Airbnb In Australia: Is It Legal? (2025 Updated)

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Signing up as a host for Airbnb Australia remains perfectly legal in 2025, and it continues to offer a fantastic opportunity to earn additional income. However, before you start listing any properties on Airbnb, it’s important to familiarise yourself with the rules and regulations that govern short term rental accommodation.

Regulations vary from state to state; for the purposes of this article, we’ll focus on NSW laws.

In recent years, legislative updates have further refined how third-party, short term ‘holiday’ rentals operate. In this article, we’ll examine the current regulatory landscape for Airbnb hosts in NSW and highlight best practices to ensure your hosting operations remain compliant.

We’ll also cover the following:

How an Airbnb actually works
Whether licensing or subleasing impacts your ability to host
Tax, insurance and safety obligations
Airbnb management agreements

How Does Airbnb Work?

Airbnb is a short term rental accommodation platform that allows guests to book spaces ranging from houses and apartments to studios and cabins at competitive nightly rates. Rather than paying for a hotel room, guests can enjoy the comfort and uniqueness of a local property.

A person who lists their property on Airbnb is known as a host, and it is up to the host to decide the rental rate for their listing. If you’re considering setting up your hosting venture, you might also want to review our guide on operating as a sole trader to decide if that business structure suits your needs.

Airbnb acts as an intermediary by handling bookings and financial transactions through their secure website. There are no monthly or membership fees – after guests have stayed, you receive your payment from Airbnb, with a small service fee deducted.

What Regulations Will Impact My Airbnb?

Since Airbnbs are classified as short term rentals, all hosts must adhere to the guidelines established for the short term rental accommodation industry.

In early 2025, NSW Fair Trading released an updated guide for short term rentals. It’s essential to review this guide to ensure your practices are aligned with its recommendations and to prevent any potential complaints.

The guide covers several key areas, including:

Your obligations to guests
Providing accurate and comprehensive information to customers
Your duties to neighbouring residents
Proper methods for handling complaints
The processes surrounding enforcement

In addition to these guidelines, planning laws also influence how an Airbnb can operate. In NSW, specific restrictions are applied to short term leases such as Airbnbs. Essentially, the planning laws dictate that:

In Greater Sydney, if you do not reside at the property, you can offer it on a short term basis for up to 180 days each year.
In regional areas of NSW, if you are not present, the property may be rented out year‐round.
If you live at the property, there is no limit – your Airbnb can be available for 365 days per year, regardless of location.

Laws and regulations can change at any time, so staying current is crucial. We recommend checking local government and planning laws in your area regularly – our Industry Regulations Guide is a useful resource for this purpose.

For more detailed information, visit the Fair Trading website to view the latest updates and news.

What Is Licensing?

A property licence provides the licensee with the right to use premises for a specific purpose. Unlike a lease, a licensing contract does not grant exclusive possession of the property.

Therefore, if you have a Licence Agreement, ensure that it explicitly permits you to host an Airbnb. It’s always a good idea to have a lawyer review your contract to confirm you are compliant with its terms.

What Is Subleasing?

Subleasing occurs when a tenant, who is already paying rent for a property, allows a third party to use part or all of that property under a separate sublease agreement. In this case, the subtenant pays rent to the original tenant.

Subleasing can only occur with the explicit permission of the landlord. If you’re renting a property and are considering listing it on Airbnb, ensure that your landlord has given you written consent. You may wish to have your Lease Agreement reviewed by a lawyer to determine if subleasing for short term rentals is permitted.

If your landlord agrees, it is wise to secure this amendment in writing – our team can help draft a Commercial Sublease Agreement to protect all parties involved.

Do I Need To Pay Tax For Airbnb In Australia?

Income earned from hosting on Airbnb is taxable, and the profits you earn from short term rentals must be reported as part of your annual tax return. Additionally, if you operate as a business, expenses such as property maintenance, repairs and insurance may be tax deductible.

