How to lift the value of flats in a walk-up block

There aren’t many investment options that offer you four or five times your stake within six months … well, few that don’t have you looking over your shoulder for  ICAC investigators or large men with suspicious bulges under their jackets.

But if you own an apartment in an old, three or four-storey walk-up apartment block, you could be sitting on just such an opportunity.

This revelation came via a question to the Flat Chat website from an owner in just such a block who is concerned about a proposal by a neighbour to install a stairlift so his mother can visit their third-floor apartment.

We’re talking about one of those chairs on a rail, that carries people up stairs they can no longer manage under their own steam. 

It’s not ideal for a common stairwell in an apartment block – especially one as restricted as in this case –  but it set us thinking, what if there was a way of “clipping” a proper passenger lift to the outside of the building?  Can it even be done?

In fact, it frequently is, according to The Lift Shop, one of several Australian companies that install small internal lifts into existing homes and offices.

And if there isn’t room inside, they can sometimes attach a small elevator to the  outside of the building instead.

So how would this work for apartments? First of all, you’d need the building to have one external wall in the stairwell, preferably at the landings.

Then it’s just a matter of creating access doorways to the stair landings and installing the lift.  Not every old walk-up block is going to be so conveniently designed but many are. 

Bearing in mind that these are very broad ball-park figures, my contact at the Lift Shop says you could install an external lift for between $100k and $150k, depending on the number of access points and the conditions at the site.

A typical three storey walk-up could have 12 apartments, four on each floor.  The ground floor units don’t need lifts, so count them out.  Now you have eight apartments splitting the cost, which runs to less than $20k each.

Or say there’s only two apartments per floor, that would be about $40k each. More storeys would mean greater cost but more owners to contribute.

A friend in real estate tell me that adding lift access to a walk-up block could increase the value of the units by as much as $150k each, so there’s the return on your investment.

The biggest obstacle to this could be the politics and legalities of strata schemes, especially when it comes to who is actually taking over the common property if the owners corporation (body corporate) isn’t doing the work.

And the people on the ground floor will have zero interest in having a lift installed and they certainly won’t want to pay higher levies for its maintenance

But the same NSW strata laws that allow 75 percent of owners to sell their entire block for demolition provide a process and structure by which the owners can sell parts of common property to pay for upgrades, then adjust unit entitlements accordingly.

In the case of the Flatchatter who contatced us about the stairlift, he and his neighbours could propose a plan that allowed them to pay for the lift but have their unit entitlements adjusted so that maintenance and running costs were covered by them at no impost on the ground-floor owners or those in the other block.

Victoria and Queensland are already looking at introducing similar laws in their strata law revisions, but until then a consortium of benefitting owners make a deal with the owners corp to make the installation fair and equitable.

So if you could do it in your block, do your sums and work out whether or not it would be worth it.

Then fire up your highly polished negotiating skills, because persuading your neighbours will be where the truly heavy lifting kicks in.

An edited version of this column first appeared in the Australian Financial Review.