Co-Living Development in Australia: Planning Pathway

Only one Australian jurisdiction has a planning term called “co-living”. New South Wales created it in the State Environmental Planning Policy (Housing) 2021, and everywhere else a co-living scheme has to be squeezed into an older label: rooming accommodation in Queensland, a rooming house in Victoria, a lodging house in Western Australia. That single fact explains most of what a developer needs to know. The product is the same across the country, and the approval path is not.

For a developer the practical question is not what co-living means. It is whether the site can carry a building of rentable rooms rather than apartments, what that does to floor space, what the building code does to the cost per square metre, and whether the finished asset is worth more than a conventional scheme on the same land. Those four questions decide the deal.

The people who hold the answers are your town planner, who works out which use definition your scheme lands in and what bonus it attracts, your building certifier, who decides the building classification and therefore a large slice of the construction cost, and your quantity surveyor, whose cost plan turns that classification into a number. The figures, thresholds and policy positions below were current at the date of writing and change often, so the linked primary source is where to confirm anything you intend to rely on.

What counts as co-living housing?

Co-living generally describes a building where each resident rents a private room, often with a private bathroom and sometimes a kitchenette, and shares kitchens, living rooms, laundries and outdoor space with everyone else in the building. The whole asset stays in single ownership and is run by a manager. Residents are on residential tenancies, not hotel bookings.

New South Wales is the only jurisdiction that defines it. Under the State Environmental Planning Policy (Housing) 2021, co-living housing has at least 6 private rooms, some or all of which may have private kitchen and bathroom facilities, and provides occupants with a principal place of residence for at least three months. The New South Wales planning department’s guidance on boarding houses and co-living housing sets out the rest: fully furnished, ready-to-occupy private and shared spaces, indoor and outdoor communal space, and a manager responsible for the plan of management who does not have to be on site but must be contactable by phone at any hour.

The three-month minimum matters more than it looks. It is the line the policy draws between co-living and short-term tourist and visitor accommodation, and it is the reason a co-living approval cannot quietly become a serviced apartment operation. Anywhere else in Australia, the equivalent line is drawn by the tenancy legislation rather than the planning instrument, which is a weaker fence.

Elsewhere, the label depends on the state:

• Queensland calls it rooming accommodation, defined in the Planning Regulation 2017 as residential accommodation where each resident occupies one or more rooms rather than the whole premises, and shares other rooms, facilities, furniture or equipment with the other residents.
• Victoria has no co-living term. A building let room by room to four or more people is generally a rooming house under the Residential Tenancies Act 1997 (Vic), and a rooming house sits under “residential building” in the Victoria Planning Provisions.
• Western Australia uses lodging house, defined in the Health (Miscellaneous Provisions) Act 1911 (WA) as a building in which provision is made for lodging or boarding more than 6 persons, exclusive of the keeper’s family, for hire or reward.
• South Australia has been working a co-living definition into the Planning and Design Code through the Accommodation Diversity Code Amendment.

The naming is not cosmetic. In New South Wales, the co-living definition comes with a floor space bonus attached. In Victoria and Western Australia the equivalent label comes with a registration or licensing obligation attached and no bonus at all. Same building, opposite consequences for the feasibility.

How does co-living differ from a boarding house, student accommodation and build-to-rent?

The four products look similar on a floor plan and behave very differently in a feasibility.

Co-living against a boarding house. In New South Wales this is the sharpest trade-off in the policy. The planning department states that boarding houses attract a 30 per cent floor space ratio bonus above the standard, while co-living housing attracts 10 per cent. The price of the larger bonus is that a boarding house must be used for affordable housing in perpetuity and must be managed by a registered community housing provider in perpetuity. Co-living has no affordability requirement, so the operator sets market rents. Whether the extra 20 percentage points of floor space outweighs a permanent affordable-housing covenant is a question about the specific site’s land value and rents, and it can go either way.

Co-living against student accommodation. Student housing is usually tied to a campus catchment, runs on an academic-year letting cycle with a summer trough, and is often assessed under separate policy. Co-living targets working tenants and lets year-round, which tends to produce a flatter occupancy profile but a less captive demand base.

