Swathes of inner city and middle suburban Sydney are set to be transformed, with changes to apartment strata laws coming into effect this week allowing residents to override small numbers of holdout unit owners and proceed with redevelopment or renovation of older buildings.
The real estate sector will closely watch the change coming into effect on Thursday, with NSW the first state in Australia to change the threshold required for these projects from unanimous agreement to agreement by 75 per cent of owners and apartment investors.
Architect David Ostinga, who is overseeing the finishing touches of a new unit added to the apartment block in Bondi where he lives, said the change would allow many older buildings to be renovated where they would otherwise not be able to. “The original buildings were in dire need of maintenance; the dilemma was that many people wanted to live in Bondi regardless of a property’s condition,” Mr Ostinga said.
“For owners there are high returns but not much motivation to contribute to sinking funds … this is quite a difficult landscape to operate in to when you’re trying to get things to happen, but our building had reached a point where something needed to be done urgently.”
Mr Ostinga and the other residents agreed to a loan for the repairs, instead of a special levy, to be repaid through the construction and sale of an additional apartment in an otherwise disused part of the building — now a modern unit based around a courtyard.
Apart from Macquarie, Lannock is the only other speciality strata lender. The latter provided the capital for Mr Ostinga’s renovations.
Lannock chief executive, Paul Morton, said the change in legislation in NSW was an attempt “to balance the desires of the majority with the rights of the minority”.
“The new legislation will focus attention by owners on the lifestyle and return that they want to achieve from their property, some may want to sell the entire strata scheme, others will see that there are less catastrophic options available that increase amenity and return,” Mr Morton said.
Lannock and Macquarie could be in line for a boom in strata lending, with many typical apartment owners unable or unwilling to borrow under their own names or fund an increase in levies.
The other changes to the NSW legislation, which is being overseen by Better Regulations Minister Victor Dominello, include the need for owners’ corporations to consider a 10-year capital works fund for the building, rather than a one-year sinking fund.