The sign outside the modest 1970s apartment complex in well-heeled Elizabeth Bay reads: “Luxury residences now selling.”
So far, so Sydney. But there is another very Sydney phenomenon at play: a court fight.
The sign outside 10 Onslow Avenue in Elizabeth Bay.Credit: Louise Kennerley
The luxury abodes advertised do not yet have planning approval. The development involves the demolition of two existing blond brick blocks with frontages on Onslow and Billyard Avenues, and the construction of two new eight and five-storey apartment buildings.
The $23 million plan by developer Fortis includes two and three-bedroom apartments and a four-bedroom penthouse. Among the proposed communal facilities are a sauna and steam room and an “ice bath meeting room”.
The proposal has raised the ire of some locals not because it will increase density but because it will reduce it from the existing 28 units to 20 larger apartments, and push out renters in more affordable flats.
The court case
A company linked to Fortis, Billyard Ave Developments, lodged a NSW Land and Environment Court appeal last year against the City of Sydney’s deemed refusal of its development application. A City of Sydney spokesperson said the appeal was listed for hearing on November 5 and 6.
An artist’s impression of the Fortis proposal.Credit: Fortis
A development application is deemed to have been refused if it has not been decided within a set timeframe.
In a court document filed before the hearing, City of Sydney set out a number of “contentions that the application should be refused”, including that the proposed height of the development “is an uncharacteristic form within the streetscape”.
The council also pointed to 77 submissions from the public objecting to an amended plan.
10 Onslow Avenue in Elizabeth Bay.Credit: Louise Kennerley
Sales before approval
Contracts for the sale of off-the-plan apartments may be entered into before development consent has been granted. At this stage, Fortis expects the apartments will be offered for sale before the court’s decision.
A Fortis spokesperson said the proposed development was “in an active project marketing phase” and “our sales and legal teams are in the process of finalising the necessary documentation, which will be finalised ahead of the official sales launch”.
“At that point, the contract of sale and accompanying information will include all relevant provisions for off-the-plan purchases. This is a standard process, and we are ensuring all requirements are fully met.”
The spokesperson said Fortis had worked closely with the council “in refining our plans”.
Sydney buyer’s agent Michael Ossitt, founder and director of STRAND Property Group, did not comment on the Fortis proposal but said, in general, that if a property was offered for sale before development approval “then the buyer should have a clause in there that would allow them to rescind the contract for no penalty and also claim their full deposit back” if consent ultimately was not granted.
“The biggest risk with it not going ahead is that the process could drag on for a period of time. If they do end up pulling out, their deposit has been tied away … and then for them to re-enter the market at a later time could be more expensive.”
Ossitt said he doesn’t recommend his own clients buy properties off-the-plan for reasons including risks with building quality and finance approvals. “Not to say that people shouldn’t, we just haven’t historically done it,” he said.
However, Ossitt said the introduction last year of the NSW Building Commission to regulate the residential construction industry had been a positive development.
‘A future piece of property’
Sydney barrister Patricia Lane, a senior lecturer at the University of Sydney and property law expert, said selling off-the-plan before development consent “simply means the developer is taking a risk about approval of the development”.
“You’re actually selling a future piece of property,” she said.
Lane said vendors must include a disclosure statement in an off-the-plan contract, and the contract was governed by provisions limiting the vendor’s right to rescind.
“If the deposit is released to the vendor, rescission means the developer has to hand it back, so they’d have to be pretty confident in a business sense about approval,” she said.
Henderson & Ball partner Justin Lawrence said “any time a buyer is buying off the plan, there is an element of risk that is obvious” because “plans are one dimensional, and we live in 3D”.
Lawrence said he had “never experienced a situation where we didn’t get [a deposit] back” where a developer had rescinded an off-the-plan contract, but “some have taken a lot longer and a lot more effort to get back than they should”.
He said buying off-the-plan “happens a lot with old buildings that are converted ... [such as an] old soap factory or warehouse”.
“They’re sold on the basis of, ‘hurry, get in now, because they’re going fast and once they’re sold, your opportunity to live in this unique building will be gone for good’.”
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