High-profile apartment defect cases have changed the way many NSW buyers approach purchasing, putting greater scrutiny on building quality, strata records and the parties behind a development before a contract is signed.

The industry buyers are assessing today, however, is also different from the one in which cases such as Opal Tower and Mascot Towers emerged.

NSW has introduced a series of regulatory measures aimed at strengthening oversight of apartment construction, including Building Commission NSW, the Residential Apartment Buildings Act 2020 and the Strata Building Bond and Inspections Scheme. Under the latter, developers are required to lodge a bond, with independent inspections forming part of the process for identifying defects in new strata developments.

Those changes provide another layer of protection, but they haven't removed the importance of buyer due diligence.

[smartcode_project:default project_id=5743 project_image_fid=372394]

For purchasers considering an apartment, that means looking beyond the residence itself. Building and strata history, strata reports, the track record of the builder and developer, the condition of common property and any known or planned expenditure by the owners corporation can all form part of assessing a building before purchase.

Whether the development is already complete can also materially change what can be assessed.

An off-the-plan purchaser is necessarily buying before the finished product exists. A completed apartment, by comparison, can be walked through before contracts are signed, allowing the purchaser to see the finishes, common areas and broader building as they have actually been delivered rather than relying solely on plans and renders.

It also removes exposure to some of the uncertainties that exist between an off-the-plan purchase and completion, including construction delays, cost pressures and builder insolvency during the delivery period.

[smartcode_project:default project_id=5743 project_image_fid=927]

<a href="https://www.apartments.com.au/project-marketer/equitifund-group">Projects by Equitifund</a> National Sales Director Ben Hamblett said that greater focus on tangible evidence is increasingly evident among apartment purchasers.

“The biggest shift we're seeing is buyers wanting proof, not promises,” Hamblett said.

“That's exactly why we deal in completed stock - you can inspect the building before you commit - and why we've backed every purchase with a cash bond against special levies.”

At <a href="https://www.apartments.com.au/buildings/the-lennox-parramatta-12-phillip-street-parramatta-nsw-2150">The Lennox</a> in Parramatta, that emphasis on a completed, inspectable product is already in place.

The 413-apartment, 46-level tower at 12 Phillip Street is being marketed by Projects by Equitifund, allowing prospective purchasers to inspect the residences, common areas and resident facilities before committing.

[smartcode_project:default project_id=5743 project_image_fid=375255]

The Lennox also introduces another layer to the due-diligence conversation through Strata Surety.

The vendor-funded arrangement provides purchasers with a cash-backed bond held in their own solicitor's trust account from settlement. According to Equitifund, the bond covers any special levy raised during the applicable cover period and is provided at no cost to the purchaser.

Special levies can create an unexpected cost for apartment owners where an owners corporation needs funding beyond its existing strata contributions. Under NSW strata law, a special levy requires approval by owners at a general meeting.

Equitifund Executive Chairman Greg Huxley said Strata Surety was designed to provide something more concrete than reassurance about that potential exposure.

“Buyers have every right to ask hard questions about strata risk - the industry has given them plenty of reasons to,” Huxley said.

“Our answer isn't a reassurance, it's a bond. Strata Surety puts real money behind that confidence, held by the buyer's own solicitor, not by us.”

[smartcode_project:default project_id=5743 project_image_fid=375281]

For The Lennox, its completed status also means purchasers can assess not only the apartment itself, but a building that has already been occupied and operating for several years.

Completed in 2021, the $300 million development, designed by <a href="https://www.apartments.com.au/architects/marchese-partners">Marchese Partners</a>, comprises one, two, three and four-bedroom apartments, with open-plan living areas extending to private balconies. Interiors incorporate engineered timber flooring, stone benchtops and integrated appliances, while many upper-level residences have views across the river and surrounding district.

Its established amenity can similarly be inspected in operation. Resident facilities include the Watermark precinct with a 20-metre pool, outdoor terrace, barbecue areas, gym, fitness studio and conference room, while ground-floor retail addresses the river walk and surrounding public space.

The Lennox is also home to the Southern Hemisphere's first fully robotic residential car park, which has now operated for several years. Its nine-level basement combines three conventional parking levels with six automated levels, accommodating 327 vehicles using technology from German firm Lödige Industries.

[smartcode_project:default project_id=5743 project_image_fid=925]

The riverfront address puts The Lennox close to much of central <a href="https://www.apartments.com.au/developments/parramatta-nsw-2150">Parramatta</a>'s existing infrastructure, including Parramatta Station, Westfield Parramatta, Parramatta Park, and the Church Street dining precinct.

The remaining apartments form part of a limited release secured by Equitifund, following the sale of the majority of residences before and shortly after completion.

The regulatory environment around NSW apartment construction has changed considerably since the defect cases that reshaped public discussion around the sector. For purchasers, however, regulation is only one part of the equation. The ability to investigate a building's history, review its strata position and, where possible, inspect what has actually been delivered remains central to making an informed apartment purchase.

At The Lennox, its completed status provides that opportunity before contracts are signed, while Strata Surety adds a financial backstop against special levies beyond the protections already provided under NSW strata law.

[smartcode_project_cta:default project_id=5743]

Joel Robinson

Buying with confidence: What NSW apartment buyers should check beyond the defect headlines

Too often, heritage buildings become the podium for a contemporary tower. At <a href="https://www.apartments.com.au/new-apartments/623-collins-607-623-collins-street-melbourne-vic-3000">623 Collins</a>, <a>Sterling Global</a> challenged its design team to reverse that process.

The brief to <a href="https://www.apartments.com.au/architects/plus-studio">Plus Studio</a> was deliberately simple: "Don't design around the heritage. Design from it." It became the philosophy behind a project that draws inspiration not only from two landmark heritage buildings, but from Collins Street itself, a street layered with architectural history and civic significance.

That philosophy has shaped one of <a href="https://www.apartments.com.au/developments/melbourne-vic-3000">Melbourne</a> CBD's most considered residential projects, where the 1924 State Savings Bank and neighbouring Batman's Hill Hotel have become the architectural foundation for 623 Collins rather than remnants preserved beneath a new development.

[smartcode_project:default project_id=145324 project_image_fid=372749]

Rather than approaching the site as a blank canvas, <a href="https://www.apartments.com.au/developers/sterling-global">Sterling Global</a> saw the existing buildings as the beginning of the story.

"Sites like this rarely become available," the developer said.

"623 Collins wasn't simply an opportunity to develop a prominent CBD site. It was an opportunity to restore and reimagine one of Melbourne's important heritage landmarks while contributing to the continued evolution of Collins Street. For us, the existing buildings weren't constraints. They were the beginning of the story."

Instead of mimicking the ornate heritage architecture, Plus Studio studied the proportions, rhythm and craftsmanship of the original buildings before translating those characteristics into a contemporary 42-storey tower.

[smartcode_project:default project_id=145324 project_image_fid=372748]

"The brief challenged us to create a contemporary landmark that respected Melbourne's architectural history without becoming nostalgic," Plus Studio said.

"Rather than mimicking heritage, we sought to understand its proportions, rhythm and material language before translating those qualities into a distinctly contemporary architectural expression."

