Boarding House Regulation – Who is winning?

23 May 2014 | Posted In: 121 – Winter 2014, Boarding Houses, Housing Types and Issues, | Author: Sally Chalmers | Author: Paul Adabie | Author: Digby Hughes

Sally Chalmers and Paul Adabie have been working on a boarding house project with both boarders and operators during the introduction of the Boarding House Act in NSW. With Digby Hughes they explain the changes and explore some of the consequences.

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Talk to anyone about the cost of living in Sydney and they will have their own story about how much rent they are paying, or the journey they took in finding a place that suited their needs and income. Renting an affordable place to call home is tough, particularly so for those on a limited or low income. The bad news is, it’s getting worse not better!

Because of the lack of affordable housing, boarding houses are becoming an increasing realistic option for those whom affordability is a priority. This is a form of accommodation where the rent is collected for the use of a single room, but other facilities such as kitchens, bathrooms and toilets are often shared. Boarding houses differ from share house arrangements in that residents are not generally known to each other and each individual occupant has their own agreement with the operator.

Boarding House operators or proprietors are as varied as the individuals living in them: they could be real estate agents, private companies, small businesses or individuals. Some non-government organisations or community housing providers may also manage boarding houses. Operators may live on site or they may have a caretaker or manager to collect rent and manage jobs such as property maintenance or the cleaning of communal areas.

Historically, boarding houses catered for people coming to the city for a short visit or contract work. They needed a temporary place to stay that was comfortable, affordable and near public transport. Accommodation fees would often include meals and laundry and there would generally be someone (usually female) who managed the day to day operations of the boarding house. These premises were mostly privately owned large houses, generally well managed and clean, with the majority of boarders working full time. Running a boarding house (or rooming house) was a good profitable business.

Today boarding houses cater for different needs and play an increasingly important role in the affordable housing market. As an easily accessible option for people, boarding houses are able to provide immediate accommodation and in many cases do prevent homelessness. They can be a reasonable form of accommodation which does not require a long term lease or a large deposit, compared to private rental. For some people this makes them an attractive option.

Due to the easy accessibility of boarding houses, it is often people on a low income or those with a limited or a poor tenancy history that seek this form of accommodation. Other residents might be those needing a temporary form of accommodation, such as those who have experienced domestic violence, family breakdown, or those just needing somewhere to stay between more permanent living arrangements.

According to the Australian Bureau of Statistics boarding house occupants are recognised as homeless. Living arrangements can be tenuous and changeable, due to challenges such as lack of regulation and oversight, and residents with low income, mental health issues and/or addictions.

In October 2012, the NSW Boarding House Bill passed the NSW Parliament. In his speech introducing the bill into the Parliament the Minister Andrew Constance said: “The key purpose of the Boarding Houses Bill 2012 is to protect the rights of residents living in all boarding houses through the introduction of major reform to the industry and to promote the sustainability of the boarding house industry in New South Wales. Boarding houses play an integral role in the provision of low-cost, affordable housing, particularly for people who may otherwise struggle to afford private accommodation. Although there is no clear data available on the exact number of boarding houses in New South Wales, it is estimated that there are around 750 boarding houses operating, the vast majority of which are located in the Sydney metropolitan region”.

Since July 2013, it’s a legal requirement for boarding house operators to register their property with the Department of Fair Trading, and since October 2013, they are required to provide their occupants with ‘Occupancy Agreements’, signed by both parties prior to the occupant moving into the house. These agreements need to comply with certain occupancy principles, which should ensure that standards are reasonable for those moving in. As of May 2014 665 boarding Houses have registered in NSW.

Financial Incentives were supposed to be a large part of the reforms to address the fears that operators would just shut down their boarding houses and that there would be fewer properties available. Because of a lack of data it is impossible to accurately ascertain whether many boarding houses have shut because of the new legislation and regulation. Anecdotal evidence from real estate agents would suggest that there has been no great rush to sell. l

For boarding house operators the two biggest changes have been:

1: The requirement to register by paying a fee of around $100 and completing a relatively simple registration form. This is not an onerous requirement in itself but the biggest consequence has been a number of boarding house properties have come to light that did not have the correct DA Approval in the first place. Depending on the attitude of the local council some of these have been closed down due to planning regulations with which they were never compliant with anyway – regardless of the new Act.

2: The other significant change for them – is that they are required to offer some basic ‘rights’ to their occupants. These include the right to a written occupancy agreement, a maximum bond payment and minimum notice of rent increases. None of these changes are onerous – and all are long overdue.

The Act was introduced with the view to improving the conditions and security for residents and ensuring that operators comply with standards. Newtown Neighbourhood Centre’s contacts with Boarding House operators however show that operators are finding it difficult to provide the accommodation under these new arrangements, given the levels of compliance and regulation.

Many operators feel undermined by the new laws. Among their concerns are:

1) Incentives were promised with the Act but have not been delivered – in fact the opposite is happening, with the ‘registration’ and occupancy agreements implemented, tax and costs of operation are rising making it impossible to run viable business.

2) Compared to those who do not register and continue to operate under the radar, the legitimate operators cost structure of public liability insurances, stamp duties and land tax means legitimate operators are at a commercial disadvantage. One operator proposed that legitimate operators who do pay their insurances up correctly/on time be offered some refund for ‘doing the right thing’ – an incentive to play by the rules.

3) Under Building Code of Australia boarding houses are classified into 2 types: smaller style houses accommodating around 12 people are classed as 1B; multi-story blocks which are C3. The latter must have back to base fire alarms, which cost $1250 for each call out, whether accidental or not. Some proprietors have complained that this is an ongoing cost to doing business.

4) Operators are frustrated that they are becoming more like social workers, dealing with mental health issues, addictions and damage to property. If an operator takes a resident to the tribunal for not paying rental arrears, they lose more rent money in the process while waiting for hearings.

Newtown Neighbourhood Centre has been working with both proprietors and residents to alleviate many of these issues. We believe that by utilising our service proprietors are able to save both time and money.

Newtown Neighbourhood Centre’s Boarding House Outreach Project supports residents and operators of Boarding Houses in Sydney’s Inner West. It provides casework support for residents needing to maintain their tenancies, and delivers regular information forums for operators, where they are updated about the reform and where they are able to voice their concerns.

For more information about supporting residents or operators of boarding houses in City of Sydney and the Inner West, please visit www.newtowncentre.org or call the centre directly on 9564 7333.

Sally Chalmers and Paul Adabie work on the Boarding House Project at Newtown Neighbourhood Centre.Digby Hughes is the Policy and Research Officer with Homeless NSW.

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