I found rental arbitrage in a video about America. I rang Terence that night and asked what would happen if we tried it in Melbourne. He was in, and about three weeks later we had signed our first lease with fifteen thousand dollars each.
The model is simple enough to explain in a sentence. You take on a residential lease the normal way, you get the owner's written permission to sublet it as short-stay accommodation, you furnish it, and you list it. Your rent is fixed. Your nightly rate is not. The gap between the two, after cleaning, platform fees, utilities and everything else, is what you keep.
People also call it rent-to-rent. Either way, you never own the property. The lease is the asset. That puts it somewhere between buying a place and co-hosting, where you manage someone else's listing without ever being the tenant. You carry the lease, the risk and the upside, but no mortgage.
Why the Australian version is different
Most of the arbitrage content online is American, and it does not transfer cleanly. Australian leases are different documents. Owners' corporations here can and do restrict short stays in a way that will end a deal after you have signed it. Councils differ, and some of them differ sharply. State rules on short-stay letting are not the same in Victoria as they are in New South Wales or Queensland.
None of that makes it impossible. It makes the homework specific. The part of the American videos that does transfer is the arithmetic. The part that does not is every rule that sits around it, so here are those rules as they stand today.
Is it legal? Three hurdles, not one
Yes, it can be, but "legal" here means clearing three separate things: the landlord's written consent, your state and council's short-stay rules, and your building's own rules. Miss one and the whole arrangement is exposed, even if the other two are perfect.
1. The landlord's consent comes first
In New South Wales, Victoria, Queensland and South Australia, the tenancy law says you need the landlord's written consent before you sublet. Western Australia is slightly different: the lease itself can allow subletting, ban it, or require consent, and consent is the default when the lease says nothing.
How freely a landlord can say no depends on the state. In Victoria and South Australia, consent can't be unreasonably withheld. In Queensland the landlord has to act reasonably. In Western Australia, where the lease requires consent, the landlord can't unreasonably withhold it either. New South Wales is the outlier: a landlord there can refuse a sublet of the whole property for any reason at all, although they can't unreasonably refuse a sublet of part of it.
Even where refusals have to be reasonable, that does not mean automatic approval. A landlord might point to insurance, the building's rules or wear and tear. Whether a particular reason holds up is for the state tribunal to decide case by case. I have not checked Tasmania, the ACT or the Northern Territory in the same detail, so if you are there, ask your tenancy authority first.
Whatever state you are in, a verbal "yeah, that's fine" is not consent. Every one of those Acts asks for it in writing.
What happens if you sublet without consent
It is a lease breach, not a grey area. The steps differ by state:
- Victoria: a 14-day notice to vacate for subletting without consent.
- New South Wales: a 14-day termination notice for the breach.
- Queensland: a 7-day notice to remedy the breach, then a 14-day notice to leave.
- Western Australia: 14 days to remedy the breach, then a 7-day termination notice.
If the tenant does not leave, the landlord still needs a tribunal or court order to end it. That is cold comfort when the business you built sits inside that lease.
2. State and council short-stay rules
The landlord saying yes does not clear you with the state. Only New South Wales and Western Australia run state-wide short-stay registers. Everywhere else it is a mix of levies, council rules and permit numbers.
