Sydney woman arrested after 'lovely neighbour' found dead

Police have arrested a 49-year-old woman after an elderly woman’s body was discovered in northern Sydney overnight.

Officers found the body of the 81-year-old in her unit on Foam Street, Freshwater, after concerned neighbours called police shortly after 8pm.

A crime scene was established at the unit by specialist investigators and members of the homicide squad.

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Detectives arrested a 49-year-old woman at the scene a short time later.

No charges have been laid.

It is believed the elderly woman and the woman who was arrested both lived in the same unit block.

Neighbour, Graham Marr, told Nine News the elderly woman had lived in the unit block for about 30 years.

"She was a typically lovely neighbour," Mr Marr said.

"Every time you used to go in and out of the units she would be the sort of person that would pop out and say 'Good morning love'. Lovely Scottish accent. One of those neighbours that you really trusted to leave anything with."