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Shortage of Rental Properties: Are too many properties used for short-term holiday rentals?

Updated: Sep 20, 2023

Here we provide a comparison between short-term and longer-term rental property options and some of the things to consider before deciding on how to rent out your property.

We also look at insurance comparisons and issues raised by some local councils.

Short-term rental accommodation, also known as STRA or holiday letting is where a house, apartment or unit is used to provide residential accommodation on a commercial basis for a temporary or short-term period.

Couple at holiday home relaxing fully insured
Insurance for Holiday Homes

Do not get caught out unable to legally rent your property for Short-Term Holiday Rentals

Before you decide how to rent out your property its worthwhile contacting us for a free Landlords or Short-term Holiday Home insurance quote. You should also contact the local council where the property is located to enquire about the local rules and regulations, you need to find out if there are any restrictions on renting out your home or apartment property for short-term rentals in the council area where your rental property is located.

The Problem with Short Term Holiday Rentals

Did you know!

  • Councils such as Byron Shire have had rules and regulations introduced by the NSW Governement which commenced In November 2021, for short-term rental accommodation.

  • Other councils such as Hobart have proposed higher council rates on short stay properties.

  • City of Melbourne considering introduction of an annual fee for property owners of short-term holiday rentals to help address housing shortage.

Some councils are trying to discourage owners from short-term rentals. Recently our own local Midcoast Council included a letter with rates notices urging property owners to consider making short-term rental properties available for long-term rental over the next 2 years to ease pressure on local families looking for accommodation. This would give time for more homes to be built.

New families moving into our local Forster, Tuncurry, Taree & Gloucester area for work are finding the lack of rental accommodation causing them real concern and stress. Some employers have advised council they cannot obtain staff for job vacancies due to the lack of suitable long-term property rentals.

For a link to the Midcoast council covering the issue click here.

For a link to article on Hobart Council proposed changes click here.

For a link to Byron Shire short-term rental accomodation click here.

For a link to NSW Governement short term rental accomodation regulations click here.

In NSW some properties must be registered on the Short Term Rental Accommodation (STRA) register. To visit NSW registry page click here.

for a link to article on City of Melboune proposed changes click here.

Insurance and Short-term holiday stays versus Long-Term rentals

We specilise in Landlords rental property insurance and can usually help with all types of rental insurance for short-term holiday accommodation or insurance for longer term leased homes or apartments. However, we are finding that some insurance companies are now declining to insure or provide insurance for short term rental properties.

Some insurance companies only want to insure long-term leased properties. Reasons for this could be lower claims when homes or apartments are permantely occupied, for example, there may be less theft or burglary claims as a permanet rental property is not usually vacant. Whereas a short-term rental property has periods of vacancy from a few days to perhaps 1 month between bookings.

Pros and Cons of Short-Term Holiday Rental Homes or Apartments

Renting you property for short-term holiday accommodation may provide benefits such as:-


  1. Higher rental income.

  2. Allows Owner to visit and stay if it is a holiday property when vacant.

  3. Can be used by family and friends when vacant.

  4. Helps with the regions holiday accommodation.

  5. You can list on sites such as Airbnb, Wotif and others and perhaps receive a higher income.

  6. You can rent out for just 1 night.

  7. You can block out periods for your own use.

  8. Some councils and local business encourage short-term rentals as it boosts local tourism and brings income to towns.


  1. You are not helping ease the long-term rental accommodation crisis.

  2. Higher Insurance costs.

  3. Ethical considerations such as if the area your property is located in has been in a recent flood or bushfire zone you are not helping ease the burden on the local community by providing accommodation for long term rental accommodation for families that have lost homes.

  4. Proposed higher land rates in some council’s areas for short-term rentals.

  5. You may have to register the property on a state govement portal for holiday accomodation.

  6. Some councils and booking sites limit the number of short stay nights with yearly caps..

  7. Unforseen changes to goverment or local council regulations that impact your return.

  8. Higher insurance premiums than a long term leased Landlords property.

  9. Victorian State Governement considering introduction of a 7.5% Short Term Holiday Rental Tax.

  10. More Councils looking at introducing Caps on number of nights available for short-term stays to encourage more long term rentals due to the shortage of housing in some areas.

  11. City of Melbourne considering a annaul fee.

Not everyone is aware of these issues. We recommend before buying a home property or apartment that you are considering renting out on a short-term basis, that you assess the impact on your rental properties return. It can have unexpected consequences on you or the property owner’s finances which could be severe.

The Final Score on Short-Term Rental Insurance

Firstly, we have years of experience is in providing Landlords rental property insurance. We can help you with insurance advice. We can also provide examples of some of the pros and cons of renting a property out from an insurance perspective. So don’t hesitate to give us a call on 02 6555 5022 if you have any Landlords insurance or Short-term rental insurance questions. We have been in business since 1985.

Initially, you may have thought you could rent out the property just as much as you like, right?

Well as you may now be aware, that is not always the case, so look into it to avoid costly mistakes. It could be the difference between meeting a mortgage repayment on your short-term rental property or the difference between a profit or loss on the rental earnings of the home or apartment.

You may soon find out, just because you own the property, it does not mean you can rent it anyhow you like. Does not seem quite right, does it, but thats the way it is. You could end up breaking local council rules and perhaps facing fines.

Worse still complaints from neighbours? Who wants to recevie a letter from the council advising the property owner that a neighbour has lodged a complaint and reported the property as being used for short-term holiday stays against local regulations or for more than the set number of days. Many neigbours know the local council rules and will report breaches.

Did you know some Councils have a maximum short-term rental period in a year?

Did you know booking sites are required to monitor the number of short-term night stays in some areas or states? That once booking days are over that yearly limit for short-term stays they won’t accept bookings unless they are for longer terms of say three months or more.

Don’t buy a property and get caught out. Find out the details from the booking site or real estate agent beforehand. Do your own research before commiting. Do not rely on what people think, find out the facts in your properties area. Do not rely on information in this blog as it is just based on things we have come across and may not apply in your case.

The fact is we have lots of clients who are very happy owners of short-term holiday properties all over Australia. We really do love to provide competetive short-term stay insurance for them. We really enjoy working in this area of the insurance market.

Call or complete one of our online forms to receive a free quote on your home or apartment insurance for short-term holiday stays if that is the way you wish to rent out your holiday home or investment property.

We hope this article has enlightened you, so you are more fully informed of the issues before you decide which path you wish to take. You may choose the flexibility of short term holiday rentals or the security of a long term lease. Whichever way you decide to go we would love to give you a free comparison insurance quote.

To get a short-term rental or holiday home insurance quote click on this link:- Rental insurance quote to find out more.

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