Exploiting a Loophole !

The plight of first home buyers locked out of the Sydney house market by ever increasing prices is matched by the shortage of rental accommodation - at prices people can afford.  For many, the only remaining option is to rent a bed in a " boarding house "  !

Usually, boarding houses are former big old homes that have been converted to that purpose.   The quality ranges widely and tenants may be offered a bed in a shared room, or have the privilege of their own room, but usually all the guests share shower and toilet facilities.   The provision of meals varies.   Some establishments cater for both breakfast and the evening meal, while others leave residents to make their own arrangements at nearby fast food restaurants.   The rental charge for such facilities is usually between $200 and $ 250 per week.

The government became aware of unlicensed boarding houses dividing rooms with illegal screens to rent tiny living spaces at exorbitant prices.  Often fire exits were blocked and in some cases accommodation was offered to shift workers on a " hot bed " basis, shared by several people. Local councils found it difficult to launch prosecutions.

As a result, the government passed a new State Environment Planning policy in 2009 and since then there has been a rash of new building applications for what are termed " boarding houses " across the city.  No form of price control exists and prices charged for these new facilities are in the range $390 to $500 per week, double that of the charge in older buildings.

Investors were quick to exploit an anomaly in the distinction between the minimum room size permitted in an apartment building as to that of a boarding house.   Individual boarding house units of twelve square meters are three times smaller than the minimum allowed in what are termed " studio apartments " built for resale.

Suddenly, the terminology changes.   These new facilities in a spanking new building with each room providing its own bathroom facility is now described as  " furnished designer studio " and the term " boarding house " has been discarded.  More than five hundred individual rooms have been constructed since that legislative change - and demand is not slackening.

All this is reminiscent of a trend that developed in Japan.   There it is possible to nightly rent a sleeping space which is a cavity in a wall containing a bed, quite similar to the luggage deposit facilities at most railway stations.  It is intended for office workers who live far from the city centre and who avoid a long commute by using this cheap option, combined with the fare of fast food outlets - to maintain a salaried city job.

Unfortunately, it seems that this loophole is mainly benefitting the new breed of boarding house proprietors who are benefitting at the expense of desperate people !