9News feature: New Generation Boarding Houses
This article first appeared on 9News. You can watch the video here.
New generation of boarding houses across Sydney are unrecognisable
They were once more like halfway houses, offering cheap rent and short term stays for those with no other option.
It's estimated between 500 and 600 development applications for boarding houses are currently before Sydney councils.
And the bulk look just like a brand new strata apartment block, complete with intercom, security cameras, balconies and an underground car park.
The difference is your bedroom, living area, and sometimes a small bathroom or basic kitchen facility are all in the one room measuring anywhere between 12 square metres and 25 square metres.
And while you may not need to fork out a month's worth of bond, in many cases, you'll pay market rate for the room and use of communal facilities in the building.
For developers, new boarding houses mean big money.
John Gilmovich, president of the Property Owners Association of NSW which represents boarding house owners, says typical rental returns on apartments are sitting around three per cent. But boarding house landlords are making double that.
"It is all demand-driven, there is a demand for this product in the marketplace. They do have great yields," he said.
"The benefits of boarding houses is it allows tenants a quick entry point. Easy in and easy out."
Mr Gilmovich said while boarding houses still have a stigma attached to them, they're modern homes attracting a very different clientele to what they used to.
A University of NSW report from 2019 found boarding houses were delivering micro-apartments for employees and students instead of affordable housing.
Lead author Dr Laurence Troy said the tenants "were not who you typically expect to find in more traditional boarding houses".
"The affordable rental housing policy was intended to provide options for marginal renters, but what we are finding is the most occupants are students and younger workers, people who you ordinarily find in mainstream studio apartment rentals," he said.
The state government is looking at introducing reforms to require boarding house units to be "affordable".
Under the planned changes, they would need to be operated by community housing providers for a decade with rent set at no more than 80 per cent of the market rate. The government is also looking at a new type of housing that would require minimum apartment sizes of 30-35 square metres.
Developers say such changes will kill off the sector.
A spokesperson for Planning Minister Rob Stokes told 9News the reforms will not be finalised until the end of June.
The inner west appears to be the boarding house epicentre of Sydney.
Take Gower Street in Summer Hill. It has your traditional boarding house along with a new generation one.
John El-Alam, who owns a couple of boarding houses said he first got into the business to help marginalised members of the community.
Now he has a DA in place to knock down an existing 12-room boarding house and build a new 30-room one.
"People find it affordable and it's easy, there is not a lot of paperwork," Mr El-Alam said.
One of his residents, Karen, said she originally intended to stay six months but has been living there for four years.
She's studying and working and has an investment unit but has made a financial decision to live in a boarding house.
"I don't have to worry about moving in or out of the place and having to worry about getting my bond back or my electricity, turning it on or turning it off," Karen said.
Rooms in the older style facility rent for $240-$270 a week.
Boarding house rooms come fully furnished and the weekly rent includes utility bills.
Developers are required to provide 0.2 car spaces per room in accessible areas and 0.4 car spaces per room in less accessible areas.
In newer buildings, rooms go for around $400 a week.