| State | Registration | Levy or night cap | Worth knowing |
|---|---|---|---|
| NSW | State register. $65 to register, $25 a year to renew. | 180 days a year for non-hosted stays in Greater Sydney and some regional areas. 60 days in most of Byron Shire. | Fire safety rules apply, including interconnected smoke alarms and an evacuation plan. |
| Victoria | No state register. | A 7.5% Short Stay Levy on stays of less than 28 nights, since 1 January 2025. | The levy does not apply to your principal place of residence. |
| WA | State register since 1 January 2025. $250 to register, $100 a year to renew, hosted or unhosted. | In Perth, an unhosted short stay needs development approval above 90 nights a year. Regional councils set their own rules. | The Residential Tenancies Act 1987 writes a consent term into leases by default. |
| Queensland | No state register. Some councils require their own approval. Noosa, for example, needs short stay letting approval, renewed every year. | Varies by council. Brisbane charges transitory accommodation at a higher rate, and rates are paid by the owner, which can come up when you negotiate rent. | Check your council before you sign anything. |
| Tasmania | Each listing has to show a planning permit number or an exemption statement. | Check your council. | Ask the tenancy authority about consent. |
| SA, ACT, NT | Check with your state or territory and your council. | Check your council. | In South Australia, consent to sublet can't be unreasonably withheld. |
These rules change often. Check your state and your council directly before you list, rather than relying on last year's article, including this one.
3. Owners' corporation and body corporate rules
Even with the landlord's written yes and the registration sorted, the building can still say no. In New South Wales and Victoria, owners' corporations can vote to ban short stays in apartments that are not the host's principal place of residence, which is exactly what an arbitrage unit is. In Victoria, three breach notices for separate events within 24 months can also lead to VCAT restricting short-stay use. Queensland is different: body corporate by-laws generally can't restrict the type of residential use of a lot, so an outright ban is generally not available there.
Read the rules before you sign the lease, not after. We learned to treat this as the first question, not the last.
“The guest paid us $625. We took home $521... and that was only for two nights. Our weekly rent for the place was $480.”
What it cost us to learn
That first booking came in while I was at the cinema. It is the part of the story people repeat back to me. The rest of it is less fun and more useful.
- We overspent on furniture by thousands, because we bought what looked good rather than what earns.
- We took three weeks to fit the place out, which is three weeks of rent paid on an empty property.
- A faulty washing machine flooded the apartment and we fixed the carpets ourselves.
- We set the prices wrong, in both directions.
Later, at about five properties, we took a guest off the platform who seemed a bit dodgy but was paying decent money. He set off the sprinklers and flooded the apartment, the units either side, the one below and the building's gym. We sat on five properties for five months after that, genuinely unsure it was worth continuing. Then we rewrote how we screen guests and check ID, and started signing leases again.
If you are the landlord
If a tenant asks you about short-stay subletting, know that depending on your state, you may not be able to refuse without a reasonable reason, so it is worth knowing what a good request looks like. Before you say yes, ask for:
- Proof of short-stay insurance, not just standard renters' insurance.
- A signed addendum to the lease that specifically allows short-term subletting.
- Confirmation the tenant has read the owners' corporation rules and, where it applies, registered with the state.
- Clear terms on who pays for registration and compliance, who holds insurance, and what happens if the property breaches council or building rules.
One thing you can't do in New South Wales or Western Australia is charge the tenant for giving consent, beyond the reasonable expenses of giving it. Rent is a separate conversation, and it is normally agreed up front in the lease. Treat the whole thing as a commercial arrangement, not a favour.
If you are the tenant
The people who get a yes tend to show up with a proposal, not a request. That means insurance already sorted, a plan for maintenance and wear and tear, and a clear answer on who handles cleaning and guests. If you want the rent to reflect the new use, raise Airbnb before you sign, not halfway through the lease.
Then get the consent in writing, every time. A signed lease addendum is best. A clear email is the minimum. A property manager's nod on the phone protects nobody.
Insurance
Standard renters' and landlord policies are built around long-term tenancies and usually exclude short-term guests. Read the product disclosure statement rather than assuming. Airbnb's own AirCover is not a substitute either. Airbnb says itself that host damage protection isn't an insurance policy, and its host liability insurance has its own terms and exclusions. Whichever side of the lease you are on, confirm the cover before the first guest checks in.
The honest version of the numbers
We run 83 short-stay properties in Melbourne now, on leases rather than mortgages, with a team of 25. We publish a month-by-month breakdown of what that portfolio actually books, including the quiet months, in the Melbourne Short-Stay Market Report. The figures in it are gross booking revenue, which is what guests paid before rent, cleaning, platform fees and every other cost comes out. It is not profit and we do not present it as profit.
