How to Manage a Holiday Rental Property

How to manage a holiday rental property in Australia: register it if your state requires it (NSW and WA do), check for a short stay levy (Victoria and the ACT charge one), use a signed holiday rental agreement with every guest, take a security deposit and hold holiday rental insurance. Run it like a small business, and it can be very lucrative.

In this legal guide, we cover the pros and cons of holiday rentals, whether you should self-manage your property, how to advertise your property and why you absolutely need to use a Holiday Rental Agreement with your guests.

Click on any of the questions below to jump to that section of this legal guide.

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If you still have a question after reading this guide, get in touch as we’d love to keep adding your questions to this comprehensive guide.

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What Are the Legal Requirements to Self-Manage a Holiday Rental?

Should I rent my property as a holiday rental?

If you own an investment property and want to rent it out, you have two choices:

1. Rent it out as a long-term residential property, or
2. Rent it out as a short-term holiday rental property

In general, “short-term” means you can rent out your property for up to about 6 weeks. Legislation varies by State and Territory, so check your local restrictions. Each rental option has its pros and cons.

With a long-term residential property, once you’ve found a tenant and agreed on the monthly rent, you have income certainty (unless they stop paying rent and need to be evicted). But you also have strict residential tenancy legislation covering the tenant’s rights and your obligations as an owner, which you must follow. These include:

• How much rent and security bond can you charge
• Where and when must you lodge the security bond
• When you may apply the security bond to any damage caused
• What maintenance and repairs must be carried out, and
• How much you can charge for water, electricity, gas, etc.

In a short-term holiday rental, you have much less income security. However, you avoid the onerous residential tenancy legislation. As long as you meet the Australian Consumer Protection regulations, you will find you are much less restricted in managing your holiday rental property.

Do I need a licence or registration for a holiday rental?

You don’t need an agent’s licence to let your own property. But most states now regulate short stays through a register, a day cap or a levy, so check the rules for your state before you take your first booking:

State	What applies to holiday rentals
NSW	Register on the NSW Short-term Rental Accommodation Register and follow the mandatory Code of Conduct. Non-hosted stays are capped at 180 days a year in Greater Sydney (excluding the Central Coast), Ballina and parts of Clarence Valley and Muswellbrook, and at 60 days a year in Byron Shire. Bookings of 21 days or more do not count toward the cap.
VIC	A 7.5% short stay levy applies to stays of under 28 days, from 1 January 2025.
WA	Registration has been required since 1 January 2025. In Perth, unhosted stays of up to 90 nights a year do not need planning approval.
ACT	A 5% levy applies to bookings of up to 28 days made through a booking platform, from 1 July 2025. Direct bookings are exempt.
SA	A state register has been proposed. Public consultation ran from September to October 2026.
QLD, TAS, NT	Short stays are mainly regulated by local councils. Check your council’s planning scheme.

If you use an agent or broker to manage the property, they need a licence in NSW. In Victoria, an agent’s licence depends on the rental period and whether they own the properties they manage.

Rules change often, so confirm with your state government and local council before you list.

How should I advertise my holiday rental property?

Several effective and inexpensive advertising options are now available thanks to the Internet. Search for holiday rental websites that cover your area and compare advertising rates, the number of listings and how the website ‘ranks’ for online searches. Some websites charge a ‘one-time’ or annual fee to advertise; others charge nightly fees for successful bookings.

When checking holiday rental websites, compare your nightly and weekly rates with similar properties in your area. Make sure you’re competitive.

Whichever holiday rental website you choose, your property advertisement must be clear and accurate. Make sure your advertisement matches your property specifications and inclusions to avoid breaching Fair Trading legislation. Make sure to list any restrictions, such as children, smoking or pets.

The clearer you are, the fewer issues you will have with misunderstandings or inquiries that require back-and-forth communication and waste time. Be upfront and open to secure bookings as quickly and efficiently as possible.

What do I need to be aware of when advertising my property?

