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How the Development of Rooming Houses Started

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How Rooming Houses Started - The Development of Rooming Houses

If we go back to the early 20th century – the rooming houses were clearly the choice accommodation of many. In fact, most single men live in this dwelling which accounted for about 5-10% of the total population of Melbourne. But at present, most of these novel rooming houses have been transformed back into houses lived in by families.

Back in the 1980s – there was the growth of community managed rooming houses which are by the way, non-profit.

But after the year 2000 onwards, this recent model of lucrative rooming houses has started in response to increasing house prices as well as a viable rental market.

Boom comes the rise of apartment builds. The development in the apartment surge is mainly due to the following reasons: need to live as near to one’s employment and reasonable costs. We are now in the modern convenience lifestyle, minimalism and individual-oriented rather than the traditional family-oriented way of life.

Apparently, what holds true is that single-person households are certainly gaining numbers among the household types in Australia. From 2016 consensus, 1 out of 4 Australians reside in a sole household.

Rooming House: What it is and how it started?

The Rooming House dates back to over a century and has many other names like boarding or room sharing and share housing. But through a decade or so, the more valuable significance took over so the name ‘rooming’ is now the most recognised familiar term of this new type of lease residence.

What makes a rooming house?

A Rooming House as defined by the Residential Tenancies Act of 1997 is a dwelling where four or more persons who are unrelated with each other live. It has one up to several rooms offered for occupancy in exchange for rent payment. The condition is that these tenants can rent a room exclusively or they can share it with others under the shared option. This is actually the most basic living arrangement for the private rooming house owners/administrators.

This means that you can have each room rented out separately. Each tenant will have his own individual long-term lease.

An abode rented by a number of people each under a rooming accommodation contract is considered as many and distinct households operating under the Residential Tenancies and Rooming Accommodation Act 2008.

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Reasons for Tenant’s Choice of a Rooming House

If you are renting and single – what are your choices?

Either you live your own by renting a single bedroom unit or reside in a shared house with others.

Rent is quite pricey in our major cities. One tenant would shell out not lower than $320/weekly for just 1-bedroom small apartment in the city of Brisbane. Costs should be even higher in Sydney and Melbourne. If you’re up for something that’s more reasonable, then you would generally have to look for a group who will allow you to be part in their lease, a shared household. This is like joining the lease of someone but the flipside is that you will not have any authority in the house.

Each tenant is accountable for his own personal lease as included in a rooming tenancy agreement. Since the goal is for everyone to have a good relationship with each other, there are stringent set of rules for each tenant to follow. If there’s a rowdy tenant who breaks the rules, he will be expelled. But for a normal tenancy contract for a shared household – if there are several violations, all will be ejected from the house.

Usually, rooming houses are designed to purposely account for the additional tenants, too. This means they are often cleaned, furnished, efficiently managed and cared well, allow for gardens and with extra bedrooms and bathrooms to include the additional tenants. Thus, you will be provided with more essentials and luxuries as well as more authority.

Deciding for a Rooming House as an Investment Property

Many investors are not even aware that there are several opportunities in leasing their property out. The primary cause is that you are not able to rent out any property in a rooming condition. Before renting it within a rooming agreement – the house is required to fulfill specific safety and classification standards with the council’s approval.

Usually, you would lease out your property as one to a family or two people. But what happens most of the time is that where there are only a single or two names, yet there are several people who actually live in the house. The reason for this is bad rental management. What is recommended is more frequent monitoring and a stricter set of rules and regulations for implementation. Suffice it to say that all tenants should abide by all these rules. This implies that all tenants will have a good relationship, with the house also being taken cared of properly.

There are certainly additional expenses and supervision included in having your property rented out as a rooming house but the major advantage is yet in the profit you’ll gain. For example, a 4-bedroom house could be rented for $450 per week on a regular lease basis. But if you’ll have this very same house rented out for say, $150 per room. Only 3 tenants will provide the same return, but when you have 4 tenants, you stand to make $600 weekly. Thus, creating positive cash flow.

How do you implement the Rooming House for each resident?

