Guide to Renting a Room in Your Australian Home

Are you considering renting out a spare room in your house? Before you do, it’s important to understand the ins and outs of this decision, including legal considerations, financial implications, and potential tax implications.

Renting out a room in your house can seem like a straightforward way to generate a bit of extra income, but it’s not without its complexities. If you’re a homeowner, there are a number of factors to consider before opening your home to a tenant – from understanding legal obligations to navigating potential tax implications.

In this article, we’ll explore the key considerations involved in renting out a room in your home and provide practical tips to help you navigate this process with confidence.

Can I rent out a room in my house?

While most homeowners in Australia can rent out a spare room, there can be exceptions. If you live in a strata-titled property (common in apartments) or a leasehold home, you should double-check your agreements. You may need permission from your building’s management committee before renting out your spare bedroom.

Some limitations might also exist. Strata or owner’s corporations may restrict advertising on short-term letting websites like Stayz or Airbnb. They could have other rules as well.

Some areas might have zoning or local council regulations that apply. It’s a good idea to check with your local council to see if any restrictions affect your plans.

If you’re a renter yourself and considering renting out a spare bedroom, things get a little bit trickier. Most rental agreements strictly forbid subletting (renting out part of the property) without written permission from the landlord. This protects the property owner’s interests and ensures they’re aware of who else is living in their property. Breaching this clause in your lease could lead to eviction. Always talk to your landlord first and get their written consent before advertising a room for rent.

Here are the rules in each state and territory for sub-letting:

• ACT: Legal Aid ACT
• NSW: NSW Fair Trading
• NT: Northern Territory Consumer Affairs
• QLD: Residential Tenancies Authority (RTA)
• SA: Government of South Australia
• TAS: Tasmania Legal Aid
• VIC: Consumer Affairs Victoria
• WA: Consumer Protection

How do you rent a room out?

Prepare the room

Just like you’d tidy up before houseguests, presenting your rental room in a good light attracts the best tenants. If you’ve been using it as a storage room before now, it’s time to find a new home for all that junk. Make sure there’s enough space for your new tenant and that everything from utilities to appliances is in working order, and you’re prepared to share common areas.

Determine a competitive rent

To find the sweet spot for your room’s rental price, you should consider a few factors: what similar rentals cost nearby, any special features you offer (like a private bathroom/ensuite or parking), and the overall condition of the room.

Draft a rental agreement

A detailed rental agreement protects the new tenant and yourself as the landlord. It should clearly outline rent amount and due dates, house rules, responsibilities, and the length of the tenancy. The more specific you are, the fewer misunderstandings you’ll face down the road.

Advertise your spare bedroom

Spread the word using online rental websites, social media groups, or community bulletin boards. When potential tenants reach out, schedule interviews to get a feel for their personality and lifestyle. Don’t be shy about asking questions – it can save you headaches later. For instance, if you (or your strata) don’t allow pets, be upfront about that. If you don’t want to live with a smoker or you’d prefer to live with someone who doesn’t work from home because you do – make this clear from the start. Open communication is key to finding a great roommate.

Run background checks

Once you find a promising candidate, it’s time to verify their suitability. Request references from their previous landlord/s, focusing on aspects like timely rent payments and overall tenancy behaviour. Consider verifying their employment to ensure financial stability. In some states, like Queensland with its TICA database, you can check for a history of tenancy issues. If a potential tenant appears on such a list, it would be wise to reconsider them.

Finalise the rental agreement

You’ve found a good tenant, now it’s time to solidify the details. Walk through the rental agreement together, answer any questions, and make sure everyone feels comfortable moving forward.

What are the costs of renting out a room in your home?

Renting out your spare room can be a tempting way to bring in a bit of extra income. But before you dive headfirst, it’s important to understand not just the potential income, but also the expenses involved in renting out your spare room. In some cases, the costs can outweigh the benefits.

