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The Civil and Administrative Tribunal recently decided the case of Lazarevska v Ozturk [2017]. In that case, the landlord built a secondary residence on his land without Council permission. Defects in the construction led to poor habitation conditions, and the tenant sought compensation for distress and inconvenience, and living in uninhabitable conditions in breach of the Residential Tenancies Act. The Tribunal decided that the sewerage overflow, odour, water leaks, and mould rendered the property uninhabitable. However, the tenant had a tangible benefit of occupation and would be unjustly enriched if the court ordered compensation to the value of the total rent paid. Instead, the Court orders the landlord to compensate the tenant for one third of her rent paid.

In Bayside Council v V Corp Constructions Pty Ltd [2017], development consent had been approved by the Council on condition that existing above ground cables be replaced with underground cables. By statute, this could only be done with the permission of Energy Australia. The contract was entered into on these terms. Energy Australia then refused permission to put in underground cables, and Council accepted $10,000 benefit in lieu of the terms of the deed requiring replacement of the cables.

The issue before the NSW Court of Appeal was whether the failure to put in underground cables constituted breach of the development consent. The Court found that there was no breach. It was not possible to put in underground cables without permission from Energy Australia, and the Council had accepted payment in lieu of this condition. The developer was there under no obligation to replace aerial cables with underground cables.

In Denoc Holdings Pty Ltd v Orange City Council [2017] NSWLEC 1271, a developer sought consent to convert a heritage mansion near Orange into a hotel. The developer sought permission to make structural changes to the inside of the building, and to demolish certain outbuildings. The Land and Environment Court accepted the proposed internal changes, with the exceptions of the removal of the original stairwell and a stained glass feature window. However, many of the external changes were not allowed, and the developer was ordered to amend the development proposal to better retain the visual integrity of the heritage building.

Additionally, the Council argued that the conversion of the mansion into a hotel would affect neighbouring properties; the balconies would affect privacy, and the carpark would increase noise. The Court acknowledged this, but decided that the plan of management would sufficiently mitigate the effects on the neighbours. The development proposal was allowed to go ahead, on the condition that the developer amend the plans as requested by the Court.

Information for investors in affordable housing:

• A concessional Managed Investment Trust (MIT) rate will be available on acquiring, redeveloping, or constructing affordable-housing property from 1 July 2017. Affordable-housing property is that which is leased to low-moderate income earners at below-market rent.
• The Capital Gains Tax discount has risen from 50% – 60% for residents who invest in affordable housing managed by a registered community housing provider from 1 Jan 2018.

Information for developers:

• A Commonwealth Property Register will be introduced, providing a mechanism for the private sector to make proposals for development of Commonwealth land.

Information for foreign owners:

• Foreign ownership of new developments will be capped at 50% from 9 May 2017.
• An annual charge on unoccupied property will be introduced from 9 May 2017. Unoccupied property is that which has been either vacant, or not genuinely available for rent, for half of the year. The charge will be equal to the foreign investment application fee imposed at the time the property was acquired.
• Capital Gains Tax (CGT):
  • The main residence exception to the CGT will be abolished from 9 May 2017 for foreign and temporary tax residents. For existing properties, this will take effect as of and from 30 June 2019.
  • The CGT withholding regime has changed, effective 1 July 2017, with the withholding threshold for properties reduced from property sale price of $2 million to only $750,000, and the withholding rate increased from 10% to 12.5%.

Other key measures:

• For purchasers of newly built residential properties, GST must be remitted directly to the ATO a part of settlement from 1 July 2018.
• For landlords who travel to inspect or manage their rental properties, the deductions for travel expense will be removed from 1 July 2017.

In the recent case of Hiep Van Nguyen & Anor v Canterbury-Bankstown Council [2017] NSWLEC 1234, the Land and Environment Court heard an appeal against the Council’s decision to reject a housing development proposal under the Environmental Planning and Assessment Act 1979. The reason for the Council’s decision was that the land was too small for the proposed development, unless an amalgamation with the neighbouring property were to take place. Since the neighbour refused to sell, the developer characterised an amalgamation as impossible.

