Interesting topic – it raises a broader issue that I believe councils turn a blind eye to.
Firstly, on your topic regarding vested interests – this is a problem I have come up against – a builder/developer who is also an owner trying to stymie a defect rectification process by approaching and trying to convince owners that he is correct – he is persuasive, and also, dare I say it, plays a race card (this was explicitly mentioned in a CTTT ruling). He almost won motions on proxy in an AGM doing this.
On the issue regarding overcrowding, I recall seeing this when inspecting apartments in inner and close to inner Sydney. My wife and I noticed 8-10 beds in a number of two bedroom apartments. This would earn the landlord ~$1,000/week, instead of ~500 for a normal rental. In Pyrmont I see adverts pinned to lampposts advertising “beds” and not rooms.
I understand there are occupancy rules regarding number of occupants in an apartment, but I think the authorities do turn a blind eye to this, partly due to the shortage of affordable accommodation, possibly largely for students near the universities.
If the authorities were serious about stopping this it would be easy – send a stooge to inspect “for sale” or “rooms for rent” and take note of any irregularities! But it doesn’t seem to happen.
There is also the annual fire inspection, but warning is given for these.