An order to cease using the property for accommodation was served on July 1, according to the Daily Telegraph, which has run a series of exposés on similar abodes.
It said the owners lodged a development proposal to convert the dwelling into a boarding house with a capacity of 12 lodgers the day after they were served with the order.
Current laws prevent council officials from inspecting illegal hostels without first obtaining search warrants.
“To obtain a search warrant, councils must have reasonable grounds to believe a breach of the Environmental Planning and Assessment Act is occurring,” a City of Sydney spokeswoman said.
“This can be difficult to show if council officers have been refused access as their ability to gather evidence is compromised and evidence of illegal use may be removed before an inspection.”
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