Co-living against build-to-rent. Build-to-rent lets self-contained apartments. Co-living lets rooms with shared amenity. The difference shows up as revenue per square metre of gross floor area, because a co-living scheme fits more rent-paying tenancies into the same building envelope, and as operating cost, because shared amenity has to be cleaned, furnished, supervised and re-furnished. If you are weighing the two, our build-to-rent guide for Sydney developers covers the apartment-based model in detail.

What is the planning pathway for co-living in New South Wales?

Development consent is required. The New South Wales planning department is explicit that, apart from limited self-assessment provisions available to certain government housing agencies for boarding houses, development consent is required for all boarding house and co-living housing development. There is no complying development pathway for a co-living building.

The state instrument is the State Environmental Planning Policy (Housing) 2021, commonly called the Housing State Environmental Planning Policy (SEPP). Co-living housing was introduced when that policy was made in November 2021, and it has been amended several times since, so check the in-force version rather than a summary.

What does the Housing SEPP require of a co-living development?

The controls that most often shape a scheme are the following. The numeric standards sit in the instrument itself rather than in the department’s guidance page, which describes the use in general terms.

Room sizes. The instrument sets minimum gross floor areas for a private room of 12 square metres for a single occupant and 16 square metres for two, in each case excluding any space used for private kitchen or bathroom facilities. Schemes are commonly designed with an upper limit of around 25 square metres per room, though that is industry practice aimed at keeping a clear line between a co-living private room and an apartment in a residential flat building rather than a figure the instrument imposes. Either way, a designer who pushes room sizes up to improve the rent per room risks pushing the scheme out of the definition, so the ceiling that actually applies is worth confirming against the current instrument with your town planner.

Communal space. Indoor and outdoor communal space for residents to relax and socialise is required. This is the part of the design that does not generate direct rent but does generate the amenity that justifies the rent per square metre, so it sits at the centre of the design trade-off.

Minimum lot size. Amendments made on 1 July 2022 simplified the minimum lot sizes for co-living housing and boarding houses. The minimum lot size on land zoned R2 is now 600 square metres, and 800 square metres on all other land. That is a site-selection filter, and it rules out a lot of small infill sites before design starts.

Floor space bonus. A 10 per cent bonus above the floor space ratio standard applies, on land where residential flat buildings or shop top housing are permitted with consent. Worth noting for anyone modelling on the assumption that the bonus is permanent: the department has said it will consider the ongoing need for the density bonus as part of a review of the policy, to be completed within three years from the date the policy commenced. A scheme whose margin depends entirely on the bonus is a scheme with policy risk in it.

Management. A manager must be responsible for implementing the plan of management for the property. The manager does not have to be on site at all times but must be contactable by phone 24 hours a day. The plan of management is a consent document, not an operational nicety, and it tends to attract conditions.

Room count is where developers most often misjudge the product. The policy allows as few as 6 private rooms, but the department’s own guidance says most co-living housing developments will typically have about 30 to 40 private rooms. Below roughly that range, the fixed cost of management, furniture, internet and cleaning is spread across too few rooms to work, which is a commercial constraint rather than a planning one.

Where is co-living permitted in New South Wales?

Broadly, on land where residential flat buildings or shop top housing are permitted with consent, subject to the minimum lot sizes above. The precise permissibility comes from the local environmental plan for the site, so the land use table is the first document to read.

The Low and Mid-Rise Housing Policy, whose provisions the department confirms sit within the Housing State Environmental Planning Policy, changed the calculation on a lot of sites by lifting permissible height and density near stations and town centres. Where those provisions apply, the base floor space ratio a co-living bonus sits on top of may be higher than the local environmental plan alone would suggest. Our guide to the New South Wales low and mid-rise housing reform covers how those standards work, and the Transport Oriented Development Program can add further station-precinct uplift on top.

The department has also removed the mandate that boarding houses be permitted in the R2 Low Density Residential zone, though some councils have elected to permit them there through their local environmental plans. Do not assume the position from a neighbouring council area.

What parking applies to co-living housing?

The planning department publishes the rate for boarding houses and co-living housing as 0.2 spaces per room in accessible areas and 0.5 spaces per room in other locations. If the council specifies a lower rate in a local environmental plan or development control plan, the lower rate applies.

