Adding a granny flat to your Perth property opens up exciting possibilities – from extra space for family to generating rental income. But if you’re thinking about listing it on Airbnb, there are some important rules you need to understand first.
The good news? Yes, you can use your granny flat as an Airbnb in Perth. The less-simple news? There are regulations around registration, planning approval, and taxes that you’ll want to get right from the start.
The Important Stuff
- Yes, you can rent your Perth granny flat on Airbnb, but all short-term rentals must be registered with the WA STRA Register (mandatory from 1 January 2025)
- If you live on the property (hosted), there’s no limit on the number of nights you can rent
- If you don’t live on the property (unhosted) in the Perth metro area, you’ll need council approval if renting more than 90 nights per year
- You’ll need to declare rental income on your tax return, though GST typically doesn’t apply
- Proper safety measures (smoke alarms, pool fencing if applicable) are required
Understanding Hosted vs Unhosted Rentals
This distinction matters more than you might think. According to the WA Planning Commission, a hosted rental means you live in the main house whilst renting out your granny flat, or you live in the granny flat whilst renting the main house. An unhosted rental means guests have the entire property to themselves, and you don’t live on-site.
If you’re living on the property, things are simpler. Hosted arrangements are exempt from development approval requirements, and there’s no cap on how many nights per year you can rent. This makes it an ideal setup for Perth homeowners who want to maximise their granny flat designs whilst maintaining their own residence.
The 90-Night Rule Explained
Here’s where it gets a bit more detailed for unhosted rentals. If you’re in the Perth metropolitan area and want to rent your granny flat as an Airbnb for more than 90 nights per year (non-consecutive) without living on the property, you’ll need development approval from your local council.
This 90-night exemption was introduced to allow property owners to rent their primary residence occasionally (such as when on holiday) without needing formal approval. But if you’re planning to run your granny flat as a regular Airbnb business, you’ll need to check with your local council about their specific requirements.
Regional areas outside Perth metro have different rules, so always confirm with your local government first.
Registration is Mandatory
Since 1 January 2025, every short-term rental in Western Australia must be registered on the STRA Register. This isn’t optional – it’s a legal requirement.
You’ll receive a registration number that must be displayed on all your listings (including Airbnb). The annual registration fee is $250. The register helps government and local communities understand how many short-term rentals operate across WA and where they’re located.
Not registering can result in fines up to $20,000 for individuals (higher for corporations), and booking platforms are required to verify registration numbers. It’s worth getting this sorted before you list.
Tax Considerations You Can’t Ignore
Renting your granny flat on Airbnb creates tax obligations. All rental income must be declared on your tax return and is taxed at your marginal tax rate. But here’s some good news: residential rental income (which includes Airbnb) is typically exempt from GST.
You can claim tax deductions for expenses directly related to running your Airbnb, including:
- Cleaning and maintenance
- Utilities (proportional to rental use)
- Mortgage interest (proportional)
- Insurance
- Furniture and appliance depreciation
- Property management fees
However, there are some important catch-22s. If you use your granny flat to generate income, it may affect your main residence capital gains tax exemption when you eventually sell your property. The portion of your property used for income generation could be subject to CGT.
Additionally, renting out your granny flat – even for one night – could trigger land tax obligations in that quarter, depending on your property value. These are complex areas where professional tax advice is invaluable.
What About Rental Income?
Perth’s tight rental market means well-located granny flats can command attractive rents. Traditional long-term rentals typically range from $400 to $600+ per week, depending on location, size, and finish quality. Airbnb can potentially generate higher returns, though with more hands-on management required.
Consider your goals carefully. Short-term rentals on Airbnb offer flexibility and potentially higher income, but require more effort – furnishing, frequent cleaning, guest communication, and managing bookings. Long-term rentals provide steady, predictable income with less day-to-day involvement.
Before you decide, it’s worth checking whether your granny flat meets current council approval rules and understanding any hidden ownership costs you might face.
Getting Your Granny Flat Guest-Ready
If you’re moving forward with Airbnb, your granny flat needs to meet specific safety requirements. At minimum, you’ll need functioning smoke alarms (mains-powered where required) and RCD safety switches. If you have a pool or spa, it must comply with WA fencing requirements.
Beyond legal requirements, successful Airbnb listings typically include:
- Fully furnished and equipped living space
- Separate entrance from the main house
- Modern kitchen appliances
- Quality bathroom amenities
- Comfortable furnishings
- Wi-Fi connection
- Air conditioning
The more thought you put into the design and amenities, the better reviews you’ll receive – and the more you can charge per night.
Making the Right Decision for Your Property
Deciding whether to Airbnb your Perth granny flat depends on your circumstances, goals, and how much time you can invest in property management. If you’re considering building a new granny flat with rental income in mind, proper planning from the start makes everything easier.
Phoenix Patios specialises in designing and building quality granny flats that meet all Perth regulations whilst maximising rental appeal. We can also help with patio designs that enhance your entire outdoor living area, making your property even more attractive to potential guests or tenants.
Whether you’re ready to start building or just exploring your options, understanding these rules now will save you headaches later. For more detailed information on maximising your granny flat investment, check out our comprehensive rental income guide.