The practice says the State Savings Bank and Batman's Hill Hotel became the project's primary source of inspiration, allowing the heritage buildings and contemporary architecture to exist "in conversation rather than contrast." Generous planted terraces further soften the transition between old and new, creating elevated green spaces while reinforcing the dialogue between the restored podium and the contemporary tower.

That dialogue continues throughout the interiors, where Melbourne designer Fiona Lynch developed a material palette inspired by the idea of alchemy, balancing contrasting materials that reference both the Neo-Grec detailing of the original bank and contemporary urban living. The result is a series of spaces that feel timeless rather than trend-driven.

[smartcode_project:default project_id=145324 project_image_fid=354343]

The project will deliver 316 residences across four collections, Heirloom, Signature, Reserve and the Penthouse Collection, with each responding differently to its position within the building, from the restored heritage podium through to the upper levels of the tower. The Heirloom Residences retain defining heritage elements including original heritage windows, generous proportions and high ceilings, while the tower introduces contemporary homes with expansive layouts and elevated views.

Amenities have likewise been designed to support long-term city living rather than short-stay convenience. Residents will have access to concierge services, wellness facilities including a pool, cold plunge, sauna, steam room and gym, alongside private lounges, entertaining spaces and dedicated resident clubs.

Sterling Global says that approach is resonating with buyers seeking permanence rather than novelty.

[smartcode_project:default project_id=145324 project_image_fid=354347]

According to the sales team, purchasers are looking for enduring architecture, generous floorplans, heritage character and long-term value, with many commenting that 623 Collins "doesn't feel like another apartment development" because of the way the architecture has been curated around the site's history.

Situated on the prominent corner of Collins and Spencer streets, the project occupies one of Melbourne's most recognisable gateway sites, marking the western entrance to the city's best-known street. For Sterling Global, it also reflects a broader shift in city-making.

"Rather than maximising development yield, the project embraces adaptive reuse as a design philosophy, allowing heritage to inform architecture, interiors and the overall resident experience," the developer said.

"The result is a building that feels uniquely connected to Melbourne."

[smartcode_project_cta:default project_id=145324]

How Sterling Global designed 623 Collins from Melbourne's history

Avant Townhomes is adding to Ivanhoe’s family-sized housing options with <a href="https://www.apartments.com.au/new-townhouses/three-82-ivanhoe-382-upper-heidelberg-road-ivanhoe-vic-3079">Three 82</a>, a collection of just 16 four-bedroom townhomes on Upper Heidelberg Road.

The <a href="https://www.apartments.com.au/developers/intrapac-property">Intrapac Property</a> townhome division has taken a contemporary approach to the traditional family home, pairing larger floorplans with the lower-maintenance format of a townhouse.

[smartcode_project:default project_id=152069 project_image_fid=374394]

Designed by <a href="https://www.apartments.com.au/architects/arcadia-studio">Arcadia</a>, with landscaping by Landsite, the homes feature generous open-plan living and dining areas that connect directly to outdoor spaces, with layouts also designed to maximise natural light and privacy.

Natural stone is used throughout the interiors, including in kitchens that pair stone surfaces with bespoke cabinetry, considered storage and SMEG appliances.

The four-bedroom layouts include built-in wardrobes and a main bedroom with its own ensuite, while family bathrooms service the additional bedrooms. Each home also includes a lock-up double garage and intercom entry.

[smartcode_project:default project_id=152069 project_image_fid=374399]

Energy efficiency has been incorporated into the design through solar panels, double glazing and reverse-cycle heating and cooling, with the homes targeting 7-star energy ratings.

Rather than incorporating extensive communal facilities, Three 82 has been conceived around private residential amenity, with the 16-home scale keeping the focus on individual homes and their own indoor and outdoor spaces.

The development is located at 382 Upper Heidelberg Road, around one kilometre from Ivanhoe Village's cafés and retail and a short drive from Eaglemont Station and Ivanhoe Station.

[smartcode_project:default project_id=152069 project_image_fid=374393]

Several of Ivanhoe's established schools are also nearby, including Ivanhoe Girls' Grammar and Ivanhoe Grammar School. The address also provides access to the suburb's parklands and the wider Yarra River corridor.

<a href="https://www.apartments.com.au/project-marketer/nelson-alexander">Nelson Alexander</a> has been appointed to handle sales.

Construction is underway and progressing well, with Three 82 currently tracking toward completion in Q2 2027.

[smartcode_project_cta:default project_id=152069]

Three 82 brings boutique four-bedroom townhome collection to Ivanhoe

Builder-developer&nbsp;<a href="https://www.apartments.com.au/developers/graya">Graya</a> has secured a prime Newstead site from fellow developer Fraser, subsequently lodging plans for The Silo, a major mixed-use residential project in Newstead designed around a new public laneway linking the James Street precinct with the wider Gasworks and Newstead neighbourhood.

Proposed for the corner of Chester and Morse streets, the <a href="https://www.apartments.com.au/architects/bureauproberts">Bureau^Proberts</a>-designed project places its strongest emphasis at ground level, where retail, landscaping and a new cobblestone pedestrian connection would open the site to the surrounding neighbourhood. The design team describes The Silo as “more than a residential building”, positioning the development as an extension of Newstead’s public realm rather than a standalone apartment tower.

“A new cobblestone laneway and landscaped connection between James Street and Gasworks unlock a missing pedestrian link, improving walkability and stitching together two of Brisbane’s significant urban destinations,” Bureau Proberts said in its Urban Design Report.

<img alt="First look: Graya plans The Silo as new pedestrian link between James Street and Gasworks" data-entity-type="file" data-entity-uuid="0ea1b06a-75f5-40a5-b2c5-33c97bc86052" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/silo%20bldg.png?VersionId=KmjsAtNePu57_B31EM_DJ5T6KPJHtcmo" />

The Silo is planned as a mixed-use development incorporating apartments alongside a bar and centre activities including food and drink outlets, indoor sport and recreation, office and retail uses.

Architecturally, Bureau Proberts has conceived the building as a collection of vertically expressed, stepping forms rather than a single uniform tower. The composition rises from an articulated podium before being broken by a triple-height landscaped recreation level, with the upper section becoming more compact before terminating in a landscaped rooftop garden.

The project's name and architectural language draw directly from Newstead's industrial history. Patterned off-form concrete is proposed as the principal façade material, complemented by slender metal rod balustrades and extensive planting. The cylindrical and vertically ribbed elements give the building its silo-like expression, while curved balconies and planted edges introduce a softer subtropical layer.

“The Silo reinterprets its robust forms, scale and materiality through a contemporary subtropical architectural expression, creating a building that acknowledges its industrial legacy, while responding to the way the precinct is occupied today,” Bureau^Proberts said.

The recreation level is one of the defining breaks in the tower. Plans include a lap pool, mature subtropical planting and shared resident facilities within an elevated communal garden. Landscaping continues through the podium and onto the rooftop, where a further garden forms what the architects describe as a “subtropical crown” to the building.

