Most brokers can fund a rooming house. Almost none can tell you whether it will work before you buy the site.

Yes, Australia wide, and from September 2026 for the construction itself, not only the completed asset. A lender on our panel funds Class 1B builds and conversions at up to 80% of construction cost, or 70% of the as-if-complete value excluding GST, whichever is the lower, and a registered, tenanted asset bought as a going concern at up to 80% LVR, through a progressive-draw facility, subject to valuation and the lender’s servicing criteria. Class 1B funding remains largely non-bank territory: expect a higher rate than a standard residential facility, a shorter lender panel, and a file that has to be prepared the way that lender’s credit team reads a rooming house.

Yes. Up to 80% of construction cost, or 70% of the as-if-complete value excluding GST, whichever is the lower, on a progressive-draw facility for a Class 1B rooming house or co-living project, Australia wide, through a lender on our panel, subject to valuation and the lender’s servicing criteria. The valuation is the hinge: the facility is set against the lender’s valuation of the project and drawn in stages as the build progresses, so the site, the plans and the builder’s contract decide the number before any lender does. Most lenders will not fund the construction of a rooming house at all, which is why investors have carried these builds on cash or on equity in their own home. Bring us the site before you buy it and we will tell you where that valuation is likely to land.

No. A registered, tenanted Class 1B rooming house bought as a going concern is the straightforward version of this work: one valuation question, one lender that reads the income basis properly, up to 80% LVR subject to valuation and the lender’s servicing criteria. A site bought and built under a progressive-draw facility, refinanced on completion with the land tax exemption planned from the first week, is the complex version. Both get the same reader, someone who has built, licensed and run them, and the same process.

A building classification under the National Construction Code covering boarding houses, guest houses and hostels of a certain size. The classification determines construction standards, fire and safety requirements, the licensing pathway, and which lenders will consider the asset.

Published industry figures put rooming house yields above 10% against 3–5% for traditional rentals, with quality Melbourne stock reported earning $150,000 a year and above. Those are gross figures before management, compliance, vacancy and holding costs, which are materially higher than a standard rental. The model works on net, not gross.

An exemption pathway exists for certain rooming house arrangements under Victorian land tax legislation. With the threshold cut from $300,000 to $50,000, whether you qualify can decide the project’s viability. Victoria has legislated actively in this area, so confirm the current position with your accountant before you commit. We will tell you what to ask them.

Often, subject to planning, building classification and licensing. Conversion is the pathway most investors underestimate: the finance is the straightforward part, and the planning and classification work is where projects stall.

Yes. The lending is arranged Australia wide. What does not travel is the rulebook: Regulation 74, Class 1B licensing and the land tax exemption are Victorian instruments, and every state writes its own. The asset also changes name at the border: a rooming house in Victoria, a boarding house in New South Wales, rooming accommodation in Queensland, and co-living almost anywhere as a newer name for the same building. We arrange the finance wherever the property is, and we say plainly where our own operating experience sits, which is Victoria, because we have built and registered them here.

Two different tests, and the lender takes the lower. On a purchase of a registered, tenanted asset, up to 80% LVR, which puts your contribution at 20% of the funded amount. On a build or a conversion, up to 80% of construction cost or 70% of the as-if-complete value excluding GST, which is the test that usually binds, and it is why a project can be fundable on cost and short on value at the same time. What moves it is location, the valuation basis the lender applies, and that lender’s servicing criteria. It is not a promise: the same project can be assessed on a standard residential basis by one lender and as a going concern by another, and the two produce different numbers. We test which basis your site attracts before the file goes anywhere. Subject to lender criteria, security position and eligibility.

Yes, in the two places that decide the deal: valuation and lender appetite. A standard investment loan is assessed on the dwelling and the suburb’s comparable sales. Rooming house loans are assessed on the asset’s income, the Class 1B compliance position and a much shorter lender panel, and some valuers will still read the property as an ordinary house (older listings may call it a boarding house) unless the file argues the income basis properly. That argument is the difference between 80% LVR and a lender that will not fund it. Subject to lender appetite, valuation basis and eligibility.

Rooming house purchases in Australia need 20% of the price plus costs where a registered, tenanted house is bought as a going concern at up to 80% LVR, subject to valuation and the lender’s servicing criteria. A build or conversion is sized on the lower of two tests, 80% of construction cost or 70% of the as-if-complete value excluding GST, so your contribution is the land, the part of the build the lower test leaves uncovered, and the soft costs (planning, surveyor, registration) that construction lenders rarely fund. Land you already own counts as contribution at the lender’s valuation. On a $1,200,000 build on land worth $600,000, 80% of cost is $960,000 and 70% of an $1,800,000 completed value is $1,260,000; the cost test binds, and you fund $240,000 of the build plus the land you already hold. Checked September 2026.