Here’s a breakdown of the key financial considerations when renting out a room:

Upfront costs

Before welcoming a new tenant, you’ll likely need to invest some time and money into getting the room and your home “tenant-ready.” This might involve:

• Refurbishments: Is the room a bit outdated? Fresh paint, new flooring, or updated fixtures can significantly enhance its appeal and attract better tenants, potentially allowing you to command a higher rent.
• Furnishings: Depending on your agreement, you may need to provide basic furniture like a bed, dresser, and desk.
• Repairs: Address any existing maintenance issues, from leaky plumbing to faulty light switches.

Remember, these initial investments are not pure expenses. They can significantly increase your chances of finding a good tenant quickly. Additionally, some costs, like painting or minor repairs, may be partially tax-deductible, further offsetting the initial outlay.

Increased utility usage

Having another person in the house naturally translates to increased utility usage. By being aware of these additional costs upfront, you can set a realistic rent that covers your expenses and provides a fair return on your investment.

• Water: Additional laundry cycles, showers, and dishwashing will all raise your water consumption. Consider installing water-efficient appliances or implementing water-saving habits.
• Electricity: Lighting, electronics, and potentially additional appliances used by your tenant will all contribute to a higher electricity bill. You might want to discuss potential cost-sharing strategies with your tenant, or factor an estimated increase into your rent calculation.
• Gas (if applicable): The cost of heating water or running gas appliances will likely increase with an extra person in the household.

Insurance

Renting out a room may necessitate adjustments to your homeowner’s insurance policy. Here are two key points to consider:

• Standard homeowner’s insurance: Review your existing policy to determine if it covers potential risks associated with renting, such as damage caused by the tenant or their guests. You might need to add an endorsement or rider to your existing policy for adequate coverage.
• Landlord insurance: Consider getting separate landlord insurance. This type of insurance specifically protects you against tenant-related risks, including property damage, theft, or liability issues that may not be covered by your standard homeowner’s policy.

Contact your insurance provider to discuss your specific situation and understand the different coverage options available. While landlord insurance adds an extra cost, it provides valuable peace of mind knowing you’re protected in case of unforeseen circumstances.

Property management fees

If you’re looking for a more hands-off approach to renting out your spare room, property management services can be an option. However, these services typically come with fees that need to be factored into your financial calculations. Here’s what property managers typically handle:

• Tenant Screening: Property managers can take care of advertising the room, screening potential tenants, and conducting background checks. This can save you time and effort in finding a reliable and responsible tenant.
• Lease Agreements: They can prepare and manage lease agreements, ensuring all legalities are addressed and protecting your rights as a landlord.
• Rent Collection: Property managers can handle rent collection, ensuring payments are made on time.
• Maintenance and Repairs: They can manage maintenance requests and coordinate repairs.

While using a property manager can be convenient, the costs of hiring one can eat into your rental income. You should weigh the pros and cons carefully to determine if hiring a property manager makes sense for your situation. You may find that it’s not really necessary to hire one if you’re just renting out your spare bedroom (as opposed to an entire property).

Some of the best home loan deals for homeowners who want to save

You could potentially lower your interest rates and reduce your monthly payments by refinancing your home loan to make the management of your rental property more financially feasible. Here are some of the most competitive refinancing deals on the market.

Lender	Interest Rate	Comparison Rate*
		5.29% p.a.	5.33% p.a.	Owner OccupierVariablePrincipal & Interest10% Min DepositRedrawExtra Repayments	Available for purchase or refinance, min 10% deposit needed to qualify.No application, ongoing monthly or annual fees.Dedicated loan specialist throughout the loan application.	More details	Compare	Promoted	Disclosure
		5.24% p.a.	5.15% p.a.	Built and funded by CommBankOwner OccupierVariablePrincipal & Interest20% Min DepositRedraw	A low-rate variable home loan from a 100% online lender.Backed by the Commonwealth Bank.	More details	Compare	Disclosure
		5.39% p.a.	5.43% p.a.	Owner OccupierVariablePrincipal & Interest10% Min DepositOffsetRedrawExtra Repayments	Available for purchase or refinance, min 10% deposit needed to qualify.No application, ongoing monthly or annual fees.Quick and easy online application process.	More details	Compare	Promoted	Disclosure

