What is a Rooming House?

A Multi Occ is a purpose built rooming house. But what exactly is a rooming house?

The Residential Tenancies Act 1997 defines a Rooming House as a residence where one or more rooms are available for occupancy, when rent is paid and four or more unrelated people live in the building. Tenants can rent a room on an exclusive basis for 6 - 12 months.

Meaning, you can have each tenant on their own separate long term lease and rent each room out individually.

Instead of renting your 5 bedroom place out for $650 per week - you can rent out each room individually for $250 per week and obtain $1,250 per week in total. This is all managed by an experienced rooming rental manager. A rooming house will often have shared living facilities such as kitchen, living room, laundry and an outdoor recreation area. In some instances the bedrooms can be self contained i.e. kitchenette and small living space (as per image above).

The difference between Rooming House and Boarding House

A rooming house is not to be confused with a boarding house.

Rooming is a standard residential house containing 4-9 bedrooms that are certified 1B compliant and are approved/registered with council to allow for multiple tenancy agreements. Each council has different regulations for rooming houses. For example, parts of Queensland and Victoria recognise rooming as a different building class to that of a boarding house. Whereas NSW doesn’t have any provisions for rooming houses, just boarding houses.

Brisbane currently has a limit of 5 rooms in a rooming house. If it has more than 5 bedrooms or is greater than 299m2 it is then classified as a boarding house. Victoria has a limit of 9 rooms and less than 300m2 to be classified as a rooming house. A rooming house should look and feel like a normal home.

Boarding Houses can be anywhere from 6+ rooms and be greater than 299m2 are often considered commercial buildings by local councils. Council will often make it difficult to construct commercial buildings in residential areas and therefore often restricted to certain council zones and require council assessment before being approved. In addition to this boarding houses also require commercial lending, heavy fire & safety requirements, additional car parking requirements and a whole different management system.

Why Choose Rooming?

As a Landlord

It is often the case that larger houses are occupied by multiple tenants however 1-2 people will sign the lease. This is known as share housing. I know first hand from my personal experience, when I was a teen I rented a 5 bedroom house and we had 9 people living in there at one point. We were paying bottom dollar rent and the house was being used to it's full capacity. I was the only one on the lease agreement, so if something went wrong I was wholly responsible. Pretty risky. This is a common occurrence in the rental market.

Rooming will allow you to maximise your rental return whilst providing a professional renting environment where separate unrelated tenants can live in harmony. Each tenant will feel responsible for looking after the property with each of them signing their own tenancy agreement. If the tenants damage their own exclusive room then it is their responsibility, not the other tenants. Damage to common areas is shared by all tenants however the use of these areas is defined by the ‘house rules’ which make it pretty clear whose responsibility it is for any damage.

As a Tenant

So as a single person looking to rent what are your options? Live by yourself (rent a 1 bedroom unit) or live with others in a group shared household. If you live by yourself, it is much more expensive for a 1 bedroom unit plus you then have more costs (electricity, wifi, etc). If you live in a share-house, often you need to find other roommates or join someone's house and follow their rules.

In a rooming house, tenants have more rights than a standard lease. Everyone must follow a list of house rules which facilitates group harmony. If an unruly tenant doesn't follow the house rules then they can be removed much faster and easier than a standard tenancy agreement. This is done to ensure everyone gets along and everyone knows their rights. The biggest benefit is that the rent is much more affordable, often the houses are furnished and the on going costs like electricity and wifi are included in the rent.

How is it managed?

A rooming house, just like a normal investment property, is managed by an experienced rooming rental manager. They will provide tenants with the correct tenancy agreement and the list of house rules. Some will even take tenants through an induction. Management fees range from 5.5% up to 12% depending on the location.

I hope this gives you a decent understanding of the basic principles of what a rooming house is and how it works.In our next articles we will explain, how common rooming houses are & what is the demand for rooming houses. Keep posted.

If you have any questions regarding Rooming Houses or Multi Occ properties, please don't hesitate to contact us - contact@thepropertyroom.com.au

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