An alleged slum-lord crammed beds for eight people into a space the size of small hotel room in a Chippendale shop and took over a disabled toilet to service it, according to the City of Sydney.

Amr Hassan Badawy Hassan was charged with carrying out development without consent on the Regent Street premises. Mr Hassan did not appear in the Sydney Downing Centre Local Court on Tuesday but his lawyer pleaded not guilty on his behalf.

The case comes as the City of Sydney continues the crackdown on illegal housing it launched in March.

Mr Hassan performed the illegal development between November last year and April 22, according to details of the alleged offence in his court attendance notice.

The Ultimo man is accused of creating a new room using Gyprock stud walls, measuring 8.97 metres long and 3.7 metres wide, or 33 square metres.

The "dormitory style" room was said to originally include four bunks bed to sleep up to eight people.

As of April 15, the room contained only two bunk beds but also a "living room", separated from the sleeping area by a sheet. The living area comprised a TV, tables, chairs, lounges, a portable air-conditioning unit and a fridge.

To service this room, Mr Hassan also allegedly co-opted a ground floor disabled toilet that belonged to a strata common area. The toilet and vanity unit were removed; a shower and laundry were installed in their place.

The City of Sydney declined to comment on Mr Hassan's case. It is understood the council's taskforce to tackle illegal housing has 38 open investigations and has issued 21 search warrants.

The group, which works with the NSW Police and Office of Fair Trading, is headed by Rex Cottam, a former Scotland Yard detective.

"Properties that are significantly overcrowded, with unauthorised building works and fire safety defects, are our investigative priority and the area where we'll take immediate action," he said in June.

"We want to send out the strong message – we are coming after you."

Last year, a fire in the back of a factory complex exposed a dirty set-up in which 15 Japanese and Korean nationals were paying up to $160 a week to live in shipping containers, a bus and caravans stacked on top of one another.

Mr Hassan is next due to appear in court on September 29.