Important Information and Comparison Rate Warning

Tips for finding a good housemate

Leverage your network

Skip the hassle of advertising, lengthy viewings, and background checks by leveraging your network. Ask your family, friends, or work colleagues if they are looking for a room to rent or if they know someone who is.

Place an ad online

Advertising your room online is a great way to find the perfect tenant, but remember to keep your personal information private. Don’t give out the full address in the listing – just your first name and the suburb. Use a dedicated email address for rental inquiries if you can, or only give out your phone number to people who have enquired about the room – don’t put it in the ad.

Conduct interviews

When considering potential tenants, it’s important to gather some key information to ensure a good fit. Make sure to ask them about their employment and income so you know they can comfortably cover the rent. Also ask about their previous rental history. Understanding their past rental experiences can provide insights into their responsibility as tenants. Ask about previous landlords and the possibility of contacting them for references.

Set clear expectations

Before your new housemate arrives, discussing some house rules can prevent confusion and ensure everyone’s on the same page. This can cover things like cleaning duties, chores, fridge space, how common areas are used, and rules for having guests over. It’s important to set these expectations early on and make sure they’re being met to prevent resentment from building up later on.

Get references

Follow up with rental references to confirm their payment history and responsibility as a tenant. Most landlords are happy to answer your questions. Consider running a background check. This can provide valuable insights into a potential tenant’s creditworthiness and rental history.

Lastly, trust your gut. If something feels off about them, don’t ignore it.

Does home insurance cover renting out a room?

Typically, a standard homeowner’s insurance policy does not extend coverage to property or possessions damaged by flatmates, room lessees, or non-family residents.

If you’re generating income by renting out part of your residence, you might be categorised as a landlord for both tax and insurance purposes. Securing landlord insurance becomes crucial to protect your property from potential loss or damage caused by tenants or housemates, whether accidental or intentional.

In the event you’re considering listing your home on platforms such as Airbnb or Stayz for shared housing, a specialised short-term home and contents insurance policy may be necessary. It’s essential to carefully review the policy’s product disclosure statement (PDS) to understand what is covered and excluded.

How does renting out a room impact my taxes?

If you’re renting out a section of your home, the rental payments you receive are considered taxable income according to the Australian Taxation Office (ATO).

You must report this income as rental earnings on your tax return, and you can deduct related expenses, but these deductions must be proportioned both for the duration that the property or room is leased and for the specific portion of the property that is rented.

Ownership status doesn’t alter the requirement to declare this income; it must be declared by the property’s owners based on their interest in the property. So if you’re renting an apartment under a 12-month lease and occasionally rent out a room through an online platform for example, you are obligated to report any revenue generated from such rentals.

Additionally, you might be liable for capital gains tax (CGT) upon selling the property. Renting out any part of your primary residence generally results in a partial forfeiture of the CGT exemption for primary residences.

It’s essential to maintain records including:

• Platform statements detailing your income.
• Receipts for any expenses you intend to deduct.

If you are only renting part of your home, for example a single room, you can only claim expenses related to renting out that part of the home. This means you can’t claim the total amount of the expenses – you need to apportion the expenses for both private and income-producing use.

As a general guide, apportion your expenses based on the floor-area solely occupied by the renter (user), and add that to a reasonable amount based on your guest’s access to common areas.

You can only claim expenses for the days in a year when the room was rented to a client. When a room in your home is not being rented out, it is treated as being used privately as part of your home.

