Love your neighbour: The Sydney homeowners selling together for $165m

Agents who specialise in collective deals were taking calls from clusters of homeowners and consolidating addresses last year, when the low-to-mid-rise development (LMR) reforms were announced. The new code commenced in February.

Planning experts say collective sites highlight the relationship between individual homeowners’ financial interests and the interests of the neighbourhood at large.

A Mosman gigalot for sale.Credit: Colliers International - Sydney

Throw in the government’s supply goals and the outcry over affordability, and many players are involved.

Feasibility for developers has hobbled green-lit Sydney apartment projects in the past.

Colliers national director Guillaume Volz, who has listed supersites across the city, including in Mosman and Rose Bay, says high-profile suburbs appeal to developers for their return margin.

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“Those areas where you can sell the product at a rate that absorbs the construction pricing,” Volz says.

“Because the land is expensive in those areas, when you include the multiplier the government has provided, it provides land owners with the incentive to sell their houses.”

Volz says vendors are typically covered by one contract with an interdependency clause.

“You absorb the cost of selling and are left with an additional benefit that’s made the whole experience worthwhile,” he says.

“If they’re going to move from areas they like and the houses they like, and ultimately, they’re all good housing and in good locations, there has got to be an incentive. That’s where I think these policies work well – it provides enough of a premium to go through the amalgamation process with their neighbours.”

A North Strathfield super site that was listed in February.

Lawyer Jonathan Harris, partner at Harris & Company Solicitors, says the transactions typically involve developers taking an option deed on a site while securing council approval.

Price expectations can be baked in the paperwork, to negate disputes and uncertainty.

“There are many different permutations on how these sales can be put together,” Harris says. “It’s hard to know if the structure that’s being proposed works for you.

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“You might see a memorandum of understanding or some other form of agreement which sets out the mechanisms for calculating a portion of a total sale, or setting out a base price – one which says, “if we achieve this base price, then we’re all obliged to sell’.”

Researchers have examined how neighbours get together to sell as one in the report: Reassembling the City: understanding resident-led collective property sales.

Professor Simon Pinnegar from the UNSW City Futures Research Centre and Professor Kristian Ruming from Macquarie’s Housing and Urban Research Centre led the study.

LMR reforms are seen to cut red tape and hush NIMBYs. However, Prof Pinnegar says involving those most affected is crucial.

“A more collaborative approach that enables meaningful input from those communities remains vital,” he says. “Lot amalgamation is a complex, long and often fraught process – pulling apart and reassembling neighbourhoods needs to take the owners and residents with them.”

Prof Pinnegar notes many areas upzoned through the revisions are home to some of the last relatively affordable rental stock in Sydney.

“This may not be front of mind in this current wave of interest spurred by LMR in high-value markets, where very expensive houses on large lots will be replaced with expensive apartments, but in areas where margins are much tighter, redevelopment risks the loss of existing affordable housing, displacement and gentrification,” he says.

“It points to the need for stronger urban policy levers to be deployed to ensure Sydney gets the housing outcomes it needs – something more than planning being reduced to feasibility-determined rezoning and then hoping that the market works its magic.