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Sydney apartment investors fear Broadway apartment complex will become ‘debt trap’


The Broadway clock tower getting a facelift in 1991.

The Broadway clock tower getting a facelift in 1991.Credit:Peter Kevin

Mr Khera said a $2.2 million proposal to repair the clock tower was among building projects he hoped could be delayed “as we are bleeding under these exhorbitant levies”.

Alan Sedghi, 67, said he now has to pay about $40,000 per quarter in levies for four UniLodge apartments he bought for more than $200,000 each to fund his retirement.

“It looked on paper like a good investment and something I wouldn’t have to worry about, but it has turned out to be the complete opposite,” he said. “It’s devastating”.

In his 17 years as a real estate agent, Mark Roberts from McGrath, who Mr Sedghi asked to sell the units, said he had never seen strata levies as high as those charged for the UniLodge apartments.

“These levy figures are astronomical,” Mr Roberts said. “He’s got no hope of selling it. With those fees he couldn’t give it away.”

Varun Marwah, 38, an army reservist who also works as an air quality consultant, paid $240,000 for his UniLodge apartment 18 months ago as an investment for his eight-year-old twin daughters.

“I have had so many sleepless nights over this,” Mr Marwah said. “Legally, the levies have a leg to stand on and we cannot challenge them because all the voting rights have been given to Bright and Duggan as the owners’ corporation.”

The old Grace Brothers Broadway building in May 1937 when it was decorated for a Coronation festival.

The old Grace Brothers Broadway building in May 1937 when it was decorated for a Coronation festival.Credit:Fairfax Media

Last year, Bright and Duggan sought expressions of interest from lot owners for a collective sale of the building “in view of the precarious financial position of the owners’ corporation” after it received “unsolicited” offers of $110 million to $160 million for the site.

Mr Marwah said it was “a lose-lose situation for owners” some of whom were severely distressed. “People feel hopeless, bullied, cornered, extorted and helpless,” he said.

Josephine Sammut, a 74-year-old pensioner who raised three children on her own said she was shocked to receive a levy notice for $10,767 in September. Bright and Duggan sent her a debt recovery notice on January 27 ordering payment of arrears within seven days.

‘These astronomical levies have caused an impossible financial strain and ruin our plan for retirement. I believe they are trying to put us in a debt trap.’

Apartment owner Choay Kean Wong

Ms Sammut said she bought the UniLodge apartment for $182,000 in 2015 after selling her Punchbowl home to get out of mortgage debt.

“This is all of my life savings. This is my superannuation,” she said.

Lien Pham, a single mother of three who paid $220,000 for her 27-square-metre loft apartment in 2018, has received two quarterly strata levy notices of more than $10,470 each that she cannot afford to pay. “I don’t have that kind of money,” she said.

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Dushyant Sharma, a 74-year-old retiree was shocked to get two quarterly strata levy notices for more than $13,000 each since November after previously paying about $2500 per quarter.

“I bought this UniLodge apartment to partially fund my retirement,” he said.

Choay Kean Wong said her strata levies were about $1800 per quarter but increased to $22,165 per quarter in the November and February quarters.

“These astronomical levies have caused an impossible financial strain and ruin our plan for retirement,” she said.

“I believe they are trying to put us in a debt trap, so they can do a mortgagee sale.”

‘This is a cautionary case’

Bright and Duggan told the Herald it was appointed to do work that the owners’ corporation had “failed to undertake over many years with the highest priority of ensuring the building can be safely occupied”.

“There are no cosmetic renovations being carried out at the building,” it said.

“This is a cautionary case of the consequences of long-term chronic undermaintenance of a building by an owners’ corporation, resulting in the need for immediate works to ensure the building’s safety, structural integrity, and safe habituation.

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“We empathise with these lot owners, however, the financial position of individual lot owners does not absolve the owners’ corporation of its legal obligations to maintain the structural integrity of the building for safe occupation.”

In its December update, Bright and Duggan said it had contacted the Office of the Building Commissioner and Fair Trading NSW to discuss the condition of the building and seek an independent review of its actions as compulsory managing agent.

UniLodge said it had no authority over the management of the owners’ corporation appointed by the tribunal and was “unable to make any comment”.

Karen Stiles, the executive director of the Owners Corporation Network, the peak body for residential strata owners, said properties had to be maintained and ideally improved over time to hold their capital and rental values.

“The consequence of ignoring essential repairs and maintenance will be large, unbudgeted levy increases in order to make the building safe or worse,” she said. “Owners were still arguing about costs when the Miami building collapsed, claiming 98 lives.“

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