What You Need to Know about Renting Your Garage in Australia

Have you ever looked at your garage and thought, “That space could be working harder for me”? You’re not alone. Across Melbourne, Sydney, Brisbane and beyond, homeowners are turning underused garages into steady streams of income. With parking spaces harder to find than a good park on Chapel Street on a Saturday night, and self-storage facilities charging premium rates, the humble suburban garage has become a hot commodity.

I’ve seen it firsthand. Over the past two decades in the garage industry, I’ve lost count of how many homeowners have asked me about maximising their space. Some start with the idea of installing shelves or cabinets, and end up asking, “Could I rent this out instead?” The short answer is yes — but like most things in property, the devil’s in the detail.

Renting out a garage in Australia isn’t just about sweeping the floor and handing over a key. It’s about understanding the local regulations, protecting yourself with the right paperwork, and setting the space up so it appeals to renters. Do it right, and you could pocket thousands of dollars a year without lifting a finger once it’s set up. Do it wrong, and you could land in hot water with your insurer, your local council, or even the tax office.

This guide walks you through everything you need to know: from legal considerations and setting rent, to insurance, tax implications and tips to attract reliable tenants. I’ll also share insights from real Australian homeowners who’ve rented their garages successfully — and a few cautionary tales from those who rushed in without checking the fine print.

Why Renting Your Garage In Australia Can Be A Smart Move

Turning Empty Spaces Into Income

For many Aussies, the garage is little more than a dumping ground — surfboards gathering dust, a lawnmower that barely starts, or half-finished DIY projects waiting for “one day.” But in today’s housing and parking climate, that unused space can be worth serious money.

In Melbourne, I worked with a family in Hawthorn who had a double garage but only ever used one side. After clearing out years of boxes and kids’ bikes, they listed the spare bay for rent on a platform like Spacer. Within a week, they had a tenant — a young professional who needed secure parking close to the train line. That single decision brought them an extra $400 a month, money they later put towards their kids’ school fees.

It’s not just about parking. In parts of Brisbane, I’ve seen homeowners renting garages as storage units. Think camping gear, furniture during renovations, or even wine collections. Storage demand is so high that people will pay $100 to $500 a month for a dry, secure garage.

As the saying goes, “One person’s clutter is another person’s opportunity.”

Parking And Storage Demand Across Australian Cities

The appetite for garage rentals is being driven by a few key realities in our cities:

• Tight parking supply: Sydney’s inner suburbs are notorious for parking shortages. Finding an on-street spot near places like Surry Hills or Paddington can feel like winning the lottery. A private garage spot in these areas can be rented for $500+ per month.
• Rising storage costs: Self-storage facilities in Melbourne’s inner north charge anywhere from $250 to $600 per month. A homeowner offering their garage at even $200 looks like a bargain.
• Urban growth: Cities like Brisbane are swelling with new residents. With apartment living on the rise, residents simply don’t have room for bikes, kayaks, or even seasonal clothes. A local garage solves the problem close to home.

Here’s a quick snapshot:

City	Average Monthly Garage Rent (Parking)	Storage Garage Range
Sydney	$450 – $700	$200 – $500
Melbourne	$300 – $500	$150 – $400
Brisbane	$250 – $400	$120 – $350

(Source: market listings from Spacer, Parkhound and Parking Made Easy, 2022–2023 data)

Real-Life Examples Of Profitable Garage Rentals

Let me share a couple of scenarios I’ve come across over the years:

• Case 1 – Premium Event Parking in Melbourne: A homeowner near the MCG rents their garage during AFL season. They charge $40 per day when matches are on, turning a simple lock-up into a seasonal earner. Over a season, they clear close to $2,000 just from weekend games.
• Case 2 – Short-Term Storage in Sydney: A retiree in Bondi rents out half of his garage to backpackers needing a safe place for their surfboards and luggage while they travel. He charges $250 a month and often books six months in advance.
• Case 3 – Family Storage in Brisbane: During a renovation, a family from New Farm needed somewhere to store their furniture. They rented a neighbour’s garage for three months at $350 per month — cheaper than commercial storage and much closer to home.

