How to Turn Your Property into a Profitable Holiday Let

Owning a rental property is a worthwhile financial goal, but many homeowners struggle to turn their space into a profitable holiday let. The two main challenges? Understanding the market demand and setting up your property to meet guest expectations.

Without proper planning, even a well-located home may fail to attract consistent bookings. This guide covers everything you need to know to successfully make your property into a holiday let.

What You Need to Do Before Letting Out Your Property

If you are like many homeowners interested in earning some money on the side, you have probably asked this question not once, not twice – how do I turn my house into a holiday home?

Well, for any property to succeed in the holiday rental market, it must meet a couple of requirements. Below is a detailed check-list you should use to access the suitability of your rental property:

1. Location & Accessibility

• Is the property in a prime location (coastal, city hub, countryside retreat)?
• Is guest parking available on-site or nearby (free or paid)?
• Are tourist attractions, dining spots, or leisure activities within easy reach?

2. Legal & Compliance Requirements

• Does your local council permit short-term rentals?
• Have you checked zoning laws and secured necessary approvals?
• Are there restrictions imposed by a homeowners’ association or building management?

3. Property Layout & Comfort

• Are the bedrooms inviting, well-lit, and spacious?
• Is the bathroom modern, functional, and hygienic?
• Does the kitchen have essential appliances for self-catering guests?

4. Must-Have Amenities

• Fast and reliable WiFi.
• Climate control (heating/air conditioning)
• Comfortable beds with quality linen
• Smart TV and entertainment options (streaming services, Bluetooth speakers)
• Secure and hassle-free check-in (digital locks, keyless entry, lockbox)

5. Enhancing Guest Experience

• Does the property offer a unique feature like a scenic view, stylish decor, or a private outdoor space?
• Is it suitable for families with children or pet-friendly?
• Are there outdoor areas like a patio, BBQ setup, or garden?
• Do you provide extras like welcome hampers, local recommendations, or concierge services?

6. Maintenance & Upkeep

• Is there a reliable cleaning and property maintenance team in place?
• Are waste disposal and recycling facilities easily accessible?
• Is the property regularly inspected for pests and general upkeep?

7. Financial Viability & Pricing Strategy

• Have you calculated rental income potential versus operating expenses?
• Do you understand seasonal demand fluctuations in your location?
• Have you factored in tax obligations and deductible rental expenses?

Researching the Short-Term Market in Australia

Before listing your property, you must understand the demand in your area. Coastal towns like Byron Bay are popular with tourists and enjoy year-round bookings like city hubs such as Sydney and Melbourne. Wine regions see peak demand during seasonal events and weekends.

Once you know the demand, you should research your ideal guests to tailor your rental to their needs. Families may prefer spacious homes near beaches, while corporate travellers prefer high-speed WiFi and a dedicated workspace. If your area attracts tourists, consider adding amenities like a BBQ or outdoor seating.

For insights on how to adapt your property, check similar listings on Airbnb and Booking.com. Look at pricing, guest reviews, and occupancy trends and use this information to ensure your property stands out.

You can understand about the Australia’s Best Airbnb Markets

Checking Local Council Regulations & Planning Permissions

Every locality will often have some regulations and permissions that property owners must adhere to before converting their property into rental premises. Failure to comply with such rules can lead to fines, forced delisting, or legal disputes. Here are the main ones to keep in mind:

• Council Approval. Some local councils require permits or impose zoning restrictions on short-term rentals. If this applies to your region, check with the local authority for specific rules.
• State-Specific Limits. Sydney enforces a 180-day cap on non-hosted STRA properties, meaning you can’t exceed this limit unless you live on-site. Other regions may have similar restrictions.
• Lender Permission. If you have a mortgage, some lenders prohibit or limit short-term rentals. Consult your loan provider to avoid breaching your contract.
• Impact on Home Loan Terms. Renting your property may shift your loan classification to an investment loan. This could lead to higher interest rates and different tax obligations.

Tax Considerations for Holiday Lets

Overlooking tax obligations on your holiday rental can lead to fines or unexpected financial losses. Proper tax planning will also help you maximise deductions and ensure compliance with Australian laws. Here are key tax issues to consider:

Do You Need a Business License?

In Australia, whether you need a business license for your short-term rental (STRA) depends on your state regulations and the services you provide:

You MAY be classified as a business if you offer hotel-like services such as breakfast, concierge, or daily cleaning. This could impact your tax obligations and regulatory requirements.