Class 1B under the National Construction Code covers a boarding house, guest house, hostel or the like with a total floor area of no more than 300 square metres and no more than 12 residents; above either limit the building is Class 3, which brings commercial construction standards, fire engineering and access requirements, a different building surveyor conversation and a materially shorter list of lenders. Most rooming house and co-living projects are designed to stay inside Class 1B for that reason, and the 300 square metre limit is the number to test against the plans before the site is bought, because it is measured across all floors. Checked September 2026.

Rooming houses in Victoria must be registered with the local council under the Public Health and Wellbeing Act 2008 before they operate, and the operator needs a licence from the Business Licensing Authority under the Rooming House Operators Act 2016; other states run their own registration schemes under their own names. For a purchase, the lender wants the current registration and the operator’s licence in the file, because they are what make the going-concern valuation possible. For a build or conversion, registration follows the occupancy permit, so the construction facility is approved on the plans and the takeout facility on the registered, tenanted house. Registration is the operator’s obligation, not the lender’s, and an unregistered house is valued as a house. Checked September 2026.

Rooming houses in Australia are valued on one of two bases, and the lender’s instruction decides which. On a residential basis the valuer compares the property with houses in the street and ignores the income, which usually undervalues a registered house with eight paying rooms. On a going-concern or income basis the valuer capitalises the sustainable net income of the registered, licensed operation, which is the basis that supports 80% LVR. The file has to earn the second basis: the registration certificate, the operator’s licence, the signed residency agreements and their tariffs, twelve months of income where it exists, and the compliance position, presented so the valuer and the credit team read the property as the asset it is. We test which basis a lender will apply before the file goes anywhere, because the same house can carry two very different loans. Checked September 2026; subject to the lender’s valuation.

Progressive-draw construction loans in Australia release the money in stages against the builder’s claims, typically deposit, base, frame, lock-up, fixing and completion, with the lender’s quantity surveyor or valuer confirming each stage before it is paid. The facility is sized before the first draw on the lower of 80% of construction cost or 70% of the as-if-complete value excluding GST, so the fixed-price building contract and the as-if-complete valuation decide the number, not the progress of the build. Interest is charged on the drawn balance and is usually capitalised or serviced from elsewhere during the build, and variations are the usual reason a project runs past its facility, which is why a contingency sits in the feasibility from day one. Checked September 2026; subject to valuation and the lender’s servicing criteria.

Rooming house construction debt in Australia is refinanced onto an investment facility once the house is registered, licensed and tenanted, and that takeout is the second funding event of the project: the house is revalued as a going concern on its income, the construction facility is repaid, and the long-term loan is priced against the operating asset rather than the building risk. Lenders want to see the registration, the residency agreements and a settled occupancy pattern, so the tenanting plan and the takeout are designed before the build starts, not after the last room is painted. Where the completed value has come in above cost, the takeout can also release equity toward the next site. Checked September 2026; subject to valuation and the lender’s servicing criteria.

Rooming house portfolios in Australia are funded one asset at a time, and the structure of the first purchase decides whether the second is possible: a house held in its own entity on its own facility, with the lender’s security limited to that property, keeps the next purchase open, while a cross-collateralised portfolio hands one lender a veto over every later move. Lenders also carry concentration limits on specialised residential assets and on individual borrowers, so a portfolio usually ends up across two or three lenders by design. Some lenders shade rooming house income in their servicing calculation rather than counting all of it, which is a lender-selection question, not a reason to stop. Bring the whole position, not just the next site. Checked September 2026; subject to lender appetite and eligibility.

Rooming house loans in Australia price above a standard residential investment loan, because Class 1B construction and going-concern purchases sit largely with non-bank lenders and the panel is short. We do not publish a rate for them: it is set on the file, by the lender that reads the asset properly, and it moves with the LVR, the valuation basis, the borrower’s position and whether the loan is a construction facility or a takeout. The takeout is where the rate comes down, which is why the long-term loan is planned before the build. What we will tell you on the first call is the range the file is likely to attract and what would move it. Checked September 2026.

Existing rooming houses in Australia are bought as going concerns with residents in place, at up to 80% LVR where the house is registered and the operator licensed, subject to valuation and the lender’s servicing criteria. Due diligence is different from a normal house purchase: the current registration and any council conditions, the operator’s licence, every residency agreement and its tariff, the compliance history under the minimum standards, the fire safety position, and whether the rooms and the occupancy actually match the register. In Victoria the land tax exemption is assessed on the previous year’s operation, so the vendor’s records decide whether you inherit the exemption or start again; the land tax guide sets out the nine requirements. Checked September 2026.