Each of these examples shows the flexibility: garages can serve as parking, storage, or even short-term seasonal opportunities. With the right setup, the income is consistent, low-effort, and in demand.

Garage Rental Laws And Regulations Every Australian Needs To Know

Australian Garage Rental Laws Explained In Simple Terms

Before you hand over the keys, you need to know what you’re legally allowed to do. In Australia, renting out a garage is usually treated as a commercial arrangement, not a residential tenancy. That means you’re not bound by the same laws that govern renting a flat or house, but you still need a clear agreement in place.

Here’s the catch: each state has its own rules, and local councils can layer on extra requirements. I once worked with a homeowner in Sydney’s Inner West who assumed he could rent his garage without fuss, only to discover his local council required a development consent for “non-residential leasing.” It cost him six weeks and a few hundred dollars before he could legally proceed.

When The Residential Tenancies Act Applies (And When It Doesn’t)

The Residential Tenancies Act (RTA) in most states doesn’t apply to garages, car spaces, or storage units. These are classed as non-habitable structures. In plain English: if you’re renting out a garage as a storage space or parking spot, it won’t fall under the RTA.

But — and this is a big one — if you convert that garage into a bedroom or granny flat without council approval, you’re walking on thin ice. Not only could you face fines, but your insurance might not cover you if something goes wrong.

A couple in Melbourne’s west learned this the hard way. They converted their garage into a student rental, but it didn’t meet the minimum ceiling height of 2.4 metres for habitable spaces. Council inspectors shut it down within months, and they had to pay for costly rectifications.

Strata Schemes, By-Laws, And Local Council Restrictions

If you live in an apartment complex or townhouse under a strata scheme, you’ll need to double-check the by-laws. Some schemes allow you to rent out your car space or garage to outsiders, while others restrict access to residents only.

In one South Yarra apartment block I consulted on, a resident rented their car space to a friend. The strata committee cracked down after complaints about non-residents entering the building. The result? The tenant had to terminate the agreement early and refund the renter.

Councils can also impose restrictions. For example:

• Some require a permit for short-term rentals.
• Others restrict garages to being used for vehicles only, not for storage.
• Setback rules may also apply if you’re modifying access or entrances.

Always ring your local council planning office before listing your garage. A ten-minute call can save you weeks of headaches later.

Why You Can’t Rent Out A Garage As A Bedroom In Australia

A garage is legally classified as a Class 10a structure under the Building Code of Australia. That means it’s suitable for parking or storage — not living.

Here are the main reasons you can’t legally rent it as a bedroom:

• Ceiling height: Habitable rooms need 2.4m, garages only require 2.1m.
• Waterproofing: Garages often lack proper moisture barriers.
• Ventilation: Windows and airflow are usually inadequate.
• Safety: No smoke alarms, insulation, or termite treatments in most garages.

It’s tempting to think you can “wing it,” especially in expensive rental markets like Sydney. But councils are cracking down hard. Renting a garage as a bedroom isn’t just illegal — it’s unsafe.

Converting Your Garage Into A Legal Living Space — Costs And Compliance

Now, if you’re serious about turning your garage into a granny flat or rental unit, you can do it the right way. That involves reclassification from Class 10a to Class 1a, which means full compliance with residential building standards.

What’s involved?

• Development approval from your local council.
• Upgrading flooring, insulation, and waterproofing.
• Installing electrical wiring, internet points, and plumbing, if needed.
• Adding smoke alarms and meeting fire safety standards.

Cost estimate: anywhere from $20,000 to $50,000 AUD, depending on size and scope.

It’s not a weekend DIY project, but if done right, it can add value to your home and open the door to long-term rental income.

How To Draft A Legally Compliant Garage Rental Agreement In Australia

Key Clauses To Include In A Lease Agreement For Garage Australia

A written agreement is essential — it avoids misunderstandings and keeps both parties protected. Here are the must-have clauses:

Essential Clauses Checklist

1. Parties Involved – Full legal names and contact details.
2. Purpose of Rental – Parking, storage, or both.
3. Access Terms – Hours of access, entry method (key, fob, code).
4. Rent Amount and Frequency – Weekly, fortnightly, or monthly payments.
5. Bond/Security Deposit – Amount, conditions, and lodgement process.
6. Restrictions – No hazardous materials, no commercial vehicles, no overnight stays.
7. Liability – Define who’s responsible for damage or theft.
8. Termination Conditions – Notice period required to end the lease.

