Owners of Mascot Towers in debt could have their debts forgiven under a new scheme to sell their apartments

Owners of flawed Sydney apartments have been offered a lifeline after their latest bid for financial freedom failed.

The city's infamous Mascot Towers, less than 7km south of the CBD, were evacuated in June 2019.

Massive cracks discovered in one of the two towers' primary support beams led 132 families to flee their units for fear the building would collapse.

Although no longer able to live in the apartments almost five years later, the owners are still paying huge debts and their mortgages, in addition to the costs of alternative housing.

In a desperate attempt to return home shortly after the foundation damage was discovered, the owners raised enough money to take out a $22 million loan.

Although $15.3 million of that money has already been spent, it is estimated that another $25 million is needed for maintenance work.

However, NSW Building Commissioner David Chandler could soon offer indebted owners a fresh start.

The deal would see their debts and outstanding mortgages canceled by selling the apartments.

It follows the owners' bid in the NSW Supreme Court to sell the entire block for demolition or repair in November.

Their case – which was opposed by strata lending company Lannock Strata Finance and the banks that held their mortgages – was dismissed by the judge.

Mr Chandler believes his plan could be the owners' last chance to rid themselves of the disastrous property.

“Some may not see it as the best option, but I think it is the only option now,” he told the newspaper Sydney Morning Herald on Friday.

'This means that people can walk away without debt, even if they lose some of their wealth.

'They won't let this hang over them for the rest of their lives. You can't rewrite history, but what you can do is map out your future.'

Chandler's plan is based on 75 percent of owners voting to sell their apartments as “individual lots” to a third party next month.

That syndicate will then likely pay to repair the building and resell the 131 units.

Each owner would be entitled to a percentage of the sales price, less the repayment of the building's strata debt.

Price estimates for the smallest apartments start at just $133,500, with third-party buyers required to submit all formal bids by February 15.

Mr. Chandler is negotiating with Lannock and the big four banks that have originated the majority of the owners' mortgages.

So far, banks have agreed to discount the outstanding money owed on home ownership loans, while the government has agreed to top up the balance.

This means that those with large mortgages will eventually be debt-free, while those with smaller mortgages will pay off their debts and may be entitled to additional repayments.

Owner-occupiers over the age of 65 or who are in particular difficulty will also be means-tested to see if they are entitled to additional resources.

Investors won't get the same help.

The deal would also see displaced residents' rental assistance end on June 30.

If Mr Chandler's plan is adopted, those who voted against the sale of their apartments will have the right to stay, but will have to continue paying off their mortgages and debts.

While residents the Herald spoke to supported the plan, Daily Mail Australia recently spoke to a couple who stand to lose thousands of dollars.

Sue, 67, and Gary, 71, bought a $486,000 condo in Mascot Towers in March 2012, believing they would work a few more years before retiring in their new home.

Now Sue and Gary are still trying to reclaim the pension money that was instead spent on their now uninhabitable one-bedroom apartment.

“Gary and I would love to retire, but we are both still working over the Christmas period,” Sue told Daily Mail Australia in December 2023.

'We wanted to retire at the age of 65.

“(But) we are still paying about $1,000 a month in strata fees (for Mascot Towers) while we rent another property in Brisbane.”

Sue and Gary have lost more than $500,000 in direct costs (such as the purchase price, stamp duty and strata charges) and almost another half million in estimated capital appreciation on their apartment.

Sue's daughter, Sally Prosser, said her parents were left in an unimaginable situation.

“You can't live in it, you can't sell it, they won't fix it, no one will take responsibility, but you still have to pay your strata fees and you still have to pay your mortgage,” she said. .

“It's wild.”

Mrs Prosser explained that the thousands the couple spent would be completely lost under Mr Chandler's proposal.

“People like my mother and Gary, who have now paid off the mortgage, will not receive any equity, let alone the thousands of dollars in strata payments that have effectively been forgotten,” Ms Prosser said.

'It's so unfair. The owners are being royally overwhelmed financially, not to mention emotionally and physically. The stories that are coming out are just heartbreaking.”