<img alt="First look: Graya plans The Silo as new pedestrian link between James Street and Gasworks" data-entity-type="file" data-entity-uuid="f8451036-35a4-49a9-8d88-2ef4438eba3d" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Silo%20Lane.png?VersionId=h8N31_rYmCEqoNrpt4kbYVQhJGZn60LH" />

At street level, the development has been designed to establish a more permeable block. Retail and hospitality tenancies address the public realm, while landscaped pedestrian spaces lead into the new laneway connection. Renders in the design report show the proposed “Silo Lane” as a substantial opening through the podium, framed by cylindrical concrete forms with cascading planting above.

The Silo continues Graya's move into larger apartment developments after building its reputation across high-end residential projects in Brisbane and the Gold Coast.

Graya buys Frasers Newstead site, plans The Silo between James Street and Gasworks precincts

<a href="https://www.apartments.com.au/developers/wickton">Wickton</a>’s completed Linacre Rise development in Hampton is giving Bayside downsizers the opportunity to move into a spacious apartment near the beach, with the developer covering stamp duty for a limited time.

The 27-residence development has been designed for buyers who want to simplify their living arrangements without giving up the space, warmth and quality associated with a long-term family home. Most apartments have already been secured by Bayside locals, leaving a select collection of two and three-bedroom residences and penthouses available.

Two-bedroom apartments are priced from $1.275 million, three-bedroom residences from $2.25 million and penthouses from $3.375 million, with the completed homes available to inspect and move into now.

[smartcode_project:default project_id=95289 project_image_fid=366760]

<a href="https://www.apartments.com.au/buildings/linacre-rise-hampton-8-10-linacre-road-hampton-vic-3188">Linacre Rise</a> occupies an elevated position on one of <a href="https://www.apartments.com.au/developments/hampton-vic-3188">Hampton</a>’s quiet, tree-lined streets, around 250 metres from the bay and 500 metres from Hampton’s village centre. Its setting gives residents access to the beach, local cafés, shops and Hampton Train Station while retaining the feel of an established residential neighbourhood.

Architecture and interiors by <a href="https://www.apartments.com.au/architects/ewert-leaf">Ewert Leaf</a> draw on the warmth and permanence of traditional brickwork, with the building integrated into terraced landscaping by <a href="https://www.apartments.com.au/landscape-architect/john-patrick-landscape-architects">John Patrick</a>. Ground-floor apartments are elevated above the street and include private garden courtyards, while several upper-level residences have generous balconies and outlooks toward the bay.

Inside, the residences favour natural materials and generous proportions. Herringbone-pattern European oak flooring, natural stone benchtops, premium joinery and Swiss V-ZUG appliances are among the key inclusions, while integrated storage has been incorporated across kitchens, bathrooms, studies and living areas.

The kitchens have been planned as practical spaces for both everyday use and entertaining, with substantial island benches, detailed cabinetry and adjoining dining and living zones. Full-height wardrobes, plush bedroom carpeting and carefully considered lighting reinforce the residential character Wickton sought to retain for buyers moving from larger homes.

[smartcode_project:default project_id=95289 project_image_fid=366769]

A Linacre Rise purchaser said the completed apartment had delivered the space, outlook and construction quality they had been seeking.

“The unit is very light, has views to die for over the bay, all construction materials and fittings are premium quality, we have secure parking for three cars, EV charging at very competitive rates, the neighbours are friendly and there is just a lovely ambiance about the place,” the purchaser said.

Environmental features include solar panels, shared electric vehicle charging stations, rainwater harvesting for toilet flushing and landscape irrigation, double-glazed windows and water-efficient fixtures and appliances.

[smartcode_project:default project_id=95289 project_image_fid=366762]

The development was built by Balmain &amp; Co, with Wickton managing the broader development process through its in-house team.

For downsizers, the project’s completed status removes much of the uncertainty associated with buying off the plan. Purchasers can inspect the finished apartments, understand their outlook and proportions, and move in without waiting for construction to conclude.

The remaining selection includes north-oriented balconies, corner configurations and penthouses with elevated bay views. The developer-paid stamp duty initiative is available for a limited time, with potential savings of up to $200,000 depending on the residence purchased.

[smartcode_project_cta:default project_id=95289]

Limited-time stamp duty offer at completed Linacre Rise apartments in Hampton

Prominent New Zealand apartment and hotel operator, <a href="/developers/safari-group">Safari Group</a>, is offering up a prime investment opportunity for Australians to purchase off the plan in one of the world’s most popular ski destinations.

They recently took to market Mountain Oak Queenstown Apartments, in the growing precinct of Remarkables Park in Frankton, near the airport and at the foot of The Remarkables - the mountain range the locals like to call “The Remarks”.&nbsp;

Sydney investors have shown interest in the one, two and three-bedroom apartments that secure high-season occupancy six months over the year, primarily over summer and winter months.

They average 90 per cent occupancy across their portfolio over January, February, March, August, November and December, while shoulder season months of April, July, September and October are still occupied 70 per cent of the time, with the growing appeal of Queenstown becoming not just a hotspot for the snow, but a lifestyle destination.

Even in the low seasons of May and June, occupancy levels reach around 40 per cent.

<img alt="Safari Group’s Mountain Oak Apartments brings new investment potential to Queenstown" data-entity-type="" data-entity-uuid="" src="https://res.cloudinary.com/dz9xllyip/image/fetch/f_auto,c_limit,w_1440,q_auto/https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/field/image/Ext_Cam15_Sunny.jpg?VersionId=SJAROUM_1s.Tr5ciMk4EEj5oAt_Vewmv" />

Safari’s Safari Hotels arm can also manage the holiday letting for an investor, from the listing on holiday accommodation websites such as Airbnb and Booking.com to the cleaning and maintenance of the investment. They’ve been in the short stay management business for 15 years and offer 24/7 support for investors, an important convenience benefit for any overseas investor

Another major drawcard for Australians is that New Zealand doesn’t have a stamp duty policy - so the entry price of NZ$639,000 (AU$586,000), is all that is payable on completion.

<img alt="Safari Group’s Mountain Oak Apartments brings new investment potential to Queenstown" data-entity-type="" data-entity-uuid="" src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,dpr_2.0,q_auto:good/https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/313_Livingv2_WEB.jpg?VersionId=nV229fM0ZeYpoxOrX372HyGjfwY_LR8c" />

Safari is starting construction of the 141 apartments in Q2 this year, with a two-year build estimated to complete in mid-to-late 2027.<img alt="" data-entity-type="" data-entity-uuid="" height="15" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXczFpFAb7WuA6f4f9TtKWcqXyNwR8qqtakWv352ERkpqNlP3KwIo8YKxw67jZNHfpjEGIZGv5MQTbnvLZwNt8iu9IVdOrswOjCvBZ4zhSoOOLrpt6etVEZTN1gkBho0r_R72zdHNA?key=yq3daOanqHSb88QFd8jGYKdb" title="Click and drag to move" width="15" />​

The apartments will feature modern amenities and contemporary designs with expansive windows capturing sweeping views of The Remarkables mountain range.&nbsp;

Interiors are equipped with modern finishes, premium appliances, and secure electronic key-locked doors, ensuring a comfortable living experience for residents and guests alike.

