Before and after: 'Australia's worst house' gets jaw-dropping makeover

Broken walls, collapsed ceilings, burnt rafters and great gaping holes in the floor.

This sad wreck of a terrace house in Sydney’s Redfern, abandoned by its owner, then occupied by a squatter and, as a final insult, set on fire, was once labelled “Australia’s worst house”.

But today, after many months of work and the injection of $650,000, the ugly duckling has been completely transformed into a gleaming new two-storey home that’s just exchanged hands for an area record of $2.35 million.

“We’re very proud of what we achieved with this house,” says Yannec Constructions founder Fayez Taouk, who bought the dilapidated house with heritage elements in July 2022 for $1,025 million as a renovation rescue challenge. 

“This was one of the smallest projects we’ve undertaken, but it was also one of the most challenging, and the most creative and fun,” he says. “We grew up around the area and had relatives there, and really like it as it has so much character.

“Then we came across this property and thought we could do something really good with it. We knew it would demonstrate what we’re capable of.”

The house, at 544 Elizabeth Street, has a chequered history.  In 2016, it became the focus of a bitter legal battle after a squatter – a Sydney banker – claimed possession of the two-bedroom house after the disappearance of Chinese owner Paul Fuh, who bought it for $143,000 in 1991.

It was left to deteriorate for 10 years until the banker moved in, paid off the outstanding rates, funded essential repairs, and claimed “adverse possession”. Outraged neighbours took him to the Supreme Court of NSW, which dismissed his claim.

The house was then bought in December 2017 for $1.11 million by a buyer who’d decided to rebuild it himself. But, overwhelmed by the enormity of the task, and unable to secure a bank loan for the work, it was sold once more five years later to Taouk.

He had to completely gut the house, repair all the brickwork and replace the ceilings and wooden flooring, while restoring its heritage elements according to its original design.

He also brought in a team of craftspeople he’d worked with before on many projects to make sure every finish would be as perfect as it could.

The result is a terrace that looks absolutely new, with three airy bedrooms, two fully tiled bathrooms, a large lounge and dining area, a stone-crafted kitchen, a study nook, a central atrium to provide more light, and a private courtyard with a barbecue kitchen outside.

Apart from all the work involved, there were also other difficulties. Every bank Taouk approached for a loan for the rebuild refused to consider it as being outside their strict interest-to-income servicing ratios. 

It looked as if the venture might have to be abandoned until non-bank lender Zagga agreed to come to the party.

“We look at things a little differently to the banks,” says Zagga director property and risk Frank Hageali. “We looked at the property, its location, the number of bedrooms and what it might be sold for at the end, and decided it really suited the market.

“It was one of our smaller transactions, but we were happy to look at it. We were comfortable with the parameters going in, we know the quality of this developer’s work and we were very happy with how it worked out.”

The house was bought at auction in July this year by buyers who don’t want to be identified, but who are apparently delighted by their purchase. McGrath Surry Hills agent Mark Foy says there was huge interest in the property with five registered bidders.

“The transformation was amazing,” says Foy, who had also sold it the last time it was on the market. 

“He did a fabulous job of it. I wasn’t surprised as I know the developer and I’ve seen his work before and I knew he’d do a really good job.”

As for Taouk, he’s not content to sit back and just bask in the praise. He’s now rebuilding and restoring another dilapidated terrace, this time at 136A Crown Street, Darlinghurst, which is due to be put up for sale soon through Foy.

“It’s an old neglected house and I knew I could do a lot with it,” Taouk says. “We always focus on what we can accomplish to restore these beautiful old homes to their full potential.”