This, the developer argued, was a sufficient reason for the court to flexibly apply the development standards and allow the development proposal. In support of this argument, the developer highlighted that the development would meet housing needs and introduce new facilities to the area, therefore benefiting the public. The Court rejected this argument, strongly expressing the view that an unsuccessful attempt to purchase property is not a sufficient ground to warrant the flexible application of development standards.

In 5 Ridge Pty Limited v Tryname Pty Limited [2017] NSWSC 371, the purchaser was induced into a contract of sale by a misrepresentation by vendor regarding the exercise of an option. The contract was later terminated, and the deposit paid by the purchaser forfeited.

Under s 55(2A) of the Conveyancing Act, the NSW Supreme Court has a statutory discretion to order the return of a forfeited deposit. In this case, the Court chose to exercise that discretion. Two key factors taken into account by the Court were that misrepresentation occurred prior to entry into contract, and was significant to the purchaser’s decision. The Court also endorsed a wide interpretation of s 55(2A) and the Court’s statutory discretion, indicating it may be willing to use the discretion in similar future cases.

In The Motel Group Pty Ltd v Strathfield Council [2017] NSWLEC 1227, a developer sought to build three medium-density apartment buildings in a low-density residential area. The local community protested strongly against the development, signed a petition and wrote letters opposing construction to the Council.

Although the development was non-compliant with height restrictions, the Court was asked to apply development standards flexibly and allow construction to begin. After considering the many objections raised by community members, the Court found that such objections were insufficient to bar the development.

In coming to this conclusion, the Court was aided by the fact that the developer considered the concerns of the objectors and offered suitable solutions by amending the plans. When this was taken into account, the public interest in increasing affordable housing out-weighed the objections of the local community.

The NSW Court of Appeal recently heard the case of Ratewave Pty Limited v BJ Illingby [2017] NSWCA 103, which concerned the duty of an occupier to warn of risk of injury. The occupier was the owner of a hotel. In the lobby of the hotel there was a low raised wooden platform, on which a statue was placed. The respondent tripped over the platform, and successfully claimed damages in negligence.

On appeal, the Court upheld the finding of negligence. The Court found that the risk was foreseeable, and was not obvious, meaning the occupier had a duty to warn others of the raised platform. The Court emphasised that a hotel lobby is not a place where people would expect to find a trip hazard of this kind. The Court also indicated that a warning sign would have been sufficient to meet the occupier’s duty of care to the respondent.

In Innovate Architects v Sutherland Shire Council [2017] NSWLEC 1067, developers sought to modify their development proposal to build a 6 storey residential building. The area in which the development was to be built contained both residential apartment buildings and new developments. The developer sought to amend their proposal to create an additional unit on level 4, thereby increasing the floor space sought.

The amendment was contested because an increase in floor space would reduce the separation between the building and the boundary with two adjoining properties. One of the adjoining properties was a residential apartment building, and the other a new development site.

The modification to the development plans was refused by the Court because the requested amendment would materially impact the amenity of adjoining land. The Court noted that it would not only reduce the privacy and outlook of the existing residential apartment building, but could also constrain the use of nearby land for new developments.

The Knight Frank City Wealth Index has ranked Sydney as one of the most appealing cities in the world in which to invest. Sydney was ranked 4^th in the world as an investment location, after London, New York, and Los Angeles.

Upcoming large-scale property development in Sydney, particularly the Crown Sydney, One Sydney, and One Sydney Harbour, are likely to attract increasing global investment in the coming decade. Additionally, investors have become more interested in the stability of their capital, as opposed to high returns. The Australian market is appealing globally because the economy is relatively wealthy, and investments here are perceived to be safer than in other locations.

Rising foreign investment in the property market will impact on domestic investors. According to the Property Council of Australia, global investment could impact positively on the Australian property market, if a healthy balance between domestic and foreign investment is maintained.