With its strategic location near Coronet Peak and Cardrona Alpine Resort, as well as key retail and dining precincts such as Market Street, Five Mile Shopping Centre, and Remarkables Market, Mountain Oak offers a strong proposition for investors seeking high rental yields and capital appreciation in one of New Zealand’s most sought-after locations.&nbsp;

Queenstown’s sustained demand for visitor accommodation and rental properties is underpinned by a shortage of housing options, attracting both local and international buyers.

Safari Group offers low-touch investment proposition in Queenstown’s popular ski fields district

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A reputable, licensed mortgage broker, who has lending agreements with a wide range of lenders, should be able to tell how much you can realistically afford to borrow based on your financial position, goals and income and  provide you with a number of suitable options.
Always ensure there is enough of a buffer in your budget in case interest rates rise and your monthly repayments increase.
Alternatively, consider taking out a fixed-rate home loan if you want certainty or splitting your home loan between fixed and variable to hedge your bets.
Be aware that some brokers and lenders will try to charge you a higher interest rate for an investment loan, insisting it carries more risk.
However, other lenders do not differentiate between investors and owner-occupiers, so keep a look out.
Before signing up, ask the lender to waive the establishment fee.
Many lenders will waive these to secure your business.
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po-LsXgBTHBmX

Speak to your mortgage broker and banker to know what you can afford with a nice buffer

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In my 20 odd years as a quantity surveyor, I have never seen more “mortgagee in possession” properties for sale than in the last few years. And this is particularly true for commercial property.
In fact, recent studies indicate that a whopping 25% or more of all commercial properties for sale have been distressed sales.
So what does this say about the commercial real estate market? Well, aside from the fact that now might be a good time to start snapping up bargains, there are other substantial tax benefits to be made. And it all relates to paragraphs 41 &amp; 42 or Tax Ruling 97/25;
Construction cost exceeds purchase price
41. Damian is a property developer who constructs a condominium of 38 units in a popular holiday resort. All units are intended for sale. During the construction period, he sells 28 of the units off-the-plan. After completion of the project, real estate prices drop significantly and he decides to sell the last of the units below cost.
42. David, an investor, buys one of the last units for $95,000. The actual construction cost of the unit to Damian was $105,000. David is entitled to a deduction under Division 43 based on construction expenditure of $105,000.
You see, the capital works deduction is based upon the actual construction cost, in comparison to most depreciating assets that are based upon what you pay for the item.
And as quantity surveyors, we are now preparing depreciation schedules where the construction cost is close to or exceeds the purchase price, just like the above example.
And as far as I’m aware, there is no other way under the Australian taxation system where you can get a deduction greater than what you actually pay for something.
When you buy a car from Mazda, for instance, you don’t ring up Mazda and ask what it cost them to manufacture the car - do you?
Buildings are different.
And if you don’t know the construction costs, TR 97 / 25 states that a report from a quantity surveyor will be accepted.
Remember, you can claim capital works (sometimes called building allowance) on commercial property if construction commenced after July 1982.
For residential buildings, construction must have started after July 1985.
Certain items within commercial properties also attract a higher rate of depreciation – like carpet.
That’s because office carpet gets more wear and tear than carpet in a home.
And it’s not just commercial property prices that have dropped close to or below construction costs. We have also seen this trend in relation to residential property prices in some holiday regions such as Noosa and Cairns.

<hr>
Tyron Hyde is director of <a target="_blank" href="https://www.washingtonbrown.com.au/">Washington Brown Quantity Surveyors</a>. 
His book <a target="_blank" href="https://www.claim-it.com.au/?utm_source=wbsite&amp;utm_medium=image&amp;utm_campaign=homepagebanner">CLAIM IT!</a> helps property investors maximise their tax benefits through smart deprecation.
 
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tyronhyde-GVUTYT8ZT3

Claiming capital deductions on commercial property: Tyron Hyde

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It’s a curious factor in 21st Century Australia that whenever housing prices rise, even moderately as they are currently, hordes of attention-seekers start looking for someone to blame. 
   The first curious thing is that anyone would think “blame” is appropriate. Apparently rising home prices is a bad thing, although two-thirds of Australian households (those who own their homes) have good reason to feel it’s a very good thing. And indeed, given that we’re all required to provide for our retirement and the family home is (for most people) the basis of their ability to do that, it’s also a good thing for the nation.   The second curious thing is that the finger-pointers never get it right in apportioning blame. Popular but misguided options are property investors (supercharged by negative gearing tax benefits, apparently), foreign investors (who pay silly prices, according to popular theory) and first home buyers (driven by government grants and stamp duty concessions).   The third curious thing is that the many people shouting “crisis” never produce any research data to support their theories that investors/foreigners/first-timers are the guilty parties in creating the outrage of increasing home values. This is because the data doesn’t exist. There’s no basis for any of the theories.   The reality is that the bulk of property buyers are next-time buyers – i.e. home buyers other than first-time buyers. Unlike first-timers, next-time buyers have the capacity to pay a top price and, unlike investors, they have the motivation to do so. Next-time buyers are more than half of the market (more than foreigners, first-time buyers and investors combined) and have the bulk buying power to cause prices to rise.   Curiously, no one ever blames them – the real movers and shakers in the property markets.   But, wait, we have a new contender. The Reserve Bank has come up with another candidate in the blame game: mums and dads who start self-managed super funds and buy real estate.   Those of you who thought that you were doing the right thing by your family and the nation by seeking this method of providing for your retirement, think again. You’re naughty boys and girls because you’re pushing up house prices. The RBA wants you to have assets in your SMSF that don’t grow in value, apparently, if that makes sense to anyone.   I think it’s time for the whole nation to take a collective cold shower on the issue of house prices. Since mid-2010, the last time we had serious price growth in the capital cities, we have had two years in which prices generally declined.   In the past 12 months the weighted average across the eight capital cities is a rise of 5% to 6%, depending on which research source you prefer. That is moderate growth only, roughly in line with the rise in incomes.   Keep in mind that the weighted city average in the ABS House Price Indexes in June quarter 2010 was a rise of 18.4%. Every city except Brisbane was in double digits, headed by Melbourne’s annual rise of 24.3%.   Growth of that sort might justify the current frenzy of comment about booms, bubbles and blame. But, right now, rather than the “white hot” markets that some are screeching about, we have lukewarm markets only. And no one deserves to be blamed for that.
 
<hr>
 Terry Ryder is the founder of <a target="_blank" href="https://www.hotspotting.com.au/" rel="nofollow">hotspotting.com.au</a> and you can contact Terry via <a href="https://mailto:%20ryder@hotspotting.com.au" target="_blank">email</a> or on <a href="https://twitter.com/hotspotting" target="_blank">Twitter</a>.
 
