21 Jan 2026We’ve got a spare bedroom in our home and are considering renting it out to a single person like a nurse, teacher or uni student who is looking for a place to live. But what does the law say on boarding or lodging in a family home?
Renting out spare bedroom a legal grey area
According to census data, there are an estimated 13 million spare bedrooms in Australia. Lodging in a family home could go a long way to helping solve the housing crisis and put a bit of money into the homeowner’s pocket.
Renting out a spare bedroom on a short stay platform such as Airbnb or Stayz requires creating an account, verifying your ID and banking information, and providing detailed information. That is not what we are talking about in this article.
Having someone pay to live in your spare bedroom is a bit of a legal grey area, and there are potential pitfalls homeowners and accommodation seekers need to take into account.
Laws covering shared accommodation
The law is quite detailed on shared rental arrangements. There are laws covering the obligations of tenants and landlords in rented accommodation. (Please see Sharing a residential rental property, NSW Fair Trading.)
If you are renting a property and want to rent out a spare room, then that is sub-letting, which is covered by tenancy law and requires permission of the owner.
The Boarding Houses Act 2012 sets out the law on boarding houses, not private arrangements like renting out your spare bedroom while you live in the rest of the house.
If you already own the home, there is a gap in the laws covering shared accommodation. Renting someone a spare bedroom in a house you own is excluded from the rules under the NSW Residential Tenancies Act 2010, which sets out the law when renting premises.
Whether the person renting the spare bedroom in your home is a boarder or lodger depends on what else is included in the arrangement. A boarder usually gets meals as part of the agreement, whereas a lodger does not. (Please see Boarders and lodgers, Tenants’ Union of NSW, February 2023.)
Protecting yourself legally if renting out a spare bedroom
It would be wise for a homeowner to have a legal agreement drawn up with any intended lodger to spell out what obligations each side has.
For instance, the lodger’s bedroom door needs a lock to ensure privacy. Is the kitchen shared? What are the bathroom rules? Is there a right to have visitors? Is there a bond? How often is the rent paid? Does the lodger pay a share of costs, such as internet and electricity?
Tenants and boarders have recourse to appeal a landlord’s actions through the NSW Civil and Administrative Tribunal (NCAT), but for a lodger in a private home there is no recourse to appeal a dispute, apart from going to the Local Court.
There is a need for a clearer regulatory framework for lodging, to encourage homeowners with spare bedrooms to offer them to people looking for accommodation, and so that that there are legal protections for both landlord and lodger.
Some private arrangements work very well, with both sides benefiting from the companionship and becoming good friends. There are home sharing and flatmate organisations which can vet applicants and support boarding arrangements.
Tax implications of renting out a room in your home
But be warned, the tax office will want to know if you receive income from boarders and lodgers. Best check to see how lodger income could affect your tax or pension.
On the other hand, there may be deductions you can claim, such as utilities and cleaning. (Please see Income and deductions for renting out your home, Australian Taxation Office, 20 August 2025.)
