Boarding house boom could be knocked back with increased parking space quotas, developers say

“These new boarding houses offer self-contained studios to people like young professionals, middle-aged people, divorcees and retired people who are being squeezed out of the housing market because of affordability issues,” says Nick Tuxworth of agents Savills Sydney.

A site in Sydney’s inner city suburb Erskineville with DA for 18 boarding house rooms sold under the hammer for $3 million. Picture: Supplied

“If these proposed new laws come in, they will certainly slow down the number of these going through the DA [development application] process and being provided. These are currently in huge demand from developers who see them returning 15-20 per cent with very low vacancy rates, investors and people wanting to rent them to live in them.”

Last week, he sold a boarding house site in Erskineville with a DA for 18 rooms over three floors for $3 million at auction after receiving nearly 300 inquiries during the sales campaign – all from developers keen to beat the new rules if they do come in. Once completed, room rents could be $425-$450 a week, compared with perhaps an apartment for $700.

He also has a fully-completed 15-room boarding house coming up for sale in Rockdale for more than $3.5 million, having sold the site last year for $1.8 million.

Boarding houses these days, like this one in Sydney’s Rockdale, are worlds apart from the old-school ones. Photo: Supplied

The government says, however, it’s responding to concerns from neighbours of these sites, who complain that the extra residents they bring to their streets are placing an intolerable burden on street parking. As a result, Planning and Housing Minister Anthony Roberts is proposing lifting the car parking allowance from 0.2 spaces per room to 0.5 spaces.

“The proposed amendment aligns with those for one-bedroom dwellings for infill development under the Affordable Rental Housing SEPP (State Environmental Planning Policy),” Mr Roberts says. “This will provide more parking spaces for people living in boarding houses as well as reduce the demand for and impact on street parking.

“Boarding houses are catering to an increasingly diverse range of residents. The proposed amendment to boarding house car parking standards seeks to address community concerns about the impacts of street parking.”

A site with approval for a 58-room boarding house is expecting to sell for about $6 million. Image: Supplied

He stresses, on the other hand, that the change will not fetter councils’ ability to approve lower car parking rates per boarding room if they are of the view that there are other transport options available in the area.

But still agents and developers have concerns, and are rushing DAs through in a bid to beat any amendments since, if passed, they will only apply to sites not yet with approval.

Urban Taskforce chief executive Chris Johnson says affordability of housing should be a priority, and such changes, if allowed to go through, will severely affect the supply of good boarding house rooms.

“These boarding houses are generally going to be in areas where there’s more density, close to transport nodes, so more car parking isn’t needed,” he says.

A block in Ashfield, in Sydney’s inner west, is expected to fetch about $6 million. Image: Supplied

“But to provide it will add around $70,000 a space to the cost of the project. It means a 40-room boarding house will go from eight spaces to 20, which would add an extra $840,000.

“As a result, this excessive number of car spaces will significantly raise the price of development and push up the rents that have to be charged to cover costs, so it won’t help unaffordability at all. In our view, this is more NIMBY-ism; people not wanting these social developments so they’re using car parking as a ruse to object.”

There are estimated to be nearly 800 DAs for boarding houses currently under consideration at various councils within NSW, says Mr Tuxworth.

Two of the ones already approved are being sold via Peter Vines of CBRE Western Sydney. He has a site in Gladesville ready for a 58-room boarding house for sale by expressions of interest for about $6 million, and another coming up at 193 Liverpool Road, Ashfield, with 37 rooms, for the same amount.

“The old boarding houses used to be dodgy old places for drop-outs with shared services, but these are very nicely designed self-contained apartments for rent which are a good alternative to a shared house for many people,” says Mr Vines.