Luxury apartments masquerading as boarding houses

Most people would associate boarding houses with low-cost housing for disadvantaged people. So why are boarding houses becoming an increasingly popular choice for developers across Sydney?  

The NSW Government has seized on boarding houses as part of the solution of boosting affordable housing stock.

As a result, a growing number of boarding houses are popping up across Sydney and surrounding regions.

So why are developers suddenly so keen to jump on the boarding house bandwagon?

A bedsitter in a boarding housing is much smaller than a normal studio apartment, so that a boarding house can fit more bedsitters than an apartment building.

Planning policy permits the construction of boarding house rooms as small as 12 square metres, whilst studio apartments must be a minimum of 35 square metres. That's almost three times smaller, meaning you can build three times as many.

However, many of these new boarding houses are actually being marketed as "luxury studio apartments" with rents to match.

NSW planning policy can override council planning controls and allow for boarding houses to be built in most residential areas.

Land tax exemptions apply where a boarding house does not charge more than $255 per week for single accommodation or $423 per week for family or shared accommodation.

But even more lucrative for the owner is to forgo the land tax exemptions and charge what the market can bear. A quick look online shows rents for boarding rooms at up to $500 per week, which is a far cry from "affordable" housing.

A final incentive is the lack of protections and the insecurity of tenure for boarders. Consumer protections are stronger for tenants in mainstream residential tenancies compared with protections for boarders.

Boarders don't have leases for a set amount of time. A boarder can be evicted as long as they're given 'reasonable' notice, but what is reasonable is determined by the owner. A boarder must be given four weeks' notice of rent increases, but it can be increased as often as the owner likes.

If a developer were to style their development as studio apartments, then renters would be tenants. Even on the weakest protections of a periodic agreement, tenants get 60 days' notice of a rent increase and 90 days' notice of eviction.

Calling a development a boarding house means owners have a lot more flexibility and much less responsibility.

The growth in new boarding houses is clearly not providing the promised affordable accommodation to those in need. It has instead turned into yet another gift to property developers.

At the very least, the NSW Government should regulate boarding house rents to ensure these rents are truly affordable, as they were meant to be.