Habermas – on the assumption that your 100 yo building is covered by Strata as opposed to Community Title, then provided the “studio apartment” complies with relevant building codes for a habitable dwelling, amongst other things in terms of ceiling height, windows in sleeping areas, bathroom/toilet facilities, and fire safety, and with the tenancy regulations for water efficient fittings and electricity isolators / metering etc then so far as I’m aware there’s no other limitation on the Owners Corporation (O/C) renting or leasing that area of its Common Property provided its decision on that property “dealing” is resolved by ≥75% of those voting in favour (incl. by proxy) at a General Meeting; that is by special resolution.
The sale of that area is a little more complex, as in addition to that same special resolution to approve of that “dealing” and the building code / occupation compliance, the O/C would have to undertake a Strata Sub-Division involving in part commissioning a valuation of the “studio apartment” in order to perform a redistribution of the aggregate units-of-entitlement (UOE) of the Scheme (if only to allocate a UOE and therefore levies to the studio), to have the Strata Plan redrawn, to obtain the consent of the Local Council, and to have all of that Registered with NSW Land & Property Information (incorporating the former Land Titles Office).
The latter process is a little complex from the perspective of matters being handled in the correct sequence, but any lawyer with strata or property development expertise should be able to assist.
Albeit from a different perspective, there’s been a recent discussion on Flat-Chat about strata-experienced lawyers HERE.