Some local councils require permits or registration for STRAs, especially in high-demand tourist areas. For example:

• NSW – STRAs must be registered with the Short-Term Rental Accommodation (STRA) Register.
• Victoria – New regulations allow councils to impose additional restrictions on STRAs.
• WA & QLD – Some regions require approval before operating a short-term rental.

Tax Responsibilities & Deductions

Here’s what you need to know about your tax obligations:

• You must report all income from holiday lets to the ATO. Failing to do so may trigger audits or penalties.
• Eligible Tax Deductions. You can claim mortgage interest, property repairs, insurance premiums, and depreciation as tax deductions. However, these deductions may be limited if you use the property for personal stays.

Might you know about the tax on rental income in Australia.

Getting the Right Insurance Coverage

Many first-time hosts assume their regular home insurance will cover short-term rentals, but this isn’t the case. Standard home insurance typically excludes damages caused by paying guests. You will, therefore, need short-term rental insurance, which covers guest-related damages, unexpected loss of income, and legal liabilities.

Similarly, you could be held responsible if a guest gets injured on your property. A Public Liability Insurance policy ensures financial protection against injury claims.

How to Prepare Your Property for Holiday Guests?

Many first-time hosts overlook key details like safety and detailed furnishing, leading to bad reviews and lost bookings. To ensure your rental stands out and remains guest-friendly, follow these three essential steps.

Step 1: Furnishings to attract guests

A well-furnished holiday home does more than just provide comfort. In fact, the right aesthetics can turn an ordinary rental into a must-book property.

• Go beyond functionality. Guests want more than just a place to sleep. Invest in a stylish, practical layout with statement décor and high-quality bedding.
• Must-have amenities. Ensure you have the basics. These include a fully stocked kitchen, high-speed WiFi, smart TV, and climate control (air conditioning/heating).

Step 2: Ensure you meet safety standards

A single safety oversight can turn an otherwise perfect stay into a disaster. Many hosts fail to consider guest security or emergency preparedness, often leading to legal issues or property damage.

• Fire safety. Install and test smoke detectors, provide fire extinguishers, and provide emergency exits.
• Noise control. If your property is in a quiet neighbourhood, set clear noise limits and communicate them upfront.
• Pet & smoking policies. If you allow pets or smoking, provide designated areas and proper ventilation to prevent property damage or complaints from future guests.

Step 3: Setting House Rules

Some hosts assume that guests will “just know” the rules. This is often not true. Here is what you should provide:

• Emergency protocols. Display evacuation routes, emergency contacts, and first-aid kits in easily accessible locations.
• Clear expectations. Outline rules for waste disposal, check-in/out procedures, and guest capacity to avoid misunderstandings.
• Security measures. If you use keyless entry or smart locks in the property, provide guests with clear instructions on usage and what to do in case of technical issues.

Might you need to know about Transform Your Property into a Holiday Home or Executive Apartment.

Ongoing Costs & Profit Maximisation Strategies

Below is a breakdown of essential costs every holiday rental owner should plan for.

Once you have factored in all the above costs, the next step is to optimise revenue and increase guest value. Here are some ways to boost your rental’s profitability:

• Offer late check-out options for an extra fee.
• Introduce curated local experiences, such as winery tours or boat charters.
• Provide pet-friendly stays at an additional charge.
• Offer discounts for returning guests.
• Add personal touches like handwritten welcome notes or loyalty incentives.
• Create an Instagram-worthy outdoor space; think of fire pits, fairy lights, or a scenic dining area.
• Upgrade the kitchen with modern appliances to attract long-stay guests.

You can understand about How to Evaluate a Rental Property for a First-time Investor.

How to Manage Your Holiday Let for Success.

Having read through to the end, it is obvious that there is a lot you need to do if you are to make your property into a holiday let. Besides strategic planning and proactive guest management, you must also understand the financing side of things. This is why many delegate some or all the aspects of running the short-term rental business to reputable property managers like L’Abode Accommodation.

At L’Abode, we take care of everything, from listing management and dynamic pricing to guest communication and property cleaning and maintenance, so you don’t have to. This way, you can maximise returns without the day-to-day stress. If you are ready to make your holiday home profitable, partner with us today and let the experts do the heavy lifting.