 
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terryryder-YECXbqmri2

It's time for a collective cold shower on house prices: Terry Ryder 

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A reputable, licensed mortgage broker, who has lending agreements with a wide range of lenders, should be able to tell how much you can realistically afford to borrow based on your financial position, goals and income and provide you with a number of suitable options.
Always ensure there is enough of a buffer in your budget in case interest rates rise and your monthly repayments increase. Alternatively, consider taking out a fixed-rate home loan if you want certainty or splitting your home loan between fixed and variable to hedge your bets.
Be aware that some brokers and lenders will try to charge you a higher interest rate for an investment loan, insisting it carries more risk.
However, other lenders do not differentiate between investors and owner-occupiers, so keep a look out. Before signing up, ask the lender to waive the establishment fee. Many lenders will waive these to secure your business.
<hr>
This article is fromProperty Observer's free ebook <a href="/guides/free-ebook-top-10-property-investment-tips">Top 10 Property Investment Tips</a>
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Look locally to see what the real rental returns could be

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I have no doubt that Sydney’s property markets are set for rapid growth at the lower price ranges which will flow to the top-end, however it will be a trickle not a tsunami. They say: when you make a mountain out of a molehill, don’t expect anyone to climb up to see the view. You see the view is otherwise known as an opinion with the voice coming from the Reserve Bank of Australia (RBA). The Sydney Morning Herald conveniently published this week – <a target="_blank" href="https://www.smh.com.au/business/the-economy/how-to-spot-a-housing-bubble-20130925-2ue44" title="How to spot a housing bubble.">how to spot a housing bubble.</a>
When looking at the view of our local market look no further than <a target="_blank" href="https://www.rwm.com.au/news/" title="this week’s sales">this week’s sales</a> which identifies in Mosman, Cremorne, Cremorne Point, Neutral Bay and Cammeray there were 32 sales with 22 of those sales being apartments, making up 69% of the week’s sales. 
<a target="_blank" href="https://www.macrobusiness.com.au/2013/09/rba-get-real-sydney/" title="RBA tells Sydney to get real">RBA tells Sydney to get real</a> when the RBA released its financial stability review this week. “Over the past year or so there has been an increase in property market activity. This is not surprising given the reductions in interest rates. The pick – up in demand, which has been sharper in New South Wales and from investors more generally, has been associated with recent increases in housing prices. It is important that those purchasing property do so with realistic expectations of future dwelling price growth.”
<a target="_blank" href="https://www.smh.com.au/business/reserve-warns-diy-super-may-set-new-property-debt-trap-20130925-2uei4" title="Reserve warns DIY super may set new property debt trap ">Reserve warns DIY super may set new property debt trap </a>although what needs to be pointed out is that Australia’s mortgage market is worth a whopping $1.2 trillion with the SMSFs totalling approximately $80 billion. If you want to throw another hand grenade: the RBA could start a rumour that the Abbott government is looking at abolishing negative gearing. Now that would add plenty to the spinning property fan.
Christopher Joye, writing for the Australian Financial Review wrote <a target="_blank" href="https://www.afr.com/p/markets/market_wrap/only_fools_ignore_bubble_trouble_tcMdVkWXAAWCs1PcK2SG9O" title="Only fools ignore bubble trouble">only fools ignore bubble trouble</a>; “residential property is the biggest source of household wealth and underlies the most important asset – home loans – held by Australia’s colossal and concentrated banking industry, which accounts for 30% of the share market’s value. There is $4000 billion of housing and $1300 billion of debt held against it. It is our most significant investment class. So are we in the throes of a bubble, and should we worry about the risks of one materialising?”
<a style="margin: 0px; padding: 0px; border: 0px; outline-width: 0px; font-style: inherit; font-family: inherit; vertical-align: baseline; color: #be002d; text-decoration: none;" href="https://www.rwm.com.au/files/2013/09/23-09-2013-9-57-43-AM.jpg"><img style="margin: 0px auto; padding: 0px; outline-width: 0px; font-style: inherit; font-family: inherit; display: block; max-width: 100%;" height="219" width="470" src="https://www.rwm.com.au/files/2013/09/23-09-2013-9-57-43-AM.jpg" alt="23-09-2013 9-57-43 AM" class="aligncenter size-full wp-image-8206"></a>
Source: RP Data, ABS, Australian Financial Review
The main issues as I see it is that banks maintain a lending responsibility given our economy still harbours strong concerns with what is happening overseas. What many seem to forget is that despite Australia experiencing a record low cash rate of 2.5%, if the property markets take-off so too will the cash rate. So with all these warnings and variables it would be fair to say there has never been a better time to buy given the cash rate will go-up, so lock and load the present rates in.
Another factor that is being missed is <a target="_blank" href="https://www.scmp.com/property/international/article/1311717/record-number-chinese-buyers-pump-property-prices-sydney" title="Record number of Chinese buyers pump up property prices in Sydney.">record number of Chinese buyers pump up property prices in Sydney.</a> Then you have the combination of Chinese and local investors buying <a target="_blank" href="https://www.afr.com/p/australia2-0/of_barangaroo_apartments_sell_out_jF37jrlXYVTvxYQ5wNsnhK" title="$300m of Barangaroo apartments sell out in hours ">$300m of Barangaroo apartments, which sold out within hours</a>, an expected result given its unique location. Agents today are being taught and advised on <a target="_blank" href="https://www.propertyobserver.com.au/news/marketing-your-property-to-chinese-buyers/2013092465226" title="Marketing your property to Chinese buyers ">marketing your property to Chinese buyers </a>as <a target="_blank" href="https://www.news.com.au/realestate/news/significant-investor-visa-holders-target-highend-sydney-properties/story-fnd91nhy-1226711353150" title="significant investor bias holders target high – end Sydney properties.">significant investor bias holders target high – end Sydney properties.</a>
It will be most interesting to see what the newly elected Abbott government does with the previous government’s Significant Investor Visa (SIV). SIVs were introduced on November 24 2012, and have attracted over 100 applications from wealthy Chinese investors looking to spend at least $5 million in Australia. Whilst some are suggesting that the Abbott government will scrap this initiative it should however be noted that this is aimed at the top-end markets which are showing just a pulse in terms of activity.
Another week of tight listings which continue to remain well down on previous year’s volumes. With school holidays finishing on October 8 we should see just how confident our market is, although I expect that we won’t see much difference from what we have seen all year.
Another reason why (in my opinion) that we have such a strong focus on what’s happening to the property markets at the moment is that there is not that much to write about. Newspapers are renowned for talking real estate up due to them trying to reignite their “rivers of gold” print revenues.
That’s my conspiracy theory.
 
<hr>
 Robert Simeon is a director of <a style="font-size: 14px;" rel="nofollow" target="_blank" href="https://www.rwm.com.au/" title="RWM">Richardson  Wrench Mosman and Neutral Bay </a>and has been selling residential real estate in Sydney since 1985. 
He has also been writing real estate blog <a style="font-size: 14px;" rel="nofollow" target="_blank" href="https://www.rwm.com.au/news/" title="Virtual Realty News">Virtual Realty News</a> since 2000. 
The RWM real estate model has sold in excess of $1 billion in database sales globally.
 