Each resident is supposed to have or do the following in a Rooming House:

  • should affix his signature in an individual rooming accommodation tenancy contract that’s separate from the standard tenancy agreement;
  • makes a bond payment and exclusively accountable for any room damages, plus equally accountable with the other residents for damages resulting in the property and its common areas;
  • has a permission to occupy a room exclusively on the grounds and accountable for its cleanliness;
  • can share the room with a companion;
  • shares the following: communal areas like living and dining areas, kitchen and laundry as well as furniture, cutlery and cooking utensils external of the resident’s room with one or several other residents;
  • is obliged by the ‘house rules’ which set the system on how the residents live together and what is identified as a violation of these rules;
  • may be expelled from the house in as barely as 48 hours if they break the ‘house rules’;
  • has lawns and gardens being maintained by a landscaper or gardener as well as communal areas that are regularly serviced and cleaned by professional cleaners;
  • pays for other expenses included in their rent, such as utilities, landscaping maintenance and communal area cleaning;
  • may have a limit in the electricity expense included in their rent once they’ll install individual electricity meters in the room typically at $200/quarterly;
  • can have exclusive usage of a garage space at $10pw, if not, will have to make use of the driveway or off-street parking;
  • uses a lock on their room’s door with a personal lockable cupboard for food in the kitchen, too.

Rooming House: House Rules

Every resident is expected to follow the house rules in their rooming house. These rules are presented to them by the professional and competent rental manager as tenants in the rooming accommodation.

The Rental Accommodation Association Victoria offers a list of house rules which apply the industry’s top procedure.

The coverage for the system includes the following: property damage, rental payment, visiting hours, usage of internet, room check-ups, fire safety and respect for privacy of the co-residents.

  • After booking has been confirmed – all fees should be paid in advance.
  • Based on seasonal adjustments and room availability – all fees are negotiable on a case-to-case basis.
  • All departures must commence before 12pm and premises should be cleared at this time.
  • You must keep your own room clean and tidy all the time. Management will conduct monthly routine checks.
  • All room inventory must be signed off ON, and all furnishings, fittings and furniture should be left in their working condition, except for the usual wear and tear.
  • You must inform immediately the Guest House management should there be any repairs and maintenance.
  • Maintain good, well-behaved conduct for the residents and visitors, without making any noise and trouble with the other tenants and neighbours.
  • All guests should be registered with the Guest Services beyond 10PM so they can be allowed to enter the Guest House.
  • All garbage must be covered and placed in the bins everyday. There should be no fresh food leftovers abandoned in the rooms.
  • Ensure that common kitchen spaces as well as bathroom are cleaned-up and wiped down after every usage.

For Long-Staying Tenants – the following should be observed:

  • Acknowledge and follow the HOUSE RULES.
  • Ensure other residents’ right to peace and privacy.
  • Make timely tariff payments.
  • In case the tariff is not settled or the HOUSE RULES not abided, thus, as in the usual managed accommodation services- the tenant will be expelled. If there’s a violation of the HOUSE RULES that extremely disrupts the peace and privacy of the rest of the residents – the wrongdoer will be asked to vacate the house right away.
  • Consider instant termination of your accommodation if payment of tariff is not made.

Tenants of Rooming Houses

The private rooming house operators’ focus is on the many sole household tenants.

The most common tenants are: students, international students (as there are about 800K of them presently in Australia), single divorced parents and young professionals. These renters have to enter into long-term lease agreements, typically between 6 months to 1 year.

This is not quite making housing available for homeless by the community-managed and not for profit local groups.

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Every council has its own unique town planning procedures regarding the building of ‘purpose built’ rooming houses as well as the variations in the usage of a current residence to a rooming house. There are councils who will encourage that purpose of rooming, whilst others will never even allow it at all.

Be reminded though that there are also state legislations which the council can have additional controls. If you’ve not complied with these regulations, this can cost you a lot of money.

But what areas have a high volume of people looking for a room to rent? What suburbs have a low number of rooms to rent advertised online? What areas have a high demand for rooming houses? You can get the answers to these questions in one customisable dashboard​.

Take advantage of our fully customisable tool to help you identify which areas have a high demand for rooming houses and utilize it to be on top over the less-knowledgeable property investors, local real estate representatives, developers and owners. It lets you narrow down 15,000+ suburbs by combining all 40 data points as filters. It also lets you compare suburbs historical & current performance. And once you identified the best location our tool also lets you do feasibility studies on 5 properties all at the same time. Save time, budget, and cover the full cycle of your investment property research workflow.

It is the most comprehensive location report of all 15,000+ suburbs in Australia – with linked state, suburb, and postcode. It’s the perfect tool for property investors looking to buy a property to rent out rooms individually to have a positively geared portfolio.

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