Rooming
Did you know there are over 1,300 registered rooming houses in Victoria?
What is Rooming?
Rooming has been around for over a hundred years and can also be referred to as share housing, room sharing or boarding. However, over the past decade the term rooming has taken a more structural meaning and is now commonly recognised as a new type of tenancy.
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 or shared basis with the shared option being the most common arrangement for private operators.
Meaning, you can have each tenant on their own separate long term lease and rent each room out individually.
A house leased by several people each under a rooming accommodation agreement is considered several discrete households under the Residential Tenancies and Rooming Accommodation Act 2008.
Why Choose Rooming?
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.
Rent is not cheap in our capital cities. A tenant would be looking at a minimum of $320 per week for a small 1 bedroom apartment in Brisbane, with Sydney and Melbourne costing a lot more. If you want something more affordable you would normally need to find a group of people who will let you join in their lease (a shared household). Often you will join someone else's lease and you will not have any power in regards to the house.
In a rooming tenancy agreement, you have your own personal lease which each tenant is responsible for. There are a strict set of rules for each tenant to abide by, to ensure that everyone in the house gets along. If there is an unruly tenant who breaches the rules, they will be removed. On a normally tenancy agreement (shared household), if there area number of breaches, you would all be removed.
Often rooming houses are tailored to specifically account for the extra tenants. Meaning they are often furnished, managed more efficiently, cleaned, gardened and will have extra bedrooms and bathrooms to cover the extra tenants. Therefore, in a rooming tenancy agreement you will get more luxuries and essentially more power.
As a Landlord
Most landlord's don't even realise they have other options when it comes to leasing their property out. The main reason is because you can't rent any property out under a rooming basis. The house needs to meet certain classification and safety standards, plus it needs to be approved through council prior to renting under a rooming agreement.
Normally you would rent your property out under one lease to either a family or a couple of people. Too many times we have seen 1 or 2 names on a lease, yet 4 or 5 people are residing in the house because of poor rental management. A rooming tenancy agreement is monitored much more and there are a strict set of rules for each tenant to follow. This is to ensure everyone gets along but also to make sure the house gets looked after the right way.
Although there are extra costs and management involved in renting your property as a rooming house, the biggest benefit is still in the profit. A 5 bedroom house may rent for $600 per week on a normal lease. Whereas that same house could be rented out at $200 per room. Meaning only 3 tenants are needed to get the same return, but when you have 5, you will be making $1,000 per week. Creating a positive cash flow king
In a Rooming House each resident:
-
Signs an individual rooming accommodation tenancy agreement (this is different from a standard tenancy agreement);
-
Pays a bond and is solely responsible for any damage to their room and equally responsible, with other residents, for any damage to the common areas and property;
-
Has a right to occupy a room on the premises on an exclusive basis and is solely responsible for cleaning it;
-
May share the room with a partner;
-
Shares other communal rooms such as a kitchen, laundry, living and dining areas, furniture, cooking utensils and cutlery outside of the resident's room with one or more of the other residents;
-
Are bound by ‘house rules’ that regulate how the residents live together and what is defined as a breach of these rules;
-
May be evicted in as little as 48 hours if they fail to comply with the ‘house rules’
-
Has communal areas cleaned regularly by a professional cleaner and lawns and gardens maintained by a landscape service provider;
-
Has the cost of utilities and communal area cleaning and landscaping maintenance included in their rent;
-
May have a cap on the cost of electricity bills included in their rent if they have individual electricity meters installed in their room (usually $200 per quarter);
-
May have exclusive right to use a garage space ($10pw) otherwise will need to park on the driveway or use off-street parking
-
Has a lock on the door of their room and has a lockable cupboard in the kitchen for food
The History of Rooming Houses
Historically, rooming houses were a common accommodation choice in the early twentieth century, housing between 5-10 per cent of Melbourne's population with residents being mostly single men. Many of these original rooming houses have now been converted back into dwelling houses occupied by families.
The 1980s saw the development of community managed not-for-profit rooming houses.
Beyond 2000, the 'new model' of profitable private rooming houses has emerged in response to a competitive rental market and rising house prices.
"The values of the Australian workforce and community are changing. The former singularity of Australian suburbia as our preferred lifestyle shifted a decade ago to embrace seachange and then treechange. But then something odd happened: we morphed again in our preferences, suddenly seeing new value in inner-city living and an apartment boom ensued".
The Weekend Australian - Bernard Salt
The rise in the apartment boom is largely due to affordability and the desire to live closer to employment. We now live in a world where convenience is top priority, minimalism is in and individuality is taking control of our once family orientated lifestyles.
This is evident in the fact that lone person households are the fastest growing household type in Australia.
1 in 4 people in Australia live in a lone household.
2016 census data.
House Rules
Each professional and credible rooming accommodation rental manager has their own set of house rules that they provide to tenants in rooming houses that sets out the rules each resident must follow.
The Rental Accommodation Association Victoria provides a set of house rules that implement best practice in the industry.
The rules cover things such as rent payment, damage to property, room inspections, visitor hours, internet usage, respect for other resident’s privacy and fire safety.
Rooming Tenants
Private rooming house operators target a number of single lone household tenants.
The most common are students (especially international students with $800,000 currently in Australia), young professional and single divorced parents. Tenants sign long term lease agreements between 6-12 months.
This is very different from providing housing for the homeless by community managed not for profit organisations.
Locations
Each council has different town planning guidelines with regards to the construction of ‘purpose built’ rooming houses and the change of use of an existing dwelling to a rooming house. Some councils will not allow rooming at all whilst others encourage it.
Note, even though the state legislation says one thing, a council can still put further restrictions on. If not done right, this can cost you thousands.
Talk to us for more information as we know exactly where and how you can make it work.