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There's never been a better time to buy: Robert Simeon

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Is it de rigueur to hang chandeliers in a garage?
<img src="/images/stories/2013/09/06/HE-SAID-WORDS.jpg" alt="HE-SAID-WORDS" width="132" height="30"><img src="/images/stories/2013/09/06/NO.jpg" alt="NO" width="55" height="30"><img src="/images/stories/2013/09/06/jc-silhouette-5.jpg" alt="jc-silhouette-5" width="165" height="248" style="float: right;">
Hanging chandeliers in a garage is a wasteful and unnecessary Marie-Antoinette style of extravagance that should be discouraged. Gathering dust in a corner is okay, but sparkling overhead is a silly notion.
Even the late Liberace, who was the king of gaudy over-the-top interior décor, didn’t hang crystal confections in the garage of his cheap Palm Springs home.
No bloke will honestly want the garage space turned, even rarely, into a ballroom. Imagine having to get the oil spill stains off the floor before the big night.
A garage with chandeliers is almost as ridiculous as chandeliers in a chook shed.
<div style="text-align: center;">
<img src="https://st.houzz.com/simgs/c2f10f3100357a9f_3-5369/traditional-garage-and-shed.jpg" width="210" height="320" style="display: block; margin-left: auto; margin-right: auto;">Photo: Lindsay von Hagel, Houzz
</div>
<img src="/images/stories/2013/09/06/mb-silhouette-4.jpg" alt="mb-silhouette-4" width="165" height="248" style="float: left;">
<img src="/images/stories/2013/09/06/SHE-SAID-WORDS.jpg" alt="SHE-SAID-WORDS" width="149" height="30"><img src="/images/stories/2013/09/06/YES.jpg" alt="YES" width="55" height="30">
Why not? It’s frivolous and fun. As interior designer Garth Barnett says “if you can you afford it, you can have it”.
But be warned hanging chandeliers in the garage will only work in some homes. But certainly for instance, the Gold Coast hinterland mansion which sold recently for $7.2 million,<a href="https://www.propertyobserver.com.au/news/bellagio-la-villa-the-grand-gold-coast-mansion-sells-at-72-million/2013092465239" target="_blank"> Bellagio La Villa</a>. This vast 10-bedroom residence has a five-car garage festooned with gilt and glass chandeliers (pictured below). Given the sumptuous décor throughout the rest of the house, these garage light fittings seem appropriate.
<img src="/images/stories/2013/09/27/tallebudgera-sept-27-one.jpg" alt="tallebudgera-sept-27-one" width="470" height="240">
A champion of chandeliers is the renowned international designer, Iain Halliday, who often allows the uniqueness of Venetian or Baccarat crystal to make a lighting statement within a contemporary inner city interior.
While his use of glamorous chandeliers usually is confined to living and dining spaces, garages could be next if he turns his attentions to projects in the NSW Southern Highlands. Perhaps even horse stables!
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Chandeliers hanging in the garage? He Said/She Said

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The June 2013 reporting season has recently been completed, with most AREITs releasing results in-line or slightly better than forecast. A review of the major underperformers and outperformers during the reporting season (31 July 2013 to 30 August 2013) has been undertaken.
AREIT performance over the reporting season 
During the reporting season, the AREIT sector generated a negative return of 0.2%, underperforming the Australian share market by 2.7%. Underperformance of the sector is partly attributable to an increase in long-term government bond yields during the month with long-term bond rates increasing by approximately 0.18% to 0.20%. Chart 1 below shows the total returns of individual AREITs over the reporting season.
Chart 1 – AREITs returns over August 2013
Click to enlarge
<a href="/images/stories/2013/10/08/areit-oct-9-big.gif" title="Click to enlarge" rel="shadowbox"><img src="/images/stories/2013/10/08/areit-oct-9-small.gif"></a>
 
 
Source: IRESS
 
Underperformers
Key underperformers during the reporting period were FKP Property Group whose share price fell by 16.9%, BWP Trust which fell by 5.9%, and GPT Group falling 3.0%.
FKP Property Group reported an impairment of $188m of its held properties and an 11% fall in its NTA just prior to the release of its financial year-end results and was subsequently sold down heavily. Statutory profit, dividend per share and earnings per share fell considerably.
The fall in value of the BWP Trust during the reporting period is mainly attributable to an entitlement equity raising made on August 8, 2013 at a discount of 4% to the prevailing stock price. This raising was completed on August 26, 2013. Financial results were in-line with expectations for the Trust with the exception of an increase in debt which increased finance costs by 6.2% and a fall of 1.2% in distributable profit for the financial year.
GPT financial results were below expectations attributable mainly to downward revaluations of properties held in Dandenong and Charlestown. Statutory profit, which includes exceptional items, was down by 6.7% from 2012 results and was below expectations. Net operating income growth slowed by 0.7% during the first six months of the year. The company’s has revised its earnings per share forecast down by 0.4% for the financial year ending June 30, 2014.
Outperformers
Key outperformers during the reporting period were Cromwell Property Group, whose share price rose by 5.6% and Stockland, which rose by 4.2%.
Cromwell Property Group stock price rose by 2% on the day of its release of the financial results. Results were in-line or slightly above expectations for the financial year. Dividends per share and dividend payout ratio were slightly higher relative to 2012 financial results and in-line with expectations. Operating profit amounted to 7.6 cents per share relative to expectation of 7.5 cents per share, with property investments contributing to 95% of operating earnings (up by 21% from last year). Additional rental income from properties acquired in NSW and Brisbane CBD in May 2013 contributed to a higher operating profit than expected. The company forecast an increase in operating profit of 8.8% and an increase in distributions of 3.4% for the financial year ending 30 June 2014.
There was no significant impact on Stockland’s share price following the announcement of weaker financial year results, as they were in-line with expectations. Stockland reported a fall in earnings per share of 24% during the financial year mainly attributable to a fall of approximately 79% in statutory profit, resulting from the writing down of its residential portfolio by around $355 million during the year. Strong performance relative to the sector during the reporting season can be partly attributable to the company’s positive outlook for the residential property market.
 
<hr>
 Binesh Seetanah is an analyst at <a href="https://atchison.com.au/" target="_blank">Atchison Consultants</a>.
 
 
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A-REIT performance over the reporting season: Binesh Seetanah

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To receive an attractive rental return from your investment, you will firstly need to find tenants and secondly find tenants that are willing to pay the rent you’re advertising.
Terri Scheer Insurance general manager Carolyn Majda says that when choosing a property to invest in you should think about the tenant demographic you want to  attract, for example a family, sole tenant or couple, and choose a home that is likely to appeal to them.
She also advises considering properties that are close to good schools, shops and public transport as these are likely to be well sought after and may give you a larger pool of prospective tenants from which to choose.
Other things to consider include whether it is a well-maintained building (if you are buying an apartment) and if there is good natural light.
Byron Rose principal of real estate firm Rose &amp; Jones, NSW, says the question investors should ask themselves is: “Would you live here, and would you be prepared to pay market rent for the property?”
<hr>
This article is fromProperty Observer's free ebook <a href="/guides/free-ebook-top-10-property-investment-tips">Top 10 Property Investment Tips</a>
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Don’t put all your eggs in the one basket

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There are many myths associated with company title property ownership and most are not positive. You will often hear statements like “I wouldn’t touch company title with a barge pole”. For some – this is a valid and educated position; for others it is a form of hysteria born of ignorance and misunderstanding.

Make no mistake – there are a number of issues pertaining to company title property ownership that can be vastly less than ideal. Before addressing the pros and cons we should understand just what company title ownership is and provide some comparison to the modern and now more customary strata title ownership.

