A Sydney council could soon be facing legal action after incurring the wrath of local residents.
The residents say the laws governing how their properties are titled have left them trapped with properties they are having trouble selling or even paying for.
So what’s all the fuss about?
In a nutshell, the homeowners say Randwick Council’s laws are way outdated – and way behind just about every other council in Australia.
What’s wrong with a company title?
Australia pioneered the strata title back in the early 60s, and it’s become popular elsewhere in the world as well. It allows for individual apartments within a single building to be privately owned, even when there are shared areas.
But to get a strata title in their particular zone in Randwick, the subdivided lot size has to be at least 400 square metres. So in the case of a duplex property, the original block has to be at least 800sqm in total before it can be subdivided with strata titles.
If their block is too small, the only option for the angry Randwick residents is company title.
Basically, the holder of a company title doesn’t actually own a title – they own a share in a ‘company’ that owns the title.
It may sound like a technicality that might not matter – but it does. Banks have become increasingly reluctant to offer reasonable loan products for company title properties, making them both expensive for the owner, harder to sell, and worth less.
One of the main issues is that the ‘company’ can impose restrictions or rules without consultation – like putting a limit on who can buy the property, whether it can be rented out, and whether modifications can be made.
In total contrast, strata titles are considered fair, reasonable and equitable, giving owners independence and also a say on the decisions that affect them.
So what’s happening to some of the angry Randwick residents in areas like Chifley, Matraville, Little Bay, Malabar and La Perouse?
- They’re paying huge interest rates on bridging loans after banks turned them down.
- They’re getting stuck in properties they’re struggling to sell, as banks don’t want to offer finance to potential buyers.
- They’re worried they may never be approved to re-mortgage their duplexes to access their equity in the future.
Read Related: What is Company Title?
So what are the angry residents going to do about it?
The most recent council meeting, during which one furious duplex owner was kicked out for shouting, was fiery.
Councillors acknowledged that some residents have been put in difficulty after the banks changed their lending policies, but argued that the title restrictions are in place to help with housing affordability.
But with some furious residents now considering joining forces in a class action lawsuit, Randwick Council has opened a period of consultation that began last week and will continue until May.
And later in March, an open forum will be held in Little Bay.
“We heard at the council meeting that it’s increasingly hard for buyers to get finance to buy company title duplexes. We need to explore ways of addressing this issue whilst ensuring that we don’t negatively impact housing affordability and the amenity of our suburbs,” she added.