_{Photo by Pixabay}

Collections:Property InvestmentRentin

Strata Committees and Body Corporates in Australia: What You Need To Know

 Denise Raward

Updated on 14 Aug 2025

Fact checked

Share

Living in an apartment building means sharing hallways, gardens, and other spaces with your neighbours. But who keeps these areas running smoothly?ON THIS PAGEWhat is a strata committee?What is a strata scheme?What decisions do strata committees make?Limitations on strata committeesWho makes up a strata committee?What do strata managers do?

If you own an apartment, townhouse, or unit, you’re likely part of a strata scheme. As well as owning your individual unit, you’ll probably also have shared ownership of common areas. But who manages this shared environment?

Enter the strata committee, a group elected by owners to oversee the day-to-day running of shared property and facilities.

What is a strata committee?

First up, let’s be clear on what a strata committee is. The term is often used interchangeably with ‘body corporate’ or ‘owners’ corporation’ but they are, technically, a little different.

A body corporate (or owners corporation) is the legal entity that includes all lot owners in a strata scheme while the strata committee is often a smaller group of elected owners who represent the interests of all owners and manage day-to-day operations.

Bodies corporate – and strata committees – must operate under the rules and regulations set down by state and territory governments.

What is a strata scheme?

While we’re on the topic, let’s also be clear what a strata scheme is. In simple terms, it’s a system of property ownership where the property is divided into individually owned ‘lots’ (typically apartments or townhouses).

Owners also have shared ownership of communal spaces such as grounds, hallways, elevators, external walls, rooves, pools, and barbecues which, in legal terms, is called ‘common property’. Such properties are purchased under strata titles.

Residential properties are not the only ones that exist under a strata scheme. Commercial buildings, retail establishments, mixed-use developments, resorts, serviced apartments, retirement villages, and caravan parks may also have a strata arrangement.

What decisions do strata committees make?

The strata committee focuses on day-to-day matters that keep the strata scheme running smoothly and can make recommendations for owner approval on larger issues.

It’s important to remember that some bigger decisions, such as setting or changing levies or undertaking major renovations, typically require approval from all the owners at a general meeting.

Here’s a breakdown of a strata committee’s key areas:

Maintaining the property

• Authorising repairs and upkeep for common areas and facilities (like hallways, gardens, pools)

Managing finances

• Overseeing the budget for the strata scheme
• Approving spending for everyday operations (e.g., hiring cleaners, gardeners)
• Collecting strata levies from owners (fees used to maintain the property)
• Paying bills for the scheme (utilities, insurance)

Enforcing the rules

• Approving applications related to by-laws (e.g., requests for pet ownership, minor renovations to individual lots)
• Addressing breaches of by-laws and issuing notices to comply (e.g., noise complaints, parking violations)
• Hiring and overseeing contractors for services like cleaning, gardening, and security

Important to remember

• Bigger decisions, such as major capital works or expenditure, typically require approval from all owners at a general meeting
• The strata committee focuses on day-to-day matters but can make recommendations for owner approval on larger issues

Limitations on strata committees

Strata committees in Australia have certain limitations to ensure they act in the best interests of all owners and comply with a legal framework.

Here’s a breakdown of some key restrictions:

• Spending limits: Strata committees can’t spend freely. They have a set spending limit, which may be determined by the strata scheme’s by-laws or default legislation in the relevant state or territory. They need owner approval for expenses exceeding this limit.
• Major decisions: Big issues will require a vote by all owners, typically at a general meeting. These may include major maintenance or upgrading products, amending by-laws, or dissolving the strata scheme altogether.
• Financial transparency: Committees are obligated to be transparent with finances. This means providing regular reports to owners on the budget, income, and expenditure of the strata scheme.
• Compliance with by-laws and legislation: Decisions must comply with the strata scheme’s by-laws and relevant state or territory strata legislation. The committee can’t make unilateral changes that contradict these regulations.
• Conflicts of interest: Committee members must avoid conflicts of interest. If a decision directly affects them financially, they should abstain from voting or discussions.
• Fairness and reasonableness: Committee decisions should be fair and reasonable, considering the best interests of all owners. They can’t make arbitrary choices that unfairly disadvantage certain property owners.