The Fair Trading Act and Consumer Protection legislation state that it is illegal for you to make false or misleading statements about your accommodation to consumers.

Misrepresenting accommodation in advertising or brochures may be deliberate or accidental, but it is illegal. You must be clear about representing the quality and standard of your property. Ensure your property photos are complete and updated regularly, and that your description of the property, distances to attractions, transport, shopping, etc., is accurate.

Also, make the number and types of beds and bedrooms you are advertising clear. For example, if there is a sofa bed in a sunroom, make that clear, as it is not an actual bedroom.

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Should You Use a Property Manager?

Should I self-manage my holiday rental property or use a manager?

Once you’ve decided to rent out your property as a holiday rental, your next decision is whether you’ll self-manage the property or hire someone to do it for you.

If you do not live near your holiday rental property, you’ll probably need to hire a manager. You can either choose a professional real estate/property management company or find an independent property manager. When choosing a property management company or property manager, do your research. Ensure they have a good reputation and competitive fees.

Some property management companies charge large fees for limited duties, quickly eating into any profits your holiday rental property makes. Most management companies charge a base fee of 18-20% of rental revenue, plus additional fees for linen, call-outs, advertising, etc. These can quickly add up and turn your holiday rental property into a break-even or loss-making proposition.

How can I keep my property manager fees to a minimum?

A cheaper alternative to a property management company is an independent property manager, someone you know or a local resident found through an advert. If you don’t know them personally, ensure you check references and their experience. You might be lucky to have a hotel management school or tourism course taught locally. Ask for a recommendation, or offer to give one of their students some job experience.

You can also manage the property bookings yourself to save further management fees (and for your comfort). This will involve advertising online, providing quotes and collecting rent and security deposits. In our experience, you’ll save substantial management fees by hiring an independent property manager and then handling some duties yourself.

But make sure you have a clear agreement with your property manager. Agreeing on a list of duties and responsibilities in a professional contract is a very good idea. This helps avoid misunderstandings and ensures a strong relationship with your manager.

If you need a simple-to-use Property Manager Contract, contact us.

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Do You Need a Holiday Rental Agreement?

What is a Holiday Rental Agreement?

A Holiday Rental Agreement with your guests sets out your Terms and clarifies the rules for renting and looking after your holiday rental property. Your guests should sign the agreement and then return it by mail or a scanned copy attached to an email.

For overseas guests, request a photocopy of their passport or other identification document. This protects you by confirming they are who they say they are; it also confirms their signature on your contract and may deter any breach of contract or damage to your property.

Should I have a Holiday Rental Agreement with my guests?

Yes, absolutely. This is probably the single most important item in this guide. You need a clear, comprehensive agreement with your guests that includes the start and end dates and the price you are charging.

A Holiday Rental Agreement will protect you and your property. It ensures you and your renter are clear on all the rental terms, gives them comfort and makes you look more professional. A Rental Agreement also gives you recourse you may not otherwise have: against damage, destruction, noise or other unfortunate issues that may arise.

Once you accept a booking from a guest, you have to honour it, subject to any conditions you outlined to them. You can only change the booking terms later if you and your guest agree.

What terms should my Holiday Rental Agreement include?

Your Holiday Rental Agreement needs to specify a number of items, including:

• Booking dates
• Check-in and check-out times
• Nightly or weekly rate
• Reservation deposit
• Security deposit and terms
• Cancellation policy
• Payment method and terms
• Additional fees for cleaning, utilities, etc.
• Charges for lost keys, swipe cards, remote controls, etc.
• ‘House Rules’ covering smoking, pets, noise, etc.

You need to decide the amount and timing of your reservation deposits and whether these amounts will be non-refundable. The Agreement should also specify the timing of final payments. If you charge a security deposit, make this clear in your quote to renters. The refund terms (including timing and basis for return) must also be clearly stated.

If you decide to charge a cancellation fee, you must also communicate this before accepting any booking. The fee amount and terms must be fair and reasonable, or they may be considered an ‘unfair contract term’ and disputed.