I once helped a family in Brunswick include a “no repairs” clause in their garage rental. It prevented the tenant from running a motorbike workshop, which could have created both noise and insurance issues.

Security Deposit And Bond Rules You Must Follow

Bonds vary by state, and because garage rentals often fall outside residential tenancy laws, it’s vital to be precise.

Bond Practices by State

State/Territory	Typical Bond Limit	Lodgement Rules	Notes
Victoria	4 weeks’ rent (if included in residential lease)	Private or Consumer Affairs Vic (if part of lease)	A standalone garage is often handled privately
New South Wales	4 weeks’ rent	Rental Bond Board	Usually applies only if linked to residential tenancy
Queensland	4 weeks’ rent	Lodged with RTA	RTA accepts garage/car park bonds
Western Australia	4 weeks’ rent (if rent < $1,200/week)	Bond Administrator	Bond replacement products are illegal
South Australia	Up to 4 weeks’ rent	Consumer and Business Services	Same rules as residential if included in the lease

Best Practice for Bonds:

1. Provide a signed receipt when receiving a bond.
2. Document the garage condition with dated photos.
3. Return bond promptly if obligations are met.

Handling Disputes And Setting Termination Terms

Disputes are rare if expectations are clear — but always prepare for the “what ifs.”

Three-Step Dispute Resolution Framework

1. Self-Resolution: Speak directly to the tenant.
2. Mediation: Use a third party (e.g., RTA in QLD offers free mediation).
3. Termination: The Agreement should allow legal termination if disputes can’t be resolved or if illegal use occurs.

A landlord in Sydney once called me after a renter started storing paint thinners in his garage — a serious fire hazard. Because he had an “immediate termination clause,” he was able to end the agreement the next day without risk.

Free Templates Vs. Professional Legal Advice

Free templates are handy but often too generic. They’re fine for simple parking arrangements, but if your situation involves strata schemes, joint ownership, or shared garages, investing in legal advice is smart.

Comparison Table: Templates vs Legal Advice

Option	Cost Range	Best For	Limitations
Free Online Templates	$0–$50	Simple, short-term rentals	Generic wording may not cover local laws
Platform Agreements (Spacer, Parkhound)	Included in platform fees	Standard parking/storage agreements	Less flexible, the platform takes a commission
Solicitor-Drafted Agreement	$300–$600	Complex arrangements, strata, long-term leases	Higher upfront cost

I’ve seen neighbours fight over shared garages where no agreement was in place. In one South Yarra case, a simple $400 legal contract would have prevented months of disputes and legal letters.

Financial Factors In Renting Out A Garage

Setting Garage Rent In Australia — What’s Competitive?

Pricing your garage right is a balancing act. Too high and you’ll scare tenants off, too low and you’re leaving money on the table.

3 Steps to Set Your Rent Fairly:

1. Check Local Listings: Look at platforms like Spacer, Parkhound, and Parking Made Easy. Compare prices in your suburb.
2. Factor in Amenities: Security lighting, roller doors, CCTV, or proximity to train stations can justify higher rent.
3. Test the Market: Start slightly higher, and if enquiries are slow, adjust down after a few weeks.

Garage Rental Pricing Snapshot (2023):

City	Parking Rent (per month)	Storage Rent (per month)
Sydney	$450 – $700	$200 – $500
Melbourne	$300 – $500	$150 – $400
Brisbane	$250 – $400	$120 – $350

A client in Melbourne’s Docklands once listed their garage for $600 a month — too ambitious. After three months without interest, they dropped it to $420 and had it leased within a week.

Tax Implications Of Garage Rental In Australia (Income, Deductions, Cgt)

The Australian Taxation Office (ATO) sees garage rental income as taxable. Ignore it, and you’re risking penalties.