This is one of the larger cost levers in the whole product. At 0.2 spaces per room, a 40-room scheme needs 8 spaces, which may fit at grade or in a single small basement level. At 0.5 spaces per room the same scheme needs 20, which can push a basement to a second level and add a material sum to the excavation and structure. Whether the site sits inside an “accessible area” as the policy defines it is therefore worth resolving before you buy, not after.

The department also removed numerical minimums for motorcycle and bicycle parking from the policy in a 1 July 2022 amendment. The consent authority must still be satisfied that provision is adequate, which means it is a negotiation rather than a calculation.

How is co-living treated in Victoria?

Victoria has no co-living planning term, so a co-living building is generally assessed as a rooming house, which is nested under “residential building” in the Victoria Planning Provisions. The trigger is the Residential Tenancies Act 1997 (Vic) definition, broadly a building in which one or more rooms are available for rent and four or more people reside.

Two consequences follow for a developer.

First, the operating side carries obligations the planning approval does not mention. The Residential Tenancies (Rooming House Standards) Regulations 2023 set minimum standards covering the rooms themselves, including lockable doors, power outlets, window coverings and heating, along with privacy latches, kitchen, dining and laundry facilities, emergency plans, ventilation, lighting, and gas and electrical safety checks. Those standards flow back into the design brief, because retrofitting a heater or a privacy latch after occupancy permit is far more expensive than drawing it in.

Second, there is a small-scale exemption pathway. Clause 52.23 of the Victoria Planning Provisions can remove the need for a planning permit for a rooming house where its requirements are met, including limits on bedroom numbers and total floor area, and a requirement that bedrooms be accessed from within the building. Because this exemption is size-limited, it generally suits conversion of a large existing dwelling rather than a purpose-built scheme of 30 to 40 rooms. A scheme at the size where co-living economics normally work will usually need a planning permit.

Victoria also operates a licensing regime for rooming house operators, separate from the planning approval. Confirm the current registration and licensing position with the regulator before you assume an operating model, because it belongs on the risk register for anyone intending to hold and run the asset rather than sell it.

How is co-living treated in Queensland?

Queensland calls the use rooming accommodation, and the state has been running a temporary streamlining measure that a developer needs to understand precisely, because it is both narrow and time-limited.

The Queensland planning department’s guidance on the regulation of rooming accommodation explains that the Planning Regulation allows small-scale rooming accommodation, meaning a maximum of 5 bedrooms and 5 occupants, to proceed without a material change of use approval from the local government in lower density residential zones where prescribed requirements are met. The Planning Amendment Regulation 2025 extended those provisions for a further 12 months, until 2 December 2026, and added mandatory landscaping obligations while excluding paving from the definition of landscaping. Where a proposal does not meet the prescribed requirements, the local government can require planning approval.

Three points a developer should take from this.

The exemption is for five bedrooms. It is not a pathway for a purpose-built co-living building, which will need a material change of use approval assessed against the local planning scheme. In Brisbane, that means the City Plan rooming accommodation provisions and the zone the site sits in.

The exemption has an expiry date, and the department has framed the extension as giving local governments a set time to write locally responsive rooming accommodation provisions into their planning schemes. A developer relying on the current position for a project that will not lodge until late 2026 is relying on something that may not be there.

Removing the planning approval does not remove anything else. The department is explicit that other approvals still apply, including building work, plumbing and drainage, and the registration and accreditation needed to lawfully operate rooming accommodation in Queensland. It also notes that infrastructure charges continue to apply regardless of whether planning approval is required, which is the point most often missed in a back-of-envelope feasibility. If an existing dwelling is converted to rooming accommodation, additional fire safety requirements of the building code apply.

How is co-living treated in Western Australia?

Western Australia regulates the operation through public health law and the built form through the planning system, and the two do not use the same threshold.

The Health (Miscellaneous Provisions) Act 1911 (WA) defines a lodging house as a building or structure in which provision is made for lodging or boarding more than 6 persons, exclusive of the family of the keeper, for hire or reward. The Act provides for local governments to keep registers of lodging houses, to register them, to impose conditions of registration, and to refuse registration or renewal. It also provides for local laws in respect of lodging houses, which means the detailed requirements can vary between local governments.