Depending on your circumstances – whether you own the property, it is your principal residence, or if it is used purely for business – other taxes might also apply, such as GST. It is paramount to keep accurate records of all income and expenses for taxation purposes. For further guidance on landlord tax deductions, you might find the ATO’s resource on rental expenses helpful. If you’re unsure about your current business structure, our article on operating as a sole trader provides useful insights.

Example
Claire owns a small cabin in a regional area of NSW, which she purchased as an investment property. In 2025, she lists her cabin on Airbnb for short term rentals. While Claire pays income tax on the profits, she is also entitled to claim landlord tax deductions for maintenance expenses and is registered for GST due to the business use of the property.

What About Insurance?

When you open your property to guests, unforeseen events can occur, which is why having adequate insurance is essential. As an Airbnb host, you may need to secure public liability insurance to protect against injuries that occur on your premises, as well as cover for property damage.

Always inform your insurer that the property will be used as an Airbnb, as this usage can affect your coverage options.

Consider consulting our legal experts if you’re unsure whether your current home insurance policy covers short term rentals – ensuring you are fully protected is key.

Safety Obligations

Ensuring your property meets safety standards is non-negotiable when hosting on Airbnb. This means addressing hazards such as broken glass, leaks, mould, or faulty appliances before guests arrive.

Your property should comply with legal safety requirements, including the installation of fire alarms, fire extinguishers, and clear instructions for emergency procedures. Regular inspections and prompt maintenance can help minimise potential risks.

Staying proactive in maintenance not only protects you from liability but also helps enhance guest satisfaction and reviews.

What Else Do I Need?

Airbnb offers a wealth of guidelines to help you run a successful short term rental. You can find tips on promoting inclusivity, crafting a compelling listing title, the fundamentals of hosting and understanding your property’s potential. Their resource centre is filled with practical articles and videos you won’t want to miss.

If you’re considering hiring a property manager or managing multiple listings yourself, it’s important to have a tailored agreement in place. Our Airbnb Management Agreement outlines the scope of services, responsibilities, and liabilities, ensuring smooth operations between all parties.

Additional Legal Considerations in 2025

As the short term rental market continues to evolve in 2025, keeping abreast of legal and regulatory updates is crucial. Regularly review your contracts, clarify your insurance coverage, and ensure compliance with any new safety standards. Resources such as our Industry Regulations Guide and Business Structure Guide can provide valuable insights to help protect your hosting business.

What Is An Airbnb Management Agreement?

An Airbnb Management Agreement is a legally binding contract that details the scope of services, liabilities, and responsibilities of a property manager handling your Airbnb. This agreement ensures that both the host and the manager are clear on their duties, thereby reducing potential disputes.

Having a well-drafted agreement in place is particularly useful if you manage multiple properties or delegate day-to-day operations. It provides clarity and sets expectations, safeguarding your business interests.

Key Takeaways

Airbnbs continue to offer a viable way to generate extra income, but it’s essential to operate within the legal framework. To summarise:

Airbnbs are short term rental accommodations governed by specific industry guidelines.
Your location in NSW and whether you reside at the property significantly affects the number of days you can host.
If you do not own the property, ensure your rental, licensing, or subleasing agreement permits short term letting.
Maintain detailed records of income and expenses for tax purposes; consult the ATO’s guidelines and our operating as a sole trader article if needed.
Inform your insurer that your property is used for Airbnb to secure proper coverage.
Adhere to all safety obligations to protect both your guests and yourself.
Consider drafting an Airbnb Management Agreement if you or your property manager are handling bookings.
Stay updated with any regulatory changes by referring to our Industry Regulations Guide.

If you would like a consultation on hosting an Airbnb in Australia, please contact us at 1800 730 617 or team@sprintlaw.com.au for a free, no-obligations chat.

Sapna Goundan

Sapna has completed a Bachelor of Arts/Laws. Since graduating, she's worked primarily in the field of legal research and writing, and she now writes for Sprintlaw.

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