The short answer
No — not without your written consent. A Sydney tenant who lists your property on Airbnb, Stayz or any other short-stay platform without your permission is almost certainly subletting without authorisation, which is a breach of the Residential Tenancies Act 2010 (NSW) and of the tenancy agreement.[1] The activity can also void or reduce your insurance cover, trigger planning consequences and, in a strata building, breach by-laws. This article explains what the law says, what your lease should do, and how to respond if you discover it is already happening.
What rental arbitrage actually is
Rental arbitrage is the practice of signing a standard residential lease and then listing the same property on a short-term platform — pocketing the difference between what guests pay per night and what the tenant pays in monthly rent. From a distance it can look like an enterprising side hustle. From your position as the owner, it is someone else running a commercial accommodation business inside your property without your knowledge or approval.
The tenant does not disclose the plan at lease signing. The listing typically goes live within weeks, sometimes under a slightly disguised address or a photo cropped to hide identifying features. Reviews accumulate under the tenant's host profile, not yours. You continue to receive rent — which is why some owners do not notice for months.
The arrangement tends to surface in inner-Sydney neighbourhoods where short-stay demand is strongest. Well-connected suburbs — the kind of areas where a two-bedroom apartment can generate strong weekend occupancy — are disproportionately targeted. If you own in areas like Surry Hills or Newtown, it is worth understanding exactly what your lease permits and prohibits.
What NSW tenancy law says about subletting
The Residential Tenancies Act 2010 (NSW) is the starting point. Sections 74 to 76 deal with assignment and subletting and draw a critical distinction based on whether the sublet covers the whole premises or only part of it.[1]
Whole-premises sublet
If a tenant lists an entire property on Airbnb while living elsewhere, they are subletting the whole premises. The Act allows a landlord to refuse consent to a whole-premises subletting outright — the refusal does not need to be reasonable.[1] In plain terms, you can say no, and the tenant has no statutory avenue to challenge that refusal.
Partial sublet
The position is different where the tenant stays in the property and only offers a spare bedroom or a granny flat to guests. That is a partial sublet, and the Act says a landlord must not unreasonably withhold consent to that arrangement.[1] The tenant can still be required to obtain written consent first, and consent can be conditional, but a blanket refusal without genuine reason may not hold up if challenged at the NSW Civil and Administrative Tribunal (NCAT).
Written consent is not optional
In both cases — whole or partial — the Act requires written consent before the subletting begins.[1] A text message saying "fine, just don't cause any trouble" does not establish the protections you need. If a dispute ends up at NCAT, the question will be whether you gave documented, informed consent to the specific arrangement. You also cannot charge the tenant a fee for considering the request, other than your reasonable costs in documenting it.[1]
STRA registration is separate
NSW requires every property used for short-term rental accommodation to be registered on the Government STRA Register before it is advertised or offered to guests.[1] Registration goes through the NSW Planning Portal. For non-hosted short-term rentals in Greater Sydney — where the host is not sleeping in the property during guests' stays — the maximum under the exempt-development pathway is 180 days per calendar year.[1] The current registration instructions and fee are set out on the NSW Planning Portal; fees are indexed and can change.
Critically, a tenant registering the property does not give them permission under your tenancy agreement. The two requirements — STRA registration and landlord consent — are entirely separate. A tenant who registers the property and lists it without your written consent has still breached the Act and the lease.
NSW Government guidance states plainly that subletting without permission breaches the tenancy agreement.[2]
What your lease should say
The Residential Tenancies Act sets the floor, but a well-drafted special condition in the tenancy agreement is your first line of defence. The standard residential tenancy agreement form does not always contain the specific language needed to cover modern short-stay platforms.
A clause that is fit for purpose should address all of the following:
- No assignment, subletting, licensing or granting of occupation to any third party without prior written consent — the list matters because an operator might argue they are "licensing" use rather than subletting.
- No advertising or listing of the premises on Airbnb, Stayz, Booking.com or any similar platform, whether for payment or otherwise.
- No short-term, holiday or transient accommodation of any kind.
- Only named tenants and approved occupants may reside at the property.
- Compliance with all planning requirements, including STRA registration, fire-safety standards, strata by-laws and the NSW STRA Code of Conduct.
- No commercial or business use of the premises without separate written approval.
- Tenant responsibility for guests: damage, excess cleaning, noise complaints, breaches of by-laws, regulatory penalties and any cost of restoring the property to its prior condition.
- Immediate removal of any listing on request.