Company title ownership was essentially the legal precursor to strata title. It allowed for the subdivisionof an apartment building so that there could be individual ownership of home units or flats. A company was formed and share parcels created. The company owned the building (and the land it occupied) and individuals could acquire specific share parcels. Each of these share parcels were linked to a respective flat (and/or other improvements such as a parking space or storeroom). The owner of a share parcel essentially became the tenant of the associated flat and was insomuch bestowed the exclusive and quiet enjoyment of the pertinent residential space. Their ownership is indeed that of shares and those shares are in a company formed specifically as owner of the building concerned.

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To clarify this – let’s create a fictional building. Let’s call it “Park Royale”. Park Royale has 10 equally sized flats and the company Park Royale Pty Limited is the owner of the building. Park Royale Pty Limited comprises 1,000 shares and these are divided into 10 share parcels (ie one for each flat). Share numbers one to 100 are for flat #1; shares 101 to 200 are for flat #2 and so on. A buyer seeking to buy flat # 2 is actually buying shares 101 to 200 in Park Royale Pty Limited.

And now our story begins...

Strata title ownership offers a defined area within a building (ie as defined in a surveyed strata diagram). It is clear what area of the building and precisely what square metres you own. In almost all cases, no such diagram of specifically defined area exists for company title ownership (in very rare instances – company title buildings have prepared a survey diagram of the flat areas. This is very much the exception). In company title, one does not actually own a specific area of the building – rather they are buying shares in the company and the exclusive use of a particular flat.

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As is normal with corporations law – Park Royale Pty Limited will have a constitution and articles of association. This will establish definitions and the manner and form of the company’s operation. Most of this detail is fairly standard; however amongst the articles of association and then the “house rules” you will find the level of restriction associated with this particular building. People often state “you can’t rent in a company title building” or “the banks won’t lend against company title”. These are generalisations that are sometimes true and sometimes completely erroneous. Here is a list of some of restrictions/allowances to look for when considering a company title purchase:

<ol>
<li>
	Are there restrictions upon who may actually be approved to purchase the shares (eg does a minor criminal infringement preclude board approval)?
	</li>
	<li>
	Is renting of the flat allowed (ie sub-letting given you are already the ‘tenant’)? Some buildings completely prohibit renting (ie the shareholder must be in residence).
	</li>
	<li>
	If renting is allowed; are there restrictions?

	<ol style="list-style-type: lower-alpha;">
<li>
		Is there an exclusion period of ownership before renting is allowed (eg no rental for first 12 months of ownership)?
		</li>
		<li>
		Is there a time limit to how long a flat may be let (eg four years then must be returned to owner/occupied)?
		</li>
		<li>
		Does the tenant need to be approved by the company board?
		</li>
		<li>
		Is there any control on the weekly rental price (minimum or maximum) that the flat may be leased for (eg some buildings may set a minimum rental price to ‘control’ the quality or calibre of tenant)?
		</li>
		<li>
		Do the articles limit or restrict the level of mortgage that may be taken against the shares (eg some buildings insist on certain levels of equity/deposit to purchase)?
		</li>
		<li>
		Are there restrictions upon the style/plan of any renovations to the flat (eg some buildings control the use of certain tiles/materials hoping to maintain character)?
		</li>
		<li>
		Can the board resume shares (ie if the board feels the owner is not ‘appropriate’; they can seek to resume the shares and force their sale essentially evicting the owner)?
		</li>
	</ol>
</li>
</ol>
Some company title buildings are very restrictive and others are essentially laissez faire. Some company articles specifically resolve in favour of renting and providing comfort to borrowers.

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Having considered some of the issues that may arise within a specific company title building, we should also focus upon broader issues that are fundamentally significant to this type of share ownership. We return to the matter of owning shares versus a defined portion of real property.

 

<hr class="system-pagebreak">
Interestingly, until recent years, almost every company title sale by an agent was in contravention of the Financial Services Reform Act. This also applied to the majority of bank valuations upon such sales. When given due thought – the issue is somewhat obvious. Rarely is an agent nor a valuer also a holder of a Financial Services Licence under the Act. That is neither are licenced to represent a sale nor provide an a opinion of value for shares – which is precisely what is happening when selling and valuing company title properties. As the REINSW outlined:

“ASIC have identified this as an anomaly in the legislation and accordingly by Class Order [CO 00-213] has exempted real estate agents from the licensing regime under the Act in respect of the sale of company title property.

 

"Class Order [CO 05/1243] ensures that persons providing financial services by providing valuations of shares in real estate companies are not subject to the burdensome and inappropriate regulation under the financial services regulatory regime. 
"The exemption recognises that the valuation of shares in real estate companies is equivalent to valuing and providing advice on the valuation of real estate, rather than providing financial product advice in relation to shares in a company.”

 

This concession by ASIC helped draw company title ownership a step closer to strata title by acknowledging that company title shares are relevant only to a specific piece of real property. Our fictitious Park Royale Pty Limited only owns “Park Royale” and shares 101 to 200 are specific to flat # 2. You can’t sell five shares (as you might sell part of a equity share portfolio on the stock market) and you as a shareholder in the company also have duties relating to the building and deposited plan as a whole (as a strata tile owner has with the common corporate body).

This was a small bonus; however the real “elephant in the room” which is not discussed often enough (especially between agents and buyers) is the issue of recourse or remedy.

What happens if there is a dispute or need for an interpretation within a company title building? If strata title – there are benchmark statutes and tribunal bodies for judgement and appeal. Company title buildings are governed ostensibly by Federal Corporations Law and the jurisdiction is court. Happily the Local Court Amendment (Company Title Home Unit Disputes) Bill 2013 means that many disputes may now be heard in the Local Court (previously the Equity Division of the Supreme Court action was required).

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An owner who has a grievance or dispute that cannot be resolved “in house” must take their issue to court – a vastly more cumbersome, intensive and potentially costly exercise. When all is well in a company title building; as with everything – life is easy. When matters “go off the rails” – company title can be a horrible Pandora’s box.

For example – a young couple owned a two-bedroom company title apartment on the waterfront of Darling Point. By the time they had their second child; the apartment was simply too small for their family. They had owned the apartment for a number of years always as owner-occupiers. They decided to move out to a rented house and to try out a new area of Sydney. On this basis they decided to lease out their current apartment and enter into a two-year lease with another owner in the building (ie a board approved share holder) who also needed to upsize.

Whilst renting, the young family found a new house they wished to purchase; however they needed to sell their company title apartment to do so. A suitable buyer was found. The price was accepted and the buyer was deemed appropriate by the board. The issue was that the building restricted a new owner from leasing in their first 12 months of ownership. The subject flat still had 14 months to run on its lease. Insomuch the board refused the approval of the sale on the basis that its “house rule” concerning leasing could not be satisfied. The tenants were locked in and the board would not budge. The upshot is that the young couple were denied any opportunity to realise a sale and essentially meant that all of their property equity was tied up and not accessible.

Many appeals were made to the board with various undertakings about the intending new owner taking up residence the moment the tenants vacated and so on. The board was steadfast and an impasse was reached. It should be noted that the specific “house rule” had been varied over the years at the board’s discretion. The board could have easily approved the sale however it would not. The end of this story is happy – however it took a group of new board members being elected before the sale was able to proceed.