On the planning side, residential development is assessed under the Residential Design Codes, a state planning policy of the Western Australian Planning Commission, together with the relevant local planning scheme. Because Western Australia has no co-living use class, permissibility, density and parking come from the local planning scheme’s use table and the codes rather than from a state co-living instrument, and the position can differ meaningfully between local governments. A developer looking at a Perth site should treat the local planning scheme and the local government’s lodging house local law as two separate pieces of research, both of which need doing before the land is committed.

How is co-living treated in South Australia?

South Australia has been adding a co-living definition to the Planning and Design Code rather than working around an older one, which over time should make it the second clearest jurisdiction after New South Wales.

The State Planning Commission’s Accommodation Diversity Code Amendment proposed introducing a new form of co-living accommodation for residences that rely on shared facilities such as common kitchens or bathrooms, alongside changes to apartment design rules, communal space guidance and student accommodation provisions. A draft practice guideline for co-living and student accommodation was prepared with it, covering the communal spaces and shared facilities that should be provided. Consultation on the draft closed on 27 February 2025 and the amendment has been through changes in response to feedback, so a developer should confirm the current operative wording in the Code itself rather than working from the consultation material.

One naming trap. South Australia also uses the term co-located housing, which is a different product: a group of two or more homes sharing gardens and some amenities, where the dwellings can be self-contained. Co-located housing is not co-living, and confusing the two in a development application will cost time.

What applies in Tasmania, the Australian Capital Territory and the Northern Territory?

None of the three has a co-living use class, and in all three the relevant question is which existing residential use definition the scheme falls into and whether it is permitted in the zone.

In Tasmania, the State Planning Provisions of the Tasmanian Planning Scheme set the residential use classes, and the general residential and inner residential zones are intended to accommodate a range of residential uses beyond single and multiple dwellings. The Tasmanian planning housing guidance is the starting point, with the applicable local provisions schedule sitting over the top.

In the Australian Capital Territory the Territory Plan governs permissibility by zone, and in the Northern Territory the planning scheme performs the same function. In both, a purpose-built co-living scheme is likely to be assessed against a boarding house or similar accommodation definition rather than a bespoke one, which means the design standards applied will be those written for a different product. That is a practical problem rather than a legal one, and it usually shows up as an assessment that takes longer than a comparable apartment scheme.

Across these three markets, the more useful due diligence question is not “is co-living permitted” but “which existing use does my scheme meet, and what is the assessment pathway for that use on this site”. Get that answered in writing before the land goes unconditional.

How does the National Construction Code classify a co-living building?

This is where the cost per square metre is set, and it is frequently the single largest surprise in a co-living feasibility.

Under the National Construction Code, a Class 1b building is described as one or more buildings which together constitute a boarding house, guest house, hostel or the like that would ordinarily accommodate not more than 12 people and have a total floor area not more than 300 square metres. Above those limits, the building is generally Class 3, which the code describes as a common place of long term or transient living for a number of unrelated people. Class 2 is the apartment classification, where each apartment is a sole-occupancy unit.

A purpose-built co-living scheme of 30 to 40 rooms sits well above the Class 1b limits, so it will typically be Class 3.

The Australian Building Codes Board’s guidance on building classification explains the logic, and the logic is what drives the cost. Class 3 buildings, where the occupants are generally unfamiliar with the building and have minimum control over the safety of the building, represent a higher risk level and therefore require higher safety levels. In a case where the classification is unclear, the board notes that a decision should be made according to the perceived risks inherent in the use of the building.

For a developer, higher safety levels translate into fire detection, alarm and sprinkler provisions, egress and travel distance requirements, and accessibility provisions that are generally more demanding than the Class 2 apartment equivalent on the same footprint. The board also notes that where a building has more than one classification, the more stringent class requirements will apply, which matters for a mixed scheme with retail or a manager’s residence at ground level.