- Private residential use only as the stated permitted use.
One thing a clause cannot do: override the Act's statutory protections. In particular, you cannot use a blanket prohibition to strip away the tenant's right to request consent to a partial sublet. What the clause can do is require the request to come in writing, before any listing goes live, and specify the conditions you would impose if you agreed.
If you are signing a new lease, ask your property manager or solicitor to review the special conditions before the agreement goes out. If a lease is already in place without adequate clauses, check whether a variation can be agreed, and take legal advice on your options.
The insurance problem
This is where unauthorised Airbnb use by a tenant causes harm that goes well beyond a lease dispute.
Standard landlord and home-and-contents policies are generally designed around residential tenancies, not transient accommodation. Some mainstream insurers expressly exclude short-term rentals from their landlord cover. Even policies that do not have an explicit exclusion may decline a claim on the basis that the occupancy type was not disclosed, or that the property was being used for a purpose that changed the risk profile without the insurer's knowledge.
The practical consequences for you as the owner can include:
- A claim for guest damage, theft or water loss being declined because the property was not in residential tenancy use at the time.
- Loss-of-rent cover being unavailable because the income stream was short-stay, not a residential tenancy.
- Public liability exposure if a guest is injured on the property and your insurer does not cover commercial accommodation activity.
- Strata building insurance complications where the body corporate's insurer takes the same position.
Airbnb offers AirCover to hosts, but AirCover applies to Airbnb bookings only — other platforms have no equivalent — and Airbnb itself says AirCover does not replace homeowners' or renters' insurance.[3] More importantly, AirCover is available to the host, meaning the person who created the listing — your tenant. It does not flow through to you as the property owner unless you are also the host.
Owners who do want to accommodate short-stay use commonly look at specialist products such as RentCover, ShareCover and Terri Scheer. If you are considering any of these, read the product disclosure statement carefully; each has different conditions, exclusions and limits, and what suits one property may not suit another. This is not insurance advice — speak to a broker who understands short-term rental risks.
If you discover that your tenant has been running Airbnb bookings without your knowledge, notify your insurer in writing as soon as possible. Ask explicitly whether the use is covered and whether you need to disclose the activity. Do not assume your cover has remained intact.
How to tell if it is happening
Tenants running an unauthorised short-stay operation rarely advertise it to you. The signs tend to be indirect:
- Search the platforms. Search Airbnb, Stayz and Booking.com using your suburb and property type. If you recognise your own photos, floor plan or furniture, you have found the listing. Note the URL, the listing ID, the nightly rate and any reviews before doing anything else — listings can be taken down quickly.
- Neighbour complaints. Frequent turnover of guests, luggage in the hallway, unfamiliar faces using the intercom or lockbox, noise on weeknights — these are the patterns neighbours notice first. A property manager receiving complaints from a strata committee or an adjoining owner should treat them as a prompt to investigate.
- Routine inspection anomalies. Signs of heavy use inconsistent with a single household: extra bedding, multiple toothbrushes and toiletries, a lockbox on the door, cleaning products left out, or the property being noticeably more worn than the tenancy period would explain.
- Parcel deliveries and welcome guides. Some operators leave a printed guest welcome guide on the bench. If you see one during an inspection, it is fairly conclusive.
- A lockbox or smart lock not authorised by you. Airbnb operators frequently install a keypad or a key safe. If one appears at your property that you did not approve, that is grounds for investigation.
If you use a property manager, they should be conducting regular inspections within the frequency allowed under the Act and reporting any anomalies. An owner self-managing a long-term lease should not wait for the end of tenancy to look.
What to do if it is
Work through the steps below methodically. The temptation to act quickly can lead to mistakes — particularly any action that could itself constitute a breach of your obligations as a landlord.
1. Preserve the evidence first
Before you contact the tenant, screenshot the listing including the URL, listing ID, photographs, pricing, availability calendar, reviews and any text that identifies the property. Save it somewhere you control. Listings disappear fast once a tenant realises they have been found out.
2. Check your lease and the Act
Identify the specific clauses the conduct appears to breach — subletting, permitted use, occupant approval, business use, platform listing — and note whether the breach is capable of remedy. Check the current version of the Residential Tenancies Act 2010 (NSW) for the applicable termination grounds and notice requirements at the time you are acting.[1] The Act has been amended over time and you need the version in force now.
3. Write to the tenant
Send a written notice — email with read receipt, or letter to the property address — stating that the conduct appears to be an unauthorised subletting or a breach of the agreement, requiring the listing to be removed and all bookings cancelled, and asking for a written explanation within a specified time. Keep a copy.