In addition, did you realise that, depending on the wording of your agreement, you could be subject to the Residential Tenancy Act of your State or Territory? This is bad news. Have you heard of all those eviction restrictions landlords have? Those are in the Residential Tenancy legislation. You don’t want to fall under them.

In Victoria, for example, using the term ‘tenant’ in your holiday rental agreement may subject you to the Residential Tenancy Act and add legal requirements you didn’t foresee. So get a professionally written Holiday Rental Agreement in Australia and use it with every guest.

Does my Holiday Rental Agreement need to be signed?

Legally, you have a ‘contract’ with your guests if you have agreed on dates and the rental price and taken a deposit, even if everything was done via email and electronically. However, you don’t have the agreed Terms of the holiday rental. If anything unfortunate happens, you are very exposed if you can’t point to an agreed term the guest breached.

For example, if they say 2 people are staying but in fact they bring 4 more friends, you can point to your agreement term. Or if the property is non-smoking and they smoke, you need to have the property professionally cleaned, etc. I think you can see how things might go wrong, and sometimes badly wrong.

You need a signed Holiday Rental Agreement with your guests, and you must give them the agreement before payment so they can review and agree to it. If you don’t, they could argue that they did not see or agree to the Terms when they paid and can’t be bound by them. So send your guests your agreement when you ask for a deposit, and have them sign and return it.

Should I tell guests my holiday rental Terms and Conditions?

Yes, you must clarify all your Terms and Conditions in your online advertisements. In particular, you must disclose and explain cancellation fees, security deposits, and the associated conditions. You also need to list any additional costs that are not included in the nightly/weekly rental fee, such as departure cleaning fees, wi-fi, utilities, etc.

A transparent approach to your Terms and Conditions will help avoid disputes. And remember, a failure to disclose any of these conditions could be regarded as misleading or deceptive under the Fair Trading Act.

Should I include my ‘House Rules’ in the Agreement?

Posting your ‘House Rules’ in your holiday rental property is a good idea. These are just everyday rules for living in your holiday home: things like taking out the garbage, making noise, leaving keys behind, etc. It’s a good way to reinforce good behaviour or highlight potential issues during their stay.

Some of these things are inappropriate (or overkill) to include in a signed rental agreement, but you still want your guests to be aware of them. Make sure the rules don’t contradict any terms in your rental agreement. Keep both the House Rules notice and your rental agreement up to date.

A list of House Rules will further protect you and your property. Renters are subject to them, so make sure a list of them is given to your guests on arrival, or the House Rules are posted prominently in your holiday rental property.

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How Do Security Deposits and Insurance Work?

Should I charge a security deposit?

Yes, absolutely. But also make it easy for your guests to pay and easy for you to refund at the end of the rental, with minimum transaction fees.

Remember that security deposits made by credit card or PayPal can easily be voided, usually just after your guest vacates your property. So make sure you take the security deposit in cash, or it’s transferred directly to your bank account.

If you have visitors from overseas, make sure you can accept payment in non-Australian currencies. Whatever payment system you choose, set it up well in advance to avoid waiting periods or lost bookings.

How much should my security deposit be?

The security deposit amount is up to you, but it should, at a minimum, cover your insurance deductible. That way, you won’t be out of pocket if you need to make an insurance claim. The security deposit should be higher for properties with a greater value or with more inclusions. In addition, consider what other property owners in your area ask for as a security deposit.

You can never be sure, and accidents happen, so choose an amount based on your property’s value and your comfort level.

What are my rights to charge guests for the damage they cause?

Before you accept any booking, make it clear that you may charge guests for any damage they cause, whether accidental or due to negligence. If you take a security deposit, you can deduct any damage from that amount.

Remember, glasses break accidentally and plates chip in everyday use, so use your discretion in how much you charge guests and what you decide to charge for. Normally, you should charge for more substantial damage or damage that needs repair due to your guests’ stay. Consider what you would expect to be reasonable if you were a guest in a holiday rental and use that as a guide.

