Beware Of The “Demolition” Verdict On Your Old Strata Complex Unit
NSW has displayed great momentum whether you talk about the new dwelling construction figures, median housing prices or the off-the-plan projects. It also carries the present darling of the crowd, Sydney, in its cradle. All this will definitely make you interested in buying in NSW. However, if you are planning to buy an old unit lot, you will have to contend with changes in the strata by laws. Let me try and give you insight into how they may impact your buying approach.
What are Strata by-laws?
Strata by-laws are the commandments which help any strata complex operate without disputes. These set of regulations see to the betterment of living quality and also aid in maintaining harmony between co-dwellers. All this sounds good, really good!
New by-laws to be introduced in July 2014
Going by the gospel, all can’t be good for everyone, let me help you delve deeper into what a few of these changes are. Come July 2014, the fast urbanising population of NSW will wake up to a new rule board. It will give them points to cheer- for instance, lesser restrictions on pets. Such cheers will however be balanced by groans.
After all, there will be greater restriction on smoking (you can’t smoke on ground floor balconies), overcrowding (can’t have more than two people populating a single room) and noise-making (hard floor surfaces…you know the rest).
What this may mean for investors?
All this seems trivial when you measure it against what the change in strata by laws might mean for an investor or owner-occupier. This point definitely requires a deeper scrutiny.
Developers in NSW can now have a stronger say regarding demolition of old units. In keeping with the vision of energy-efficient buildings and modern living spaces, the developers can offer a fair price to existing lot owners in lieu of their present units.
75% vote (and not 100% vote) now required
Earlier, any such action required a 100% vote from the owners of that particular strata complex. Now, this number comes down to 75%. This means that even if you say a firm NO to demolition, developers can still go ahead with the act if they muster 75% votes from your complex.
Why developers love old strata units
Developers love such properties because it allows them to create strata complexes with many more storeys than the present one (on the same area spread). Naturally, such construction can encompass many more lots and hence adds terrifically to their bottom-line.
A salvaging factor
A saving grace in this regard is that a 5-room penthouse and a small studio both count as “one” vote. This is a great boost for the concept of “Egalitarianism” or “equal rights for all”, I must say. In the past, the weight of a vote depended on the quality of unit and its area spread, clearly putting owners of tiny lots at a disadvantage.
Due Diligence a must for buyers
If you are planning to buy an older unit in NSW, you need to first conduct Due Diligence. Among other things, you will have to find out whether the area (your unit belongs to) is treated as vintage by the council.
If so, it will make matters easier for the developer as councils show little or no resistance to giving demolition go-ahead for such areas. Top on the mind of the council is redevelopment projects for these streets, given their high demand in the property market.
In general, the councils first ascertain whether the cost of repair and maintenance of an old unit complex (say, for the next 20 years) will be lower or higher than the cost of demolition and rebuilding of such lots.
Have you been offered a price for your strata complex lot by a developer?