What You Must Do:

1. Declare Income: Report all rent under “Other Income” on your tax return.
2. Claim Deductions: You can usually deduct expenses such as cleaning, repairs, insurance, and platform fees.
3. Track Records: Keep digital copies of payments and receipts — the ATO may request them.

Capital Gains Tax (CGT) Considerations:

• If your garage is part of your primary residence, renting it out may reduce your CGT exemption when you sell.
• Example: If the garage is 10% of your property’s floor space, and you rent it for five years, that 10% of capital gain could be taxable when you sell.

A homeowner in Camberwell rented their garage for eight years, earning a steady income. But when they sold the property, their accountant calculated $18,000 in CGT that they hadn’t planned for.

Insurance Considerations For Landlords And Tenants

Standard home insurance usually won’t cover commercial use of a garage. This is where many owners unknowingly leave themselves exposed.

Insurance Checklist for Garage Rentals:

1. Consult Your Insurer: Tell them you plan to rent the garage — hiding it could void your cover.
2. Landlord Insurance: Protects against damage (fire, flood, theft, malicious acts) and legal liability (e.g., tenant injury on site).
3. Rent Default Cover: Some policies cover missed rent, though often at extra cost.
4. Tenant Insurance: Remind renters that their belongings are not covered by your policy. They need contents insurance that extends to off-site storage.

Insurance Type	Covers	Notes
Home Insurance	Your house, garage	May be voided if used commercially
Landlord Insurance	Building, garage, liability up to $20M	Strongly recommended
Tenant Insurance	Renter’s belongings	Must be arranged by the tenant

One homeowner in Brisbane rented a garage for storage without updating insurance. When a storm caused flooding, the renter’s items were damaged. The landlord ended up paying out of pocket because their policy was voided.

Security Deposits And Protecting Against Rent Default

A bond provides a financial buffer if tenants cause damage or skip payments.

Best Practice for Security Deposits:

1. Charge up to 4 weeks’ rent as a bond.
2. Lodge it with the relevant authority if required in your state.
3. Always provide a receipt.
4. Return it promptly if no issues arise.

To reduce the risk of rent default:

• Use automated payment systems (e.g., direct debit).
• Consider platforms like Spacer that handle payments securely.
• Keep detailed records of all transactions.

A couple I worked with in Fitzroy had a renter fall behind two months’ rent. Because they had only relied on cash payments, they couldn’t prove the shortfall in mediation. Since then, they have only used digital transfers.

Preparing Your Garage For Renters

Cleaning And Maintenance Before Renting

First impressions matter. A messy garage full of cobwebs, oil stains, and broken shelving won’t inspire confidence. Tenants are more likely to pay a premium for a space that feels clean, safe, and well-maintained.

Garage Prep Checklist:

1. Declutter: Remove old boxes, tools, and anything personal.
2. Repair: Fix cracks, leaks, and broken doors.
3. Clean: Sweep floors, pressure wash concrete, and dust shelving.
4. Ventilate: Ensure airflow to prevent mould and dampness.
5. Pest Control: Treat for rodents or termites if necessary.

A homeowner in Carlton North cleared out a garage that had been untouched for years. After a simple pressure wash and repainting the roller door, they increased their listing price by $50 a month compared to other local options.

Essential Security Upgrades For Peace Of Mind

Tenants renting garage space want to know that their car or belongings are safe. In fact, garages with security features consistently rent faster and for higher rates.

Recommended Upgrades:

• Lighting: Install motion-sensor LED lights outside.
• Locks: Replace old padlocks with deadbolts or electronic locks.
• CCTV Cameras: Even a basic Wi-Fi camera adds peace of mind.
• Keyless Entry: Digital codes or fobs prevent lost keys.

Cost vs Value Table:

Upgrade	Approx. Cost	Impact on Rentability
Motion-Sensor Lighting	$80 – $200	High tenants value safety
Heavy-Duty Roller Lock	$120 – $250	High – stops forced entry
Wi-Fi Security Camera	$150 – $400	Medium – builds trust
Keyless Entry System	$200 – $500	High – modern convenience

In South Brisbane, I saw a landlord install a $180 security light and immediately boost enquiries on their listing. The tenant mentioned the light was the deciding factor because the street was otherwