Property owners across NSW and Victoria are rethinking their rental strategy in 2026. With strong rental demand, evolving short-term rules and rising interest rates, choosing between long-term leasing and short-term letting has become a strategic decision rather than a simple one.
The good news is that with flexible leasing options now available, you do not have to choose one forever, you can switch between strategies to suit your goals and market conditions.
This guide explains the key differences, gives practical ideas for each approach, and offers clear tips to help you decide.
Short-Term vs Long-Term: The Basics
Long-Term Rental
This is where the property is rented to a tenant on a lease (for example six or twelve months). The tenant pays rent every week or month.
Short-Term Rental
This is where the property is made available for stays of days or weeks, often through online platforms.
In Victoria, a 7.5 per cent short-stay levy applies to short stays of less than 28 days, which is collected on the total booking fee and remitted to the state government.
In NSW, local rules such as the NSW STRA register and a 180-day yearly cap on unhosted short-term stays in Greater Sydney apply.
Income Comparison
Sydney (NSW)
• Long-term rental yield: around 4.0–4.5 per cent
• Short-term rental gross yield: around 5.0–7.0 per cent before costs such as cleaning, furnishing, management fees and utilities.
Melbourne (VIC)
• Long-term rental yield: around 4–5 per cent
• Short-term gross yield: around 5–8 per cent before costs and subject to demand and occupancy.
Long-term rentals tend to offer stable and predictable income with lower variable costs.
Short-term rentals can generate higher gross returns, but only if occupancy is strong and operating costs are managed well.
Costs and Management
Short-term rentals usually involve:
• Cleaning after each guest
• Management fees (often 15–25 per cent)
• Furnishing and replacement costs
• Utility bills included in price
Long-term rentals usually have:
• Lower management fees (around 6–8 per cent)
• Tenant pays utilities
• Less frequent turnover
Think carefully about how much time and money you are willing to invest.
Why Flexibility Matters in 2026
Short-term rental lets give you the freedom to:
• Block dates for personal use
• Adjust pricing for peak periods
• Try different rental strategies throughout the year
Meanwhile, long-term tenants commit for months, reducing flexibility.
Air Design Australia offers flexible leasing options so you can switch between short-term and long-term strategies based on your goals and local demand. Visit our page to learn more
Short-term rental property managed by Air Design in Five Dock, NSW
When One Strategy Makes More Sense
Consider long-term rental if:
• You want guaranteed monthly income
• You prefer lower day-to-day involvement
• Your property is suited to long-term tenants
Consider short-term letting if:
• You are in a tourist or business travel area
• You enjoy managing guest stays or can hire management
• You want flexibility to use your property yourself
Practical Tips
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Research local demand
Look at similar properties in your area and their occupancy rates. -
Calculate net income
Subtract all costs — cleaning, management, utilities and taxes — before you compare. -
Check your strata or local rules
Some buildings or councils have restrictions on short stays. -
Plan for compliance
Ensure you register and adhere to any required insurance, levy or safety standards. -
Review annually
Markets change, and flexible leasing allows you to adapt.
Why Many Owners Choose Professional Management
Managing rentals can be rewarding, but time intensive. A professional property management company will handle:
• Local rules and compliance
• Pricing strategies
• Guest communication and check-ins
• Cleaning and maintenance coordination
Services like Air Design Australia help you get the most out of your property, whether you choose long-term or short-term leasing, and can switch between them as opportunities change.
Property managed by Air Design in Balmain East, NSW
