Short-term rentals have become a major part of Australia’s accommodation market. Platforms like Airbnb have made it easier than ever for homeowners to earn income from their property, which is why more people are exploring Passive Income for Homeowners: Beginner’s Guide to Short-Term Rental Success.

But with the growth of the industry, many governments and councils are introducing new rules to balance tourism, housing supply and neighbourhood concerns.

So are restrictions actually increasing?

The short answer is yes. Regulations are increasing, which means owners need to understand the rules and ensure their property is managed in line with local requirements.

In this guide we break down what is changing across New South Wales and Victoria, and what homeowners can do to stay compliant and profitable.

First, the good news for owners

Across Australia, short-term rental rules are set by state governments and sometimes local councils. These may include:

• registration systems
• safety standards
• local night caps
• taxes or levies
• clearer rules for hosts and guests

For well managed properties, short-term rentals remain a strong opportunity, particularly for owners who understand The Power of Listing on Multiple Platforms. And when you partner with a professional management team like Air Design Australia, staying on top of these requirements becomes much simpler, as we handle compliance, guest management and day to day operations on your behalf.

Key rules affecting owners in NSW

New South Wales has one of the most structured frameworks for short-term rentals in Australia.

Here are the main rules homeowners should understand.

1. Properties must be registered

If you want to advertise a short-term rental property in NSW, you must register it through the NSW Planning Portal before listing it online.

Your listing must display a registration number.

2. A mandatory industry Code of Conduct applies

The NSW Code of Conduct sets minimum behaviour standards for:

• hosts
• guests
• booking platforms
• letting agents

Authorities can take disciplinary action against hosts or guests who repeatedly break the rules.

3. There are night caps in some areas

For properties where the host is not living on site, there are limits in certain locations.

For example:

• 180 nights per year for non hosted short-term rentals in Greater Sydney
• 60 nights per year in parts of Byron Shire

Hosted stays where the owner is present can operate year round.

4. Fire safety rules apply

Short-term rental properties must meet fire safety standards including smoke alarms and evacuation plans.

Key changes affecting owners in Victoria

Victoria currently takes a different approach.

Instead of strict night caps across the state, the main policy change has been a new tax on short stays.

From 1 January 2025, a 7.5 percent levy applies to short-term stays under 28 days.

The revenue is intended to support housing initiatives.

Councils may also introduce local rules, but these typically require approval from the state planning minister.

What this means for property owners

The biggest shift is not that short-term rentals are disappearing.

It is that casual hosting is becoming more regulated.

Professional hosting with proper systems is becoming more important than ever, especially as many owners begin to recognise the Hidden Costs of Managing Your Rental Property.

This is why many owners now work with experienced property managers who understand:

• compliance
• local council rules
• guest screening
• pricing strategies

This is something that we at Air Design Australia handle every day across NSW and Victoria.

A simple compliance checklist for homeowners

If you are currently running a short-term rental, use this quick checklist.

Legal and registration

✔ Check if your property needs to be registered
✔ Display your registration number on listings
✔ Understand local council restrictions
✔ Confirm whether night caps apply in your area

Safety requirements

✔ Install compliant smoke alarms
✔ Create a simple evacuation plan
✔ Ensure exits and safety equipment are clearly marked

Guest management

✔ Provide clear house rules
✔ Have a local contact person available
✔ Set expectations around noise and neighbours

Financial compliance

✔ Declare rental income to the Australian Taxation Office
✔ Understand whether levies or local taxes apply
✔ Keep records of bookings and expenses

Thinking about renting your property as a short-term stay?

At Air Design, we help homeowners navigate regulations, maximise income and deliver exceptional guest experiences.

Our team manages properties across New South Wales and Victoria, handling everything from compliance and pricing to guest communication and property care.

If you are curious about the potential of your property, we would love to help.

Get in touch with Air Design for a free property assessment and discover what your home could earn as a professionally managed short-term rental.

See What Your Property Could Earn with Air Design