owners back in control, prevent unwitting financial risk, and level the playing field—if you take the time to understand and act on them.

Now is the time to “lift the bonnet” on your building’s arrangements, get to grips with your options, and make sure your contract is delivering the value (and the flexibility) that your owners deserve.

“The building’s owners own the embedded network. You have control—don’t let operators take value that should stay in your community.”