@JimmyT said:
So forget the tenant and Housing NSW – there is a clear resentment from both parties towards owners – and focus on the lot owner. Forcing then to re-establish the unit as a studio will solve all your problems when the troublesome tenant moves out.
Reading Whale’s, well-mapped plan of action with Housing NSW above, I withdraw my advice to “forget Housing NSW”. Add them to the list and follow the steps above. But it’s interesting that their first response to Whale’s complaints weren’t “I’m sorry if one of our tenants is behaving badly,” but “you can’t make us do anything” – something that was later shown to be untrue.