Monday, February 4, 2013

Is my share house a boarding house?

With the Boarding Houses Act 2012 partly commenced, share house residents might be wondering: is our share house a boarding house under the Act?



The answer is: maybe. It depends on how many people live there, the legal relations between them and... the furniture at the premises. (Yes, the furniture. All will be explained below.)

The Boarding Houses Act applies to 'registrable boarding houses', as defined by the Act. Registrable boarding houses come in two types: 'general boarding houses', and 'assisted boarding houses'.

For share house purposes, you don't need to be concerned with assisted boarding houses. If your share house going to be covered at all, it will be as a general boarding house.

To be a general boarding house, your share house has to tick EACH of the following four boxes.

First, it must fit the definition of 'boarding premises' (at section 4 of the Boarding Houses Act). Boiled down, this means premises that are the principle place of residence for one or more lodgers.




So, if at least one person in the house is a lodger (not an owner; not a tenant; not a child, partner, visitor or guest staying free of charge), and it's their principal place of residence, the premises are boarding premises.

(This first part of the test is pretty easily satisfied: lots of share houses would tick this box. It's the second and third parts that narrow things down.)

Second, the premises must provide beds for five or more residents, not counting residents who are proprietors (or managers, or relatives of proprietors or managers).


Leased premises, where the tenant lets in others as residents, can be a boarding house – in which case the tenant is the proprietor. As proprietor, this tenant (or tenants plural, if there's more than one of them on the lease) doesn't count towards the five-residents threshold.

Also, note that it's beds for five or more residents, so if a house that's set up to sleep five persons has a vacancy, it can still fit the definition – you don't actually need five warm bodies in the house at any given time, and a general boarding house doesn't cease to be one just because there's a vacancy.

(Many share houses will flunk this part of the test: most are not set up for five residents, particularly when you don't count anyone who's on the lease with the owner.)

Third, as indicated above, five or more residents must be provided with beds.



In the Boarding Houses Act's definition of a general boarding house, the premises provide the beds. If you've brought your own bed to the premises, it appears you don't count towards the five-residents threshold.

(Lots of share houses will flunk this part of the test, too. On the other hand, particularly in the overcrowded, exploitative part of the market, it is common for premises to be set up with bunks, to facilitate the overcrowding – so these places may be registrable boarding houses.)

Fourth, five or more residents provided with beds must pay for their accommodation.



The Boarding Houses Act says the payment must be a 'fee or reward', so it doesn't necessarily mean money – so it's possible (but unusual) for the deal to be that you pay your way by providing services to the proprietor. But if you're staying there free, you don't count towards the five-residents threshold.

(Most residents of share houses pay their way – but sometimes there are people staying for free, so it's worth keeping in mind that they don't count towards the threshold.)  
 
Here's the four-part test summarised:

1. the premises are the principle place of residence for one or more lodgers; and
2. the premises are set up for five or more residents, not counting proprietors, such as anyone on the lease with the owner; and
3. the premises provide beds for five or more residents (again, not counting proprietors); and
4. five or more residents provided with beds (again, not counting proprietors) pay to reside at the premises.

If your share house passes the test, it's a registrable boarding house, and the proprietor will need to register it with NSW Fair Trading. Also, if you don't have residential tenancy agreements under the Residential Tenancies Act 2010, you'll have occupancy agreements and be covered by the occupancy principles set out in the Boarding Houses Act when the relevant parts commence a little later this year (date to be announced).

If your share house is not a registrable boarding house, you won't be covered by the Boarding Houses Act – so no occupancy agreements or occupancy principles for you! Also, you may not be covered by the Residential Tenancies Act either – so no residential tenancy agreement, and probably no access to the Consumer, Trader and Tenancy Tribunal for you! – unless you and your housemates get your affairs in order.

As always: if you've any questions, please contact your local TAAS.

7 comments:

  1. Hi, Thank you for the useful info. Just wondering if you are able to point me to the source of info about the "beds" being provided as a pre-requisite to being a boarding house? All I can find is 5 or more paying residents. I couldnt find any published info about beds. Thank you.

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    Replies
    1. http://www.legislation.nsw.gov.au/maintop/view/inforce/act+74+2012+cd+0+N

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  3. hopefully notifications of this still get to you. my question on this is

    it says that you have to register as a boarding house if there is 5 or more paying residents of the house, thats all fair and good. what if there are less then 5 ? say you have 3 paying residence (in a three bedroom house)

    in NSW at least, we dont have a definition for people numbering under 5, unless its a standard house, what if your renting room by room and the number is lower then 5. would it be a 3 person boarding house but because its under 5 its not needed to be registered ??

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    Replies
    1. Hi Unknown,
      Yes a boarding house that looks, feels and acts like a boarding house, but isn't set up for 5 residents or more, does not have to register as a boarding house.
      We are aware of many boarding houses like this that are not covered by the Boarding Houses Act 2012.
      An occupant in one of these unregistrable boarding houses can still be either a tenant or a lodger and their rights will differ accordingly. Have a read of our factsheet on Boarders and Lodgers for more info: https://tenants.org.au/factsheet-14-boarders-and-lodgers. You can also get specific legal advice from your local Tenants' Advice and Advocacy Service on that page.
      All the best

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    2. thanks for the reply leo,

      so if the house acted like a boarding house, had residence signed up with house agreements like a boarding house (apposed to leases or subleases) it would be clasified as a boarding house ?

      my question really is based on those houses that are just rented room per room to separate individuals

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    3. Part of the difficulty is that there is no one classification. What you describe as "rented room per room to separate invididuals" could be called a boarding house as well, or some people might recognise it as some other form of sharehousing.
      Because the colloquial and legal names for things don't match up, it can be quite hard to say one place is a boarding house and another isn't. We tend to prefer to look at whether someone is profiting off the arrangement. There tends to be a big difference in behaviour between strangers coming together to share costs compared to someone looking to turn a buck, though the current legal framework might apply in either case.

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