I would rather you read that than a screenshot. A single good month tells you nothing about a business. Thirteen consecutive months, including the ones that dip, tells you something. Registration, levies and insurance all come out of the margin too, so run your own numbers before you commit to a lease.
Who this suits
Arbitrage rewards people who will do unglamorous work repeatedly. Ringing agents back to back for weeks. Reading the owners' corporation rules before signing rather than after. Being the person who answers at eleven at night when a guest cannot find the lockbox, or paying someone reliable to be that person.
It punishes people who want it to be passive from day one. Ours was not passive for a long time. It is now, because we built an operations manager, a warehouse, a cleaning team and an errand runner between us and the day-to-day, and that took years rather than months.
Questions people ask me
Is Airbnb rental arbitrage legal in Australia?
It can be, when three things are in place: the landlord's written consent, any state or council short-stay registration or approval, and the building's owners' corporation or body corporate rules. In Western Australia, what the lease says about subletting matters too.
Do I need my landlord's permission to put a rental on Airbnb?
Yes. The tenancy laws in New South Wales, Victoria, Queensland and South Australia require the landlord's written consent to sublet. In Western Australia it depends on the lease, and consent is the default when the lease says nothing. A verbal yes does not meet the written-consent requirement.
Can a landlord refuse an Airbnb subletting request?
In Victoria and South Australia, consent can't be unreasonably withheld, Queensland landlords must act reasonably, and in Western Australia consent can't be unreasonably withheld where the lease requires it. In New South Wales a landlord can refuse a sublet of the whole property for any reason.
What happens if I sublet on Airbnb without consent?
It is a lease breach. In Victoria and New South Wales that can mean a 14-day notice. In Queensland it is a 7-day notice to remedy, then a 14-day notice to leave, and in Western Australia 14 days to remedy, then a 7-day termination notice. If the tenant stays, the landlord needs a tribunal or court order.
Do I need to register with the state?
Only New South Wales and Western Australia run state-wide short-stay registers. Victoria charges a 7.5% levy instead, Tasmanian listings need a planning permit number or exemption statement, and in Queensland some councils, such as Noosa, require their own approval.
Does renters' insurance cover Airbnb guests?
Usually not. Standard renters' and landlord policies are built for long-term tenancies and typically exclude short-term guests, so check the product disclosure statement. Airbnb says its AirCover host damage protection isn't an insurance policy.
Can my landlord charge extra for allowing Airbnb?
In New South Wales and Western Australia, a landlord can't charge for giving consent beyond the reasonable expenses of giving it. Rent is a separate matter and is normally agreed up front in the lease, so raise Airbnb before you sign.
Can a body corporate ban Airbnb even if my landlord says yes?
In New South Wales and Victoria, owners' corporations can vote to ban short stays in apartments that are not the host's principal place of residence. In Queensland, body corporate by-laws generally can't restrict the type of residential use of a lot. Read the rules before you sign.
What is the difference between subletting and Airbnb arbitrage?
Subletting is the general legal term for renting all or part of a leased property to someone else. Airbnb arbitrage is one kind of subletting: short-term, through a platform, as a business.
How much can you make from rental arbitrage?
It depends on the property, the location and how well it is run, and registration, levies and insurance all come out of the margin. Our own portfolio's monthly gross bookings, quiet months included, are in the Melbourne Short-Stay Market Report. Run your own numbers before you commit to a lease.
This is general information about the rules as they stood in October 2026, not legal advice. Check with your state tenancy authority, your council and, if you need it, a lawyer before you sign.
If you want to see the whole thing explained properly, the free training walks through it. If you would rather read about the business first, here is how it started. For the two ways in without a mortgage, read how to run an Airbnb without owning property.
