Sydney property developer scores $2m house under squatter's rights

A Sydney property developer has scored a $2 million house for free thanks to a squatter's rights law.

He's now been declared its rightful owner after a court battle with descendants of its previous owner.

Bill Gertos was visiting a client in the Sydney inner west suburb of Ashbury in 1998 when he came across the empty three-bedroom house.

After discovering the long-term tenant who lived there had died, he walked into the abandoned property, changed the locks and rented it out for two decades.

"We assumed the property was Crown land and the money that was being paid in rent along the way was just going to the government," a neighbour told 7 News.

But instead the money was going to Mr Gertos. He was raking in $600 a week in rent money.

Then he tried to officially claim ownership through the law commonly known as squatter's rights.

This allows someone who occupies a property for a certain period to claim ownership. In New South Wales this is 12 years.

He said he had spent around $35,000 on repairing the house in 1998 and $108,000 on further renovations in 2014.

But the descendants of previous owner Henry Thompson Downie, who died in 1947, launched a legal challenge.

They argued Mr Gertos had not acted in an "open" manner and occupying the property to obtain rental income did not amount to a "taking of factual possession".

But Justice Rowan Darke disagreed, ruling: "Mr Gertos succeeded in taking and maintaining physical custody of the land, to the exclusion of all others".

The family of Mr Downie are planning on appealing. Neighbouring residents also said they were unhappy about the decision.