That " Seventy-Five Percent " Law !

On November 30 a "revision " of Strata law comes into effect.  It will make some owners of strata apartments very rich - and it will absolutely terrify others.  It is known as the "Seventy-five Percent Law "" and it reduces the ratio of owners consent from the present hundred percent for the forced sale or redevelopment of an existing apartment building.

Like most law changes it delivers a mix of benefits and liabilities.  In the past the owners of old unit blocks that were occupying valuable land were frustrated by a single holdout who refused to sign on the dotted line to allow redevlopment.   We are desperately short of land to create new housing and in many cases this form of redevlopment will furnish the original owners with a better apartment, but also make them richer from the sale of additional apartments in a new and more modern higher building.

Proponents claim that this law change will deliver many opportunities for improvements that do not require demolition and rebuilding on the site.  Changed land use laws may make it possible to add extra stories to an existing building, or excavate to create a parking garage for many cars below.

In particular, Sydney is blessed with many apartment buildings built shortly after the end of the second world war in the eastern suburbs, inner west and the lower north shore.  Most of these are small by modern standards, with probably about a dozen apartments each but now standing adjacent to new buildings which tower above them.   Their apartment layout and standard fittings are way out of style and the site is absolutely begging for renewal.

This law change completely reverses the right of any individual to stop a redevelopment agreed to by the majority of owners.  The power is now back in the hands of the body corporate and that much vaunted "right of tenure " has limitations.   It is inevitable that some people who do not wish to move will be forced out of their home.

Those familiar with the housing industry can see a new strategy emerging to enhance profits. There is nothing to stop the body corporate of a dated old apartment building making application to the council for a development approval depicting replacement with a modern, multi apartment fashionable building.   They would be aware that a site with an approved DA would be immensely more attractive - and valuable - to developers and would therefore deliver higher profits to the original owners.

One of the side effects may be a price increase offered to owners of older style buildings by consortium's seeking to achieve that seventy-five ownership status so that they can force renewal and enhance their profits.   Any owner fighting a proposed redevelopment would be very suspicious of an apartment purchase by a mysterious new owner who then offered the newly acquired apartment for short term lease.

No doubt this law change will be good for the city and will result in many older sites getting a speedier renewal and a consequent increase in housing density, but it will also force out many pensioners who find to their dismay that this forced sale has added to their means tested assets and either decreased or ceased their pension.

Sometimes unexpected and added wealth can be a burden !