Rooming House
Class 1b or Class 3: what a rooming house building class means for your loan
6 min read · By Daniel Lagden · 7 November 2026
The short version
- Under the National Construction Code, a boarding house or similar is Class 1b only if it is within 300 square metres and ordinarily houses no more than 12 people.
- A Class 1b building also cannot sit above or below another dwelling or another class of building, apart from a private garage.
- A boarding house outside those limits is generally Class 3, which many lenders treat as commercial or specialist lending.
- The class is set by the building approval, not by the listing, so check the paperwork before you rely on it.
When a lender looks at a rooming house, one of the first questions is what class of building it is. The answer can move you from a residential style loan to a commercial or specialist one, with a different deposit, valuation method and set of lenders. The class comes from the National Construction Code, and it is worth understanding before you fall in love with a property.
Quick summary: Class 1b is the small end, up to 300 square metres and 12 residents. Larger boarding houses are generally Class 3. Lenders often treat the two very differently, so confirm the class from the approvals.
What Class 1b means
The National Construction Code describes Class 1b as a boarding house, guest house, hostel or the like with a total floor area of no more than 300 square metres, measured over the enclosing walls, that would ordinarily accommodate no more than 12 people. It also has to be a building that is not located above or below another dwelling or another class of building, other than a private garage. States adopt new editions of the code at different times, so check the wording and the limits for the edition that applies in your state.
What Class 3 means
Class 3 is a residential building providing long term or transient accommodation for a number of unrelated people, such as a boarding house, guest house, hostel or lodging house. It has no floor area or resident limit in the definition, and the code treats boarding and lodging houses that do not meet the Class 1b limits as Class 3. Class 3 buildings generally face more demanding building requirements than Class 1b, for example on fire safety.
Class 1b and Class 3 at a glance
| Item | Class 1b | Class 3 |
|---|---|---|
| Floor area | Up to 300 square metres | No limit in the definition |
| Residents | Not more than 12 ordinarily resident | No limit in the definition |
| Position | Not above or below another dwelling or class of building | Can be part of a larger building |
| Building requirements | Generally lighter than Class 3 | Generally more demanding |
| How many lenders treat it | Often closer to residential lending | Often commercial or specialist lending |
The last row is a general pattern, not a rule. Each lender writes its own policy, so one may treat a Class 1b rooming house as residential and another may not.
Why lenders care
- The class tells them what the building was approved and built for, which is what their security rests on.
- It can decide whether the loan is residential or commercial, which affects the deposit and the valuation method.
- A building used beyond its class, for example with more residents than it was approved for, creates a compliance and insurance problem.
- It links to council approval and licensing, which lenders also check. See our guide to council approval and compliance.
Count the people, not the rooms
The 12 resident limit is about how many people would ordinarily live there, not how many bedrooms there are. A house with eight rooms and several couples sharing can pass the limit without anyone noticing. If you are near the line, ask what the approval says and what the current occupancy is, because adding rooms or residents may need a new approval and can change the class.
Where to find the class
Look at the building approval documents and the occupancy or classification certificate for your state, and ask the seller for them. The class is set when the building is approved, so a listing that says Class 1b is not proof. A building surveyor or your lawyer can confirm it, and your broker can tell you how lenders are likely to treat it.
General information only, current as at November 2026. This summarises National Construction Code definitions. The code is updated over time and states apply it in different ways, so confirm the wording and the edition that applies to your building. This is not legal, building or credit advice.
Run the numbers
Frequently asked questions
What is a Class 1b building?
Under the National Construction Code, 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 people ordinarily resident, and not located above or below another dwelling or another class of building other than a private garage.
What happens if my rooming house is bigger than a Class 1b?
A boarding house outside the Class 1b limits is generally Class 3. Many lenders treat Class 3 as commercial or specialist lending, which usually means a larger deposit and fewer lenders.
Do all rooming houses have to be Class 1b?
No. Rooming houses larger than the Class 1b limits are generally Class 3. The class depends on the size, the number of residents and how the building was approved.
Who decides the building class?
It is set when the building is approved, and recorded in the approval and occupancy documents. A building surveyor or lawyer can confirm it for you.
Does Class 1b make finance easier?
It often helps, because many lenders treat it closer to residential lending, but each lender has its own policy. Income, approvals and your own position still matter.
Not sure what class your rooming house is?
Send us the address and the approval details you have. We will tell you how lenders are likely to treat it before you commit.
Check my rooming house financeGeneral information only. This article does not take into account your objectives, financial situation or needs, and is not credit assistance, legal advice or financial advice.
