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Posted 12 June 2019
Category: Strata, Urban Renewal, Development Contracting, Conveyancing
Strong pressure on Sydney property prices and an acute shortage of suitable development sites has made it possible for neighbours acting together to achieve excellent prices for properties which in aggregate represent a suitable development site. This is illustrated by the recent sale of nine St Leonards houses, which were sold for more than $66 million to a Hong Kong based investor.
Except perhaps for the price, this is not a unique situation, as there have been a number of collective sales across Sydney in recent years. The strongest pressure is for development sites close to the city and the harbour, but there is pressure across Sydney, as demand for higher density accommodation increases, with investment property purchasers and first-time buyers pursuing the limited available supply. Owners able to work together can take advantage of this, as have owners in St Leonards, Castle Hill, Guildford and a number of other Sydney suburbs in recent years.
For strata buildings, new legislation now makes this possible even where some owners don’t want to sell. The new legislation makes it possible for a 75% majority to drive through collective sale, provided that certain procedural and compensation requirements are satisfied. This is already proving controversial and will clearly have some significant downsides, but gives owners much more flexibility to sell or redevelop a dilapidated building where maintenance costs have become prohibitive or to take advantage of the commercial opportunity presented by a developer keen to purchase and redevelop the building as a whole.
Where all owners are in agreement, including for strata properties, the process is reasonably straightforward. The main steps would be:
For strata buildings under the new legislation with a dissenting minority less than 25%, collective sale may still be possible, but things get a bit more complicated. The main steps are:
Where the owner of a necessary property does not agree or for strata buildings more than 25% of owners don’t agree, the options are very limited. There is no compulsory acquisition mechanism in these circumstances, so the only possible solution is commercial, i.e. finding a way to persuade enough dissenting owners to change their position.
We have considerable expertise with property development, strata and non strata, acting for developers, property owners and strata managing agents and can assist with all of these issues. In particular, we can assist you with the following:
***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.