Rooming house income in Australia is assessed room by room, not as one rent: the lender takes the tariffs under the residency agreements, applies a vacancy allowance and the running costs a rooming house carries that a standard rental does not (management, cleaning, the utilities usually included in the tariff, compliance and insurance), and tests the net figure against the repayments. Some lenders shade gross rooming income to a percentage; the one that reads it as a going concern tests the net. Registered houses with twelve months of ledgers assess most favourably, which is one reason a build’s feasibility is modelled on net income at a sensible occupancy, never on eight rooms full at the advertised tariff. Checked September 2026; subject to the lender’s servicing criteria.

Regulation 74 of the Victorian Building Regulations 2018 sets the minimum street setback for a building on a residential lot, and a rooming house design that pushes the building forward to fit the rooms needs the council’s report and consent to vary it. That request arrives long before any finance question, it is not always granted, and a refusal can remove enough rooms to break the feasibility, which is why it is the second of the three places these projects fail. The answer is a site whose depth accommodates the plan inside the setback, or a design that does, tested with the building surveyor before the contract is signed. Checked September 2026.

Rooming house conversions in Australia on a property you already own are financed in three stages. The works to reach Class 1B (fire separation, room sizes, shared facilities, the setback and any planning permit) are funded on a progressive-draw basis against the works contract, at the same two tests as a new build: 80% of construction cost or 70% of the as-if-complete value excluding GST, whichever is the lower. The existing loan is refinanced into that facility or sits beside it, depending on the lender. Once the house is registered, licensed and tenanted, it is revalued on an income basis and the debt is repriced as an operating asset. The equity you already hold in the property is your contribution, which is why a conversion often needs less cash than a site purchase. Checked September 2026; subject to planning, building classification, valuation and the lender’s servicing criteria.

Four. Under the Residential Tenancies Act 1997 a rooming house is a building where one or more rooms are available to rent and the total number of people who may occupy them is four or more. A share house with four unrelated people each paying for a room is a rooming house in law, whatever the listing calls it, and it carries the obligations: registration with the council under the Public Health and Wellbeing Act 2008, an operator’s licence under the Rooming House Operators Act 2016, the minimum standards, and a Class 1B building permit where the works or the use change. Lenders read the same line: a registered, licensed house is valued as a going concern, and an unregistered one is valued as a house. Checked September 2026.

In Victoria, sometimes, under Clause 52.23 of the planning scheme: no planning permit is needed for a rooming house in the residential, mixed use, township and similar zones where no more than nine bedrooms are provided, no more than 12 people are accommodated, the total floor area of all buildings on the land is no more than 300 square metres excluding outbuildings, bedrooms are reached from inside the building, shared entry, kitchen and living areas are provided, and the garden area rule is met in the General and Neighbourhood Residential Zones. Overlays can still trigger a permit, and none of this removes the building permit: the house is still built to Class 1B, with the fire, access and setback requirements that come with it. Checked September 2026 against the clause; confirm your site with a town planner before you buy it.

A shaded figure, and the shading is the number to build the feasibility on. For a construction facility, the valuer’s room-by-room rent is shaded by 20% and the property is valued on vacant possession as a boarding house. For the takeout loan on a tenanted house, lenders count 80 to 90% of the rent depending on who pays the outgoings, and 50% where the house is untenanted. A lease-doc loan at 70% of value needs a head lease of two years or more, because room-by-room income is not a lease. We run every feasibility on the shaded figure at a sensible occupancy, never on eight rooms full at the advertised tariff. Checked September 2026; subject to valuation and the lender’s servicing criteria.

Because of what the asset is to them, not to you. Two mainstream non-banks on our panel decline the class altogether: one because its construction product stops at four standard dwellings, the other because it will not hold a rooming house as security at all. A third holds them only as specialised security at 55 to 65% of value. None of that is a judgement on your project; it is why the file goes to the lenders that fund Class 1B at the first attempt, at up to 80% of construction cost or 70% of the as-if-complete value, rather than being discovered on your credit file after three declines. Checked September 2026; subject to lender assessment.

Not with the lender on our panel that writes the takeout. Once the house is registered, licensed and tenanted, it can be refinanced at up to 80% of value on a 30-year term with no annual review, no revaluation and no ongoing fees, and assessment can start 30 days before completion against the certificate of occupancy and the valuer’s rent appraisal. Construction facilities run to $3 million per project, and houses of ten rooms or fewer sit inside that lender’s 80% band. The takeout is planned before the build starts, because it is where the rate comes down and where equity for the next site is released. Checked September 2026; subject to valuation and the lender’s servicing criteria.

Yes, and the lender has to be told. A residential loan is written against a house lived in as a house; turning it into a registered rooming house changes the use, the building class and the security the lender holds, and most residential lenders will not hold a rooming house at all. Left unreported, the change is a breach of the loan’s terms and can void the building insurance the lender relies on. The clean path is the one on this page: the works are funded on a progressive-draw facility against the building contract, the existing loan is refinanced into it or sits beside it depending on the lender, and the registered, tenanted house is then refinanced on its income. The equity you already hold is your contribution.