Police have accused Auckland Council of failing to enforce prostitution bylaws after finding illegal workers in a raid on an upmarket brothel three blocks away from the home of the Prime Minister.

Horrified neighbours say the sex business popped up "literally overnight" in a $750,000 townhouse within their Parnell residential complex.

They claim the once-quiet Cleveland Mews has been sullied by full-frontal nudity in the windows, and bus loads of men streaming in on hourly rotations.

After they complained to the council, police paid a visit and found two of the four prostitutes inside were working illegally on student visas. Neighbours had also alleged there were underage prostitutes, but police found this was not the case.

In an email to resident Catherine Hedges, police condemned Auckland Council's lax attitude to enforcing prostitution bylaws.

Constable Joshua Ballantyne said: "Auckland Council look after enforcement and to be honest I haven't actually seen any in my time at the police."

He added: "I think they pass the portfolio around the office and nobody actually opens it. Useless."

The townhouse is fitted out with external security cameras. When the Herald on Sunday rang the bell yesterday, nobody came to the door.

Auckland Council compliance manager Ian Smallburn said it was up to prostitutes and their managers to ensure they were complying with law - the council would crack down only if there was a complaint made against the brothel.

There were no enforcement initiatives targeting the city's sex industry, he added.

"The onus is on the brothel operator to ensure they are operating legally with all the necessary approvals, consents, licences," Smallburn said.

"The council relies on information from members of the public in order to investigate premises."

Police referred the illegal workers to Immigration NZ but, because the brothel otherwise complied with the law, police were not able to close it down.

Smallburn explained the property fell within a "mixed use" zone, where the sex-trade was allowed and a resource consent was not needed.

The brothel does not have to be licensed, either, as long as there are no more than four prostitutes working there.

Residents have now hired a lawyer to draft an amendment to the body corporate rules in a last-ditch attempt to prevent more sex workers moving in.

Catherine Hedges, who lives only metres away from the brothel, has called an extraordinary general meeting for residents and landlords next week.

"We all feel anxious," she said.

"I don't care about what they're doing behind closed doors, but I'm anxious about what comes with it," Hedges said.

She said clients had sometimes knocked at the wrong doors late at night, or parked their cars over driveways.

Daytime business also seemed to be bustling, with men coming and going while children rode their bikes in the courtyard, according to another neighbour, who has three young children.

"Men are showing up for the matinee show, and by that I mean an afternoon of sex, and knocking on the wrong door," he said.

"The other day I saw a mini bus pull up and eight Asian men all went in at the same time."

Matthew Clarke, who owns the townhouse in question, has emailed residents expressing his shock at discovering what his refurbished investment property is being used for.

He has told residents that he paid a property manager to screen prospective tenants for his property and this was not what he wanted.

The tenants had claimed they were running a clothing manufacture business that operated through the night on "China time" - explaining the late-night comings and goings.

Another Cleveland Mews landlord cancelled a lease this month when his new tenants started to move in and it became apparent they too were setting up a sex operation.

Immigration NZ acting head Steve McGill said his agency, like the council, only investigated brothels if it received a complaint.

In the past year at least eight other foreign sex workers had been found working illegally, he said.

Auckland Council's chief planning officer Roger Blakeley said a review of the region's policy and bylaws for commercial sex premises would begin later this year.