The easiest and quickest way to manage the final inspection of your property is to use a checklist when the guest is leaving. Sometimes items are forgotten, or guests move things like lamps or chairs, and a list ensures you don’t miss anything.

Inspections are also best done as close as possible to the guests’ departure, so you can rectify and address any items that have been broken, damaged or missing.

What holiday rental insurance do I need?

Holiday Rental Property Insurance differs from Home and Contents Insurance or Landlord Insurance. And if you try to claim for damage by your holiday rental guests under ‘normal’ property insurance, your insurance company will probably reject your claim!

You need specific Holiday Rental Insurance to cover damage to your property while it’s rented to a holiday rental guest. Many insurers offer Home and Contents or Landlord Insurance, but only a few insurers in Australia offer short-term rental or Holiday Rental Insurance. So be careful and check your insurance policy.

Most insurance policies also require you to have a Holiday Rental Agreement with your guests. So don’t cut corners; cover yourself and use a Holiday Rental Agreement.

Call your insurance company and ask them these questions:

• Is my property covered under my policy for short-term (under 3 months) holiday rentals?
• Do I need a formal short-term rental agreement with my guests?
• Am I covered if I use a rental agent to manage my properties, and they sign the agreements with the tenants?

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When Must You Refund a Guest?

When am I required to give guests a refund?

A guest has the right to a refund if something has changed in the accommodation promised. For example, if you no longer have a 3-bedroom house and can only offer them 2 bedrooms. Or if something is substantially mis-advertised in your brochure or website, such as an elevator or handicapped facilities that are not available.

If guests change their minds after you have taken their deposit, you have no obligation to provide a refund. You don’t need to provide a refund if the customer does not like the accommodation or finds cheaper accommodation elsewhere and cancels their booking.

In addition, you cannot be held responsible for external environmental conditions which are outside your control, such as rain, wind, lack of sun or snow. This is all part of going on holiday, and if a guest decides to cancel their accommodation on this basis, they are not entitled to a refund.

To be safe, ensure your guests understand your Terms and make your cancellation fees and Conditions clear in advance.

What if I accidentally take two bookings that overlap?

When you agree to a booking and accept a deposit, you are making a contract with your guest. You have to honour this agreement as you would with any contract. After all, you are expecting your guests to honour their booking obligation, and they expect the same from you.

If you have made an error, you must fix it and put the guest in the same or a similar position so that they are not disadvantaged. You will need to try and find similar accommodation and/or compensate them for any difference. Let them know immediately when you realise your error, and make every effort to rectify the situation.

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Holiday Rental FAQs

Do I need to register my holiday rental in NSW?

Yes, most hosts must register on the NSW Short-term Rental Accommodation Register and follow the mandatory Code of Conduct. Non-hosted stays are capped at 180 days a year in Greater Sydney and some regional areas, and 60 days in Byron Shire.

Is there a short stay levy on holiday rentals?

Yes, in Victoria and the ACT. Victoria charges 7.5% on stays of under 28 days. The ACT charges 5% on bookings of up to 28 days made through a booking platform; direct bookings are exempt.

Do residential tenancy laws apply to a holiday rental?

Generally no. A genuine holiday letting falls outside residential tenancy laws. A long stay, or a guest living in the property as their home, can become a residential tenancy.

Do I need a licence to manage my own holiday rental?

No. Owners letting their own property do not need an agent’s licence. Agents and brokers managing other people’s properties do, depending on the state.

We hope you found this legal guide on How to Manage a Holiday Rental Property helpful.

About the Author: Vanessa Emilio

Vanessa Emilio (BA Hons, LLB, ACIS, AGIA) is the Founder and CEO of Legal123.com.au and Practice Director of Legal123 Pty Ltd. Vanessa is a qualified Australian lawyer with 20+ years experience in corporate, banking and trust law. Click for full bio of Vanessa Emilio or follow on LinkedIn.

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