A former owner of Sydney's iconic Annandale Hotel says he is "filthy" at the council after it reversed its long opposition to live music, a stance that has sent him and his co-owner brother "stone motherless broke".

Receivers Ferrier Hodgson moved in to sell the Parramatta Road pub, which had reportedly been struggling with a $3 million mortgage, in February.

In the wake of the receivership, Leichhardt Municipal Council has voted unanimously to adopt a "Good Neighbour Policy" to end legal action against music venues.

Mayor Darcy Byrne has invited the receivers to submit an application for extended trading hours to make the hotel more financially viable as a live music venue, according to Fairfax Media.

"The reign of the fun police at Leichhardt Council is officially over," Mr Byrne said.

"From now on, council will take responsibility for resolving noise complaints amicably instead of forcing music venues to shut their doors."

The move has infuriated brothers Matthew and Daniel Rule, who bought the hotel in 2000 and were in constant combat with the council over noise and late trading, ultimately forcing the hotel's closure.

The council "put us through unimaginable amounts of stress as we scratched every day to figure out how to pay the bills and keep the doors open", Matthew Rule said.

He accused the council of "gifting the receivers ... a late licence the minute we are out on our arses" while it "ultimately contributed to us losing a business we struggled to for 13 years to keep alive, our family losing money and my brother and I stone motherless broke".

The former owner suggests the council should hand them the licence back.

"Hand us the late licence and support the two people who 13 years ago when it wasn't trendy or politically advantageous to support live music ... had a massive f***ing crack!"

Mr Byrne, who was elected five months ago, said the Rule brothers had a right to be furious with the "wrong, opportunistic and short-sighted" decisions of the previous council.

The Annandale was built in the 1930s and as a live music venue it launched the careers of Australian acts including The Vines, Jet and The Living End, and became a popular stop for touring acts.

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