The grand alternative to strata
With their grand foyers and old-world charm, company-title flats are starting to enjoy a revival.
So if the system of company, or co-operative, title, devised in New York in the 1880s as a way of allowing units in a single building to be separately owned, is good enough for the most lusted-after apartment block on earth – Manhattan’s 740 Park Avenue – it’s little wonder that many Sydneysiders find it irresistible, too.
None of our company-title buildings boast $US37 million ($44.6 million) apartments with 34 rooms, 14 bathrooms and space for 16 live-in staff. But at the same time, some of Sydney’s company-title blocks are among the most exquisite and sought-after art-deco buildings in the city.
EVERYTHING OLD IS NEW AGAIN
“These are real quality buildings,” says Wayne Priddle, the chairman of Mont Clair, a seven-storey heritage block on Liverpool Street, Darlinghurst, built in 1937 and revered as a stunning example of the streamlined moderne art-deco form.
“They’re often quite beautiful, and I feel these buildings tend to be better managed than most strata buildings. The boards are empowered to make the decisions needed for good management, whereas in strata, they have much less power.”
On the Sydney apartment scene, the arrival of strata-title legislation in 1961 gave unit owners, for the first time, title deed to their property. Before that most of the buildings were company title, a system where there’s no title in any real estate, but it gives owners a right to occupy an area by virtue of owning a set number of shares in the “company” that owns the building.
One of the hurdles for buyers in the past was raising finance – some banks, historically, have been hesitant to lend without title. “That strong bias against them has now gone,” says manager Wally Patterson of Dynamic Property Services. “Many banks, like Westpac, the Commonwealth and St George, do now provide financing, although it still might not be quite as generous as for strata. They might offer 90 per cent rather than 95, or 80 instead of 85 per cent.” Company title is coming gradually back into vogue, although usually as a way of circumventing council restrictions on subdividing new blocks into multiple titles. By introducing company title, strictly speaking, you’re not subdividing into different titles – you are simply issuing shares on the one property.
WHAT’S THE UPSIDE?
The major difference to strata blocks is that, with company title, prospective owners must first be approved by the elected directors of the company, usually residents themselves. In this way, there can be strict control of who buys into a building. Buyers have to front up to an interview with the board, as well as provide references and have their credentials checked to make sure they’re suitable and can afford the levies. “It’s a way of being able to determine who your neighbours might be,” Patterson says. “That can be very popular.“
Where tenants are permitted – and they’re often only allowed after the owners have lived there for six months to two years – these too are interviewed to make sure they’re suitable.
Perhaps because of the strictness of management, company-title buildings often have a higher percentage of owner-occupiers, which is an attraction for many.
“You tend to have people there who understand the building and how it works,” says Greg McKinley of Richardson & Wrench, Elizabeth Bay. “As a result, you have a lot of like-minded people go in and can have great harmony in a building.
“Company-title units tend to be a little cheaper than others, too.“But company-title buildings often feel much more like a community,” says block manager Fay McDonald.
IS THERE A DOWNSIDE?
The drawback of creating that community is that some people might find it invasive to be interviewed for their suitability to buy an apartment. Doubtless, some sales founder because of that reluctance.
It can also be difficult, at times, to find answers to questions that in strata can be easily found in the bylaws, in strata title legislation or by asking the NSW Office of Fair Trading, which oversees the sector.
“With company title, it’s just the articles of association that lays down the rules, and often there’s nothing in there, especially when they’ve been laid down in the 1920s, that deals with a lot of modern issues, like noise and smoking,” Stell says. “The Corporations Act, under which company title falls, wasn’t really designed to look after residential premises.”
For the full report, please visit www.smh.com.au
Source: The Sydney Morning Herald
