From Kiama to Merimbula, the NSW South Coast is one of the most popular places in the state for holiday homes and short-stay rentals. We're based in Batemans Bay, and we're asked about holiday home lending all the time.
Here's what you need to know.
Holiday home, investment or both?
How you'll use the property affects your loan:
- Purely personal holiday home: assessed like a second owner-occupied property, but often priced as an investment loan. No rental income counted.
- Long-term rental: a standard investment loan.
- Short-stay rental (Airbnb, Stayz): an investment loan, but lenders differ on how they treat the income.
- Mixed use: you use it some weekends and rent it out the rest of the year.
How lenders treat short-stay income
This is where lenders vary most:
- Some lenders ignore short-stay income and use a long-term rental appraisal instead.
- Some accept short-stay income if you can show a history, such as 12 months of booking platform statements or tax returns.
- Some accept projected income from a property manager's appraisal, usually shaded heavily.
Short-stay income can be higher but is seasonal. Lenders take a cautious view.
Property types to watch
- Standard houses and units: usually fine
- Properties in holiday resorts or managed letting pools: some lenders restrict lending, especially if the unit is small or under a management agreement
- Serviced apartments: limited lender options and lower LVRs
- Large rural blocks: may need rural lending policy
NSW short-term rental rules
NSW has a state-wide framework for short-term rental accommodation:
- Properties must be registered on the NSW short-term rental accommodation register
- A fire safety standard applies
- Some areas have day caps for non-hosted stays (for example, 180 days a year in Greater Sydney). Some councils have different limits
- Strata schemes can sometimes restrict short-term letting
Check the current rules for your council before you buy. They change, and they affect income.
Insurance
Coastal and bushland properties on the South Coast can face higher insurance premiums due to bushfire and flood risk. Short-stay rentals need appropriate cover. Get quotes before you buy, because lenders require building insurance.
Tax considerations
If you use the property yourself for part of the year, deductions are usually apportioned based on the time it's genuinely available for rent. The ATO looks closely at holiday homes. From 1 July 2027, negative gearing changes also apply to established properties bought after 12 May 2026.
Frequently asked questions
Can I use a holiday home's rent to help me borrow?
Often yes, but lenders may only count long-term rental income or a shaded portion of short-stay income.
Is a holiday home an owner-occupied loan?
Usually not, since it's not your main residence. Most lenders price it as investment or "second home" lending.
Can I buy a holiday home with my super?
Not with SMSF borrowing. Since 10 August 2026, an SMSF can't use a new limited recourse borrowing arrangement to buy residential property, and an SMSF's property can never be used by you or your family anyway.
Looking at a holiday home on the South Coast? Call Finfident on 02 6416 2142, or Call, Text or WhatsApp 0424 545 654. We're local, and we know which lenders understand coastal and short-stay properties.
Want to know if this applies to you?
Talk it through with a Finfident broker. It's free and there's no obligation.
