Can you use your granny flat as an Airbnb?

There are many different uses for a granny flat, but renting out a room or secondary dwelling as an Airbnb is a popular method to earn quick, additional cash. 

If your granny flat is in a city or high-tourist area, you may want to consider this option. As long as your property abides by your local laws and regulations, you can use it to provide short-term Airbnb accommodation. 

One of Airbnb’s main advantages is that it provides more flexibility than a traditional rental. You can set your granny flat’s availability and pricing, select tenants, and manage the bookings on your own terms.

What is an Airbnb?

An Airbnb is a property or room rented out on a short-term basis, via the global website, Airbnb, although there are a number of other holiday rental sites. 

Occupants are typically travellers, searching for a cost-effective, more personal alternative to hotels. Holidaymakers or travellers who want to experience the real feel of ‘living’ in a city or town, and may want access to kitchen or washing facilities, often find Airbnb suits their needs better than a hotel. 

People choose an Airbnb by searching for listings in their desired location, within various parameters, such as:

  • Number of rooms
  • Proximity to public transport
  • Amenities
  • Costs 

Airbnb accommodation ranges from single rooms to entire homes. Costs are usually set depending on property size, location, and amenities. Aside from providing a space to stay, Airbnb hosts must include living essentials like toiletries and bedding. They can then choose to include optional extras, like shampoos and conditioners, hair dryers and so on.

What are the requirements for using your granny flat as an Airbnb?

In Western Australia, each local council has their own by-laws regarding short-stay accommodation and holiday rentals. You can find out if your property is subject to any approvals or safety requirements by checking the WA Government’s local laws register. 

After turning your granny flat into an Airbnb, you may be affected by capital gains tax. Capital gains tax, or CGT, is the tax paid on profits after selling assets, like property. If you sell your property later on, the granny flat will be subject to CGT. Since the flat is producing assessable income, you can usually claim tax deductions. However, it is important to double check that you qualify for these exemptions.
Rules surrounding cleanliness, tenant safety, and pricing differ depending on the listing site used. As a host, you are responsible for providing clean and safe accommodation for guests, managing repairs, and maintaining the property. If you rent your granny flat out frequently, consider hiring a property manager who specialises in short-term rentals.

What are the advantages of using your granny flat as an Airbnb?

There are many advantages to using your granny flat as an Airbnb. 

You can boost your income, and claim tax deductions

 If you Airbnb your granny flat, you can set and adjust your own rates and adjust them based on demand. This means once your granny flat has built up a reputation as a desirable place to stay, or during peak seasons, you could consider raising your prices. 

You can even claim tax deductions for certain expenses related to running a granny flat Airbnb. These include repairs, cleaning, and internet costs. Claiming these tax deductions can help offset the cost of your Airbnb business.

Keep complete autonomy over your home 

An Airbnb also gives you complete control over your property. You decide who to rent to, when to rent your property, and how much to charge. With a short-stay tenant, you don’t have to commit to a long-term lease. This gives you more freedom than a traditional rental arrangement. 

Rent your granny flat out to tenants who suit your needs

Renting out your granny flat for short stays allows you to meet a diverse range of tenants. Airbnb guests come from all over the world, so you’ll become acquainted with many new people. The higher number of tenants and bookings through the site provides financial stability and security. If a booking falls through or a tenant doesn’t pay, you can find a replacement. This is not possible with a long-term tenant failing to make rent or breaking their lease.

Airbnb granny flat living room with couches and TV

What are the disadvantages of using your granny flat as an Airbnb?

Before leasing your granny flat on Airbnb, there are some disadvantages and things to be aware of before you list your property.

Income isn’t always guaranteed 

The main disadvantage to renting out your granny flat as an Airbnb is the lack of guaranteed income. Traffic varies seasonally, so you need to plan for the slower periods. This is especially important if running an Airbnb is your main source of income. 

Maintenance of your property is essential

Even if your granny flat Airbnb is only a side-business, you need to put time into maintaining the property. Your granny flat should be clean, tidy, and safe to attract guests and maintain a high rating on listing sites. Whether you’re paying professional cleaners, property managers or doing it yourself, a presentable property is imperative to securing business.

Potential privacy issues

Depending on the layout and position of your granny flat, you may experience issues with privacy. Consider your property’s amenities and whether you will mind sharing them with guests. These could include a driveway or parking space, a pool, rubbish bins or garden area. 

If your granny flat is close to your main residence, you may be able to see and hear tenants when you are home. Make sure to consider how much space you are willing to let your tenant use in your granny flat Airbnb. 

Do you need Airbnb insurance in Australia?

Although Airbnb offers cover against damage caused by guests, as well as offering you liability insurance if someone is injured at your property, you might also want to consider purchasing your own insurance. Other sites that offer a similar service may not offer cover. You should do your own research and find the insurance plan that suits your needs and protects your interests.

How much does Airbnb charge?

Airbnb usually charges a standard service fee of three percent of the reservation subtotal, when you get paid. The subtotal is the total you charge for renting the accommodation, without adding fees for additional services, like a cleaning fee. Airbnb also charges guests, typically a higher fee. Airbnb also pays sales and tourism taxes on your behalf.

Is it better to rent out your granny flat or use it as an Airbnb?

Whether it’s better to rent out your granny flat or use it as an Airbnb depends on your personal income and business goals. If you are looking for long-term, stable income, you might be better off renting your granny flat to a single tenant with a long-term lease. This guarantees steady income from your property. However, you will have as much control over rent prices, and your home will need to be available for the duration of the lease.

Having a granny flat Airbnb provides more flexibility with tenants, rental prices, and availability. You can set your own booking dates and keep your granny flat available for personal use when you need it. 

Although the income is not as reliable as a traditional rental, you are able to align your rental rates with the current rental market. Ultimately, the best option for you depends on your individual circumstances.
Chat to our friendly team to find out how you can make the most of your granny flat.