The practical consequence is that a co-living building should not be costed off an apartment rate per square metre. It should be costed off a Class 3 rate, with the classification confirmed by the certifier before the cost plan is finalised. Our guide to construction cost per square metre in Australia covers how those rates move by building type and location, and a quantity surveyor’s cost plan is where the number for your specific scheme comes from.

What does co-living do to the feasibility?

Co-living changes the shape of a development feasibility in three ways at once, and they pull in different directions.

Where the revenue comes from

Revenue is rent per room, not price per apartment. A co-living scheme typically produces more rentable tenancies per square metre of gross floor area than an apartment building on the same site, because a 16 square metre room with a bathroom replaces a 50 square metre one-bedroom apartment. That lifts gross income per square metre, which is the entire commercial case for the product.

It also changes what “gross realisation” means. A co-living asset is generally not sold room by room, so the end value is the capitalised value of the income stream rather than the sum of lot sales. That makes the capitalisation rate as important an input as the construction rate, and it makes net operating income the number the whole feasibility turns on. Because rooms are counted rather than saleable areas, it is worth being precise about which area measure sits behind each line, since a rate applied to gross floor area and a rate applied to net lettable area will not give the same answer.

Where the costs sit

Three cost effects tend to run against the revenue gain.

Construction cost per square metre tends to be higher, driven mainly by the Class 3 classification discussed above and by the higher density of bathrooms, kitchenettes and services per square metre of floor. More wet areas per square metre is more cost per square metre, almost regardless of location.

Efficiency tends to be lower. A building with more, smaller tenancies needs more corridor, more risers and more shared amenity per square metre of net lettable area. Some of the floor space bonus is consumed by the circulation the product itself requires.

The scheme is furnished and operated. Co-living is delivered fully furnished and ready to occupy, so furniture, fittings and equipment is a real capital line, and the operating cost base carries management, cleaning, utilities, internet and periodic furniture replacement that an apartment landlord passes to the tenant.

A worked example

The figures below are illustrative only. They are a way of showing how the arithmetic connects, not a benchmark for any real site.

Take a 40-room co-living scheme with 1,350 square metres of gross floor area.

Revenue:

Costs, excluding land:

If the developer needs a 20 per cent development margin on cost, total development cost cannot exceed about $8,732,000, because $10,508,727 divided by 1.2035 is roughly that figure. Strip out the $6,982,000 of non-land costs and the land the deal can carry is about $1,750,000. That is the residual, and it is the number a co-living scheme lives or dies on, because it is what you can bid against an apartment developer looking at the same site.

What happens when the capitalisation rate moves

Hold everything above constant and move only the capitalisation rate, from 5.5 per cent to 6.0 per cent. Net operating income of $577,980 capitalised at 6.0 per cent gives about $9,633,000. Against the same total development cost of $8,732,000, profit falls from about $1,776,700 to about $901,000, and the margin on cost falls from roughly 20 per cent to roughly 10 per cent.

Fifty basis points, and half the margin. This is the structural difference between co-living and a build-to-sell apartment scheme: the exit value is a capitalisation, so it moves with the yield environment over a build programme you cannot shorten. Phasing these numbers month by month across the build and lease-up is what turns a static residual into something a financier will engage with, and sensitivity testing on the capitalisation rate is generally more informative than sensitivity testing on construction cost for this product, because construction cost can be fixed by contract and a yield cannot.

The second lever worth testing is the operating cost ratio. At 35 per cent of effective gross income the example produces a net operating income of $577,980. Every percentage point of operating cost ratio moves that figure by roughly $8,900, which capitalises at 5.5 per cent into roughly $162,000 of end value. Operating assumptions are not a footnote in a co-living feasibility. They are a value driver.

How is a co-living scheme exited?

Generally as a single operating asset, sold to an investor on a yield, rather than as individual rooms sold to owner-occupiers. That has consequences a developer should price in early.

There is no pre-sale revenue. A build-to-sell apartment scheme can bring forward deposits and use pre-sales to support a funding position. A co-living scheme cannot sell rooms off the plan in the same way, so the capital structure has to carry the project through to completion and lease-up. That is a funding conversation to have with a broker before, not after, the site is committed.

There is a lease-up period after practical completion. The asset does not reach stabilised income on the day the occupation certificate issues. Rooms fill over weeks or months, and the feasibility should carry that period explicitly, with the holding costs that go with it.

