Housing in Sydney: Developers build 'boarding houses' for $500 per week

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Sydney residents walk past a newly-completed apartment development in Sydney's inner-city suburb of Zetland, June 24, 2015.
Sydney residents walk past a newly-completed apartment development in Sydney's inner-city suburb of Zetland, June 24, 2015. Reuters/Jason Reed

While several Australians struggle to avail housing in Sydney's costly rental market, high-end "boarding houses" are being built by developers with rent as high as $500 a week. Construction of boarding houses across Sydney surges, while councils are claiming they do not possess the power to ensure housing is actually within people’s means.

Randwick mayor Noel D'Souza says the situation divides the community. "Developers are building these and the rents are not reflecting affordable housing,” he added.

Over 500 boarding house rooms in Randwick were built since the implementation of the State Environmental Planning Policy for Affordable Rental Housing in July 2009. Based on a report the Randwick Council has prepared, half of these were approved in the last two years. The figure is also supported by findings of a survey of all boarding houses in the council area.

According to the survey, boarding houses built under the policy were leased between $390 and $500 a week. The price was about the double of rooms in older traditional boarding housing, which were leased between $200 and $250.

An example is a boarding house in Avoca Street, Randwick that consists of forty rooms. Single rooms are being advertised for lease at $500 weekly. It is currently marketed as "furnished designer studio.”

Cash cow

D'Souza said the policy is being treated by developers as a “cash cow.” He pointed out that there should be new rental controls to guarantee the rooms remained subsidised for both key workers and low-income earners.

He added that what is currently happening is that developers are taking advantage of generous incentives to get bigger developments built in residential areas under the pretext of helping the community, the Sydney Morning Herald reports. But they are actually charging market rates, which are way out of reach of those most in need.

After the report’s results, Randwick council has asked the Department of Planning to conduct a review of the effectiveness of the policy. An audit of the location, number of boarding houses approved under the policy and rents charged was also requested.

Mayor Helen McCaffrey believes developers are trying to make use of the policy for financial gain. She said the council had "limited capacity to refuse development applications" providing developers follow the minimum standards set by the policy.

A Department of Planning spokesman said the policy is now under review. The move is part of a more comprehensive state policy review program.

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