See also: Pros, cons, risks, and considerations when buying a strata property

Who makes up a strata committee?

The number of people on a strata committee is decided at each annual general meeting (AGM). It can range from one to nine members, with the owners corporation making the final decision (as long as it stays under nine).

There are a few exceptions:

• Two-lot schemes: In these small buildings, the committee must have at least two members, one from each property.
• Large schemes (over 100 properties): These require a minimum of three members on the committee.

Who is eligible to be a member of a strata committee?

Each property owner within the scheme has the right to nominate one person per property for election. Nominees can be the owner themselves, another property owner, or a non-owner, such as a tenant or a tenant representative who lives there.

However, certain individuals are ineligible for nomination to the strata committee, including:

• The building manager
• Any agent responsible for leasing properties within the scheme
• Anyone affiliated with the scheme’s original owner (developer) or building manager, unless they have disclosed this affiliation in writing prior to the election
• Any owner who has outstanding debts to the scheme at the time of the AGM

Office-bearer jobs in strata committees

Chairperson

The strata committee chairperson takes the helm of the group and presides at general and committee meetings. The role gives power to the bearer to decide on issues and procedural matters. However, the chairperson does not have a casting vote.

This role requires leadership and management skills – those who aspire to take the lead should be people-oriented and diplomatic. Self-confidence is also a must to be able to handle the pressure that can come with the role.

Secretary

The secretary of the strata committee has the role of convening meetings. This position entails preparing, taking, and distributing the minutes of all meetings and conventions. The secretary also has the responsibility to keep records and answer queries addressed to the owners’ corporation.

For those who wish to be a successful strata committee secretary, attention to detail and organisation are two of the much-needed skills.

Treasurer

Perhaps the most complicated role, the treasurer is in charge of all finance-related matters. Being a treasurer involves sending notices of levies, receiving and recording payments made to the corporation, keeping accounting records, and preparing financial statements.

Given the complexity of the role, the treasurer should be organised and trustworthy. Having a background in accounting or finance is also a big asset.

What do strata managers do?

Bearing in mind that those on strata committees are volunteers, the owners corporation may choose to appoint a professional strata manager. They can provide varying levels of support to the owners corporation and/or strata committee.

The owners corporation will decide the specific responsibilities to delegate to a strata manager, which can include:

• Organising and facilitating meetings
• Collecting levies, managing banking, and securing insurance
• Providing advice on asset management
• Maintaining the scheme’s financial records

Strata managers are typically appointed by the owners’ corporation during an AGM.

Do you need a strata manager?

Hiring a professional strata manager is certainly not a legal requirement. However, many strata schemes, especially larger ones, opt to appoint one. Many strata committees can benefit from the managerial support and specialist knowledge of strata laws and regulations that a manager can offer. A strata manager’s services are paid for from body corporate fees.

But if issues arise with a strata manager, it is advisable to discuss any concerns with the owners corporation, which has the authority to terminate their services. This can be accomplished by:

• Choosing not to renew their contract upon expiry
• Voting to dismiss them at the next general meeting
• Filing a petition with the relevant authority in your state or territory

It’s up to each owners’ corporation to determine whether a strata manager is needed or whether the responsibilities can be handled ‘in-house’.

Photo by Isaac Quesada on Unsplash

First published in May 2024

Collections:Property InvestmentBuying a homeCompare home loan rates from 4.64%

Use our comparison tool to find a home loan that best suits your needs.compare home loan rates

Compare Home Loans

Compare home loansRefinance home loansFixed home loan ratesOwner occupied home loansVariable home loan ratesGreen home loansNon-bank lenders

Related Guides

Can you get a home loan as a single parent?

Like most things, getting a home loan as a single parent can take a bit more planning. Her…