The buyer is buying an operation. A purchaser is acquiring an income stream that depends on a management model, occupancy history and a plan of management. Documentation quality, tenancy records and demonstrated operating costs affect the price achieved as much as the building does. In New South Wales in particular, the plan of management is a consent document, so a scheme operating outside it has a value problem as well as a compliance problem.

What does co-living look like in New Zealand?

New Zealand has no co-living planning term either, and the nearest equivalent is the boarding house.

Under the Residential Tenancies Act 1986, a boarding house tenancy broadly arises where a property is let to six or more tenants who each rent a room and share facilities, and the tenancy is intended to last 28 days or more. Tenancy Services, part of the Ministry of Business, Innovation and Employment, publishes the operating rules that apply, and they differ in several respects from a standard residential tenancy.

On the planning side, permissibility comes from the district plan. In Auckland, the Auckland Unitary Plan treats boarding houses as an activity distinct from visitor accommodation, with occupancy thresholds in the residential zones determining the activity status and therefore whether a resource consent is required and how it is assessed. Our resource consent guide for New Zealand developers covers how that process works.

New Zealand developers should also note that the planning framework itself is in transition as the Resource Management Act 1991 is replaced. A co-living scheme with a long lead time is a scheme that may be assessed under a different regime than the one it was conceived under, so confirm the position that applies at lodgement rather than at concept stage.

What to ask your town planner, certifier and valuer

The questions below are the ones that decide a co-living deal on your specific facts, and they are deliberately not answered here because the answers are site-specific.

Ask your town planner:

• Which use definition does this scheme meet in this jurisdiction, and is that use permitted with consent in this zone under the current local instrument?
• If this is a New South Wales site, does it meet the minimum lot size for co-living housing, and does the floor space bonus actually apply here given the underlying permissibility of residential flat buildings or shop top housing?
• Does the site sit within an “accessible area” for the purposes of the parking rate, and has the council adopted a lower rate in its local environmental plan or development control plan?
• Does the low and mid-rise or transport oriented development framework change the base floor space ratio or height on this site, and how do those provisions interact with the co-living bonus?
• What has this council actually approved for this product in the last two years, and what conditions did those consents carry on the plan of management?
• What is the realistic assessment timeframe here compared with a conventional residential flat building on the same site?

Ask your building certifier:

• What building classification will this scheme take, and at what point in the design does it cross from one class to another?
• What do the fire, egress and accessibility provisions for that classification require here that a Class 2 apartment scheme on the same footprint would not?
• Are any performance solutions likely to be needed, and what does that do to the certification programme?
• Which state-specific variations to the National Construction Code apply, and are any adoption dates for a new edition going to catch this project mid-design?

Ask your quantity surveyor:

• What is the cost per square metre for this classification and this level of wet-area density, as opposed to a standard apartment rate?
• What is the furniture, fittings and equipment allowance per room, and what replacement cycle should the operating model assume?
• How does the parking outcome change the substructure cost, and what is the cost difference between one basement level and two on this site?

Ask your valuer and your accountant:

• What capitalisation rate would you apply to a stabilised co-living asset in this location, and what evidence supports it?
• What lease-up period and stabilised occupancy assumption would a financier’s valuer be likely to adopt?
• How is this asset treated for land tax, duty and goods and services tax purposes in this state, and does the answer change if the scheme is held rather than sold?

The last of those is a reminder that co-living touches tax positions this guide deliberately does not go near. Those are questions for your accountant on your facts.

Where to confirm the current position

Every figure, threshold and policy position in this guide was current at the date of writing and is the sort of thing that changes without much notice. The primary sources are:

• New South Wales: boarding houses and co-living housing and the State Environmental Planning Policy (Housing) 2021
• Queensland: rooming accommodation regulation and the Planning Amendment Regulation 2025
• Victoria: Residential Tenancies (Rooming House Standards) Regulations 2023
• Western Australia: Health (Miscellaneous Provisions) Act 1911
• South Australia: PlanSA accommodation diversity
• National Construction Code building classification
• New Zealand: boarding house tenancies