4. Notify your insurer and, if applicable, the strata manager
Do both promptly and in writing. Ask the insurer whether the use is covered and whether it needs to be disclosed. Ask the strata manager whether the activity breaches any by-law. The answers will affect your options and may be relevant evidence later.
5. Issue the correct statutory notice if the breach is confirmed
If the tenant does not stop the activity, the Act sets out the available termination grounds and the required notice periods. The notice must correctly identify the conduct and allow the legally required period for remedy where the Act requires one. Getting the notice wrong can delay or defeat your application at NCAT. Take advice from a solicitor or licensed property manager before serving a termination notice.
6. Apply to NCAT if necessary
If the tenant does not remedy the breach or vacate lawfully, you must use the statutory tribunal process. You cannot change the locks, remove the tenant's belongings or physically exclude anyone from the property. Doing so is itself a breach of your obligations and can result in significant penalties.
7. Claim compensation for your losses
NCAT can hear claims for damage, cleaning costs, nuisance, lost rent and other recoverable loss, subject to its jurisdiction and the evidence available. The screenshots, inspection reports, contractor invoices and written communications you collected earlier become your evidence.
8. Report to the relevant authorities if appropriate
Councils investigate planning compliance including STRA registration, day-limit breaches and fire-safety issues. NSW Fair Trading administers the STRA Code of Conduct. If you believe there are safety hazards at the property — for example, a lockbox installed on a fire-egress door, or interconnected smoke alarms disconnected — you may have an obligation to act regardless of the tenancy dispute.
Throughout all of this, take legal advice from a solicitor who practises residential tenancy law. Nothing in this article is legal advice, and the correct steps depend on your specific lease, the conduct in question and the current state of the legislation.
Questions landlords ask
Does paying rent on time mean the tenant has permission to sublet?
No. Punctual rent payment does not authorise a different use of the premises, unapproved occupants or commercial activity. The lease is a separate document from the rent-payment obligation. A tenant can be in full rent compliance and still be in material breach of the agreement for subletting without consent.[2]
Can a tenant register the property on the NSW STRA Register without my knowledge?
The registration system does not currently require the registrant to prove they are the property owner. A tenant can, in principle, register the property and obtain a STRA property ID without your knowledge. That registration does not give them permission under the tenancy agreement, and it does not cure any breach of the Act.[1] If you discover this has happened, contact the NSW Planning Portal about the registration and deal with the tenancy breach separately.
What if I agreed verbally or by text message?
A verbal or informal agreement creates uncertainty. The Act requires written consent, and an informal exchange may not establish the specific terms needed to protect you — maximum guest numbers, inspection rights, insurance obligations, liability for damage, STRA compliance and termination conditions. If you are open to the arrangement, document it properly in a lease variation prepared by a solicitor or licensed property manager. NSW Fair Trading has guidance on what tenancy agreements must contain.[2]
Does this apply in a strata building?
Yes, and strata adds another layer. A strata scheme may have by-laws that restrict or prohibit short-term letting of lots, regardless of what the tenancy agreement says. The by-law position has to be checked separately against your scheme's registered by-laws. A tenant breaching a by-law can expose both you and them to action by the owners corporation. The strata manager is the right first contact for the by-law question.
If I want to allow short-term letting, should I do it myself rather than through a tenant?
Most owners who want to participate in the short-stay market find that operating directly — or through a professional manager — gives them more control over guest selection, pricing, insurance, compliance and condition of the property than a rental-arbitrage arrangement does. If you are weighing up the options, the HomeHost earnings calculator lets you enter your suburb, number of bedrooms and property type to get a sense of potential short-stay income in Sydney. It does not ask for your street address. You can also read more about what full short-term rental management in Sydney involves before deciding which path suits you.
What should I ask a property manager about compliance and licensing?
Any company collecting guest money and arranging stays on your behalf may need a licence under the Property and Stock Agents Act 2002 (NSW). Ask for the licence number and class, the name of the licensee in charge, and whether guest funds are held in an audited trust account or in the company's operating account. A licensed NSW real estate agency is required by law to hold client money in a trust account that is audited annually as a condition of the licence. That is a meaningful consumer protection that is worth verifying before you sign a management agreement.
If you have questions about your specific situation, or you would like to understand your options as a Sydney owner, get in touch with the team at HomeHost — we are happy to talk through the detail without any obligation.
