The regulatory body is your Local Council. My experience is that absolutely no one/nobody can or will do anything about this except Council, who are responsible for seeing that the Residential Development Consent is adhered to.
You need to start taking photos and keeping a record of what is going on – Councils don’t have the budget to do a ‘stake out’, and you’ll be abused like there is no tomorrow for doing this – and give this to Council with a request that they issue an order to stop the ‘Illegal Use’.
You can try and scare off the offender: a breach of the Development Consent is a breach of the Environmental Planning and Protection Act and fines are currently up to $1.1 million.
Go to Council. And good luck! This is no different to using a Residential building for short-term letting or a business in prostitution – it’s not Residential.