The events above may fall into the domain of an “oppressive board” as discussed in the 2006/7 New South Wales Law Reform Commission (NSWLRC) investigation into disputes in company title home units. The NSWLRC considered legislating company title ownership to more closely mirror strata title ownership in terms of rights and remedies available to shareholders.

It found that examples existed of individual or multiple shareholders feeling or actually being “oppressed” by boards (or members of). That is the board abusing its power and knowing that opposition would require involved court action. Some owners were found to be too frightened to oppose or speak up against a board or board member in fear of associated consequences or fall out. The initial board’s stance in the story outlined above essentially rendered the young family’s ownership with ‘zero equity’ and they were unable to move forward with their lives on the basis of the particular boards’ belligerent and unreasonable position on a unique anomaly.

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Significantly – whilst the NSWLRC recommendations did result in some important revisions, there remained a view that company title ownership had its own particular idiosyncrasies and benefits that had appeal for a section of the home owning community and that the Commission was loathe to attempt a change upon a system that conferred a type of control that the majority of owners are aware of when making their purchase decision. Many owners relish the level of control over the approval of their co-owners or the limitation or complete prohibition of renters. It is this “quality control” that often appeals to intending company title purchasers.

 

<hr class="system-pagebreak">
Returning to the question of equity is a segue to the matter of mortgages or lending for a company title purchase. The fact remains that the sale concerned is that of shares and some lenders simply don’t lend for company title. It is an in-house risk and legal assessment and some institutions just don’t offer the requisite facility.

Other lenders do; however they may require a larger injection of upfront cash equity (ie their loan to value ration or LVR may be lower). In these cases lenders may only be prepared to lend 60 to 70% of the sale price – the balance needing to be paid in the form of a larger deposit. Having said that, some of the major lenders will allow an LVR of 80 to 85% with company title purchases (subject to the restrictions in the articles of association). Company title borrowing is certainly widely available; however not as easily as against its strata-title cousin.

Conveyancing for company title is another item to address. Whilst a contract will require council zoning and sewerage diagrams – these are pertinent to the overall building and deposited plan. The contract will require company financials; copy of the share certificate; the constitution and articles of association; special conditions and so on. Whilst being a sale of shares – there is no cooling off period applicable. That is the sale is essentially unconditional and no 66W certificate is involved.

Essentially unconditional is the case in so far as most company title share sales involve a special condition that the sale is indeed subject to the company board’s approval of the purchaser and transfer. The purchaser cannot “cool off” and they are obligated to conduct their best endeavours to satisfy the board’s inquiries; however until the transfer is approved – the sale remains conditional.

Having given attention to all of this; what is the attraction to owning a company title home unit? One significant factor is that of actual value for money. Despite all of the ‘baggage’ that may be involved; the silver lining is that purchase prices are often lower than buying strata title. I regularly hear comments like “company title is 10% lower” which is actually a complete shot in the dark. A much broader context applies – not the least is the market expectancy. That is whether or not company title is a regular or expected event within a certain market place. If one considers Potts Point or Elizabeth Bay then company title is very much regular place and a large proportion of wonderful art-deco buildings in this area are indeed company title.

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There is often a certain cache attached to company title in these areas. They are reminiscent of the elite New York co-operative buildings filled with celebrities and the mega-rich. Often these New York buildings are cash only ownership and approval is a genuine ordeal with new owners having to provide vast details of their personal history and financials. The postcode 2011 isn’t at these exclusive levels; however buying company title in Potts Point/Elizabeth Bay isn’t nearly the impediment that the solitary company title building in Dover Heights might present.

This Eastern Ave block is a surprise stand alone amongst a deluge of neighbouring strata title lots and is often met with “Company title? Out here? What?”. This building is assisted by a very ‘helpful’ set of articles of association; however it definitely suffers price-wise against its competing strata title offerings. A company title flat with restrictive articles not in an “accepted” locale will incur significant buyer resistance which is usually only offset by a genuine price advantage.

The message in all of this is that company title ownership is quite distinct from strata title apartment ownership. Strata title is a vastly more uniform pursuit with clear rights and obligations and opportunities for recourse in the event of dispute. Company title may represent a saving in the upfront purchase and it may offer an improved level of “quality control” for owner occupiers.

Each instance is quite specific and particular due diligence is required on a case by case basis. In certain situations (such as owning in a grand building in Potts Point or Elizabeth Bay) there is almost no avoiding it. Company title ownership shouldn’t be treated as ‘buyer beware’ – instead it’s more a case of ‘buyer be aware’.

 

<hr>
Brad Caldwell-Eyles is a principal at <a href="https://www.1stcity.com.au/" rel="nofollow" target="_blank">1st City - Hasemer+Caldwell-Eyles</a>.

 

 

 
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Truth v myth; the must know facts about buying company title: Brad Caldwell-Eyles

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The Coalition’s new paid parental leave (PPL) scheme – starting from July 1 2015 - will pay a replacement wage up to an annual salary of $150,000, funded by a levy on the 3,000 biggest employers.
No policy is perfect, and the Coalition’s PPL scheme is no exception, but I think this is a good move for a number of reasons.
Firstly, we need women to be involved in our economy where possible and we need our policy settings to encourage and support that. The good news is that female participation in the labour force is rising – from 60.3% in 2000, to 65.3% in 2011. That’s a 5% rise in just 11 years while the male participation rate was flat.
The problems for women are many: as the cost of living increases, they are compelled to work; when working women have children and stop working, it puts stress on household finances; when they do go back to work, women still absorb most of the home duties meaning their extra income often goes on child care costs; when women take time off to have children, they usually lose their superannuation contributions; and when women with kids do go back into the workforce their preference for part time and casual work reduces their income and their superannuation.
Therefore we are faced with this conundrum: women earn less than men during their working lives, meaning they have less superannuation. Yet women live longer and therefore have longer retirements to fund.
The government needs to be congratulated for ensuring that the new PPL scheme will keep the superannuation guarantee contributions going during the paid leave.
More still needs to be done to lift the average super balances of women to parity with men’s – in 2010 the average female super balance was around $40,400, compared to the average male balance of $71,600. But allowing women to take 26 weeks off to care for their baby, with no discontinuation of their super, is a really good start.
Small business owners are also going to benefit from the PPL scheme. Many women choose to work at large companies or government departments, attracted to maternity policies and benefits.
With paid parental leave being funded from Canberra, smaller business owners will be on a more level playing field with the big employers, because they’ll be able to attract and retain female employees of child-bearing age.
And women will be able to make employment decisions based on criteria other than maternity benefits.
In the end, superannuation could be the crucial part of this policy. But also watch women of child bearing age giving up long commutes to the CBD as they realise that working for a small business does not penalise them for having a baby.
 
<hr>
Mark Bouris is executive chairman of <a target="_blank" rel="nofollow" href="https://www.ybr.com.au/">Yellow Brick Road</a>, a financial services company offering home loans, financial planning, accounting and tax, and insurance.
You can contact Mark on <a rel="nofollow" href="https://twitter.com/markbouris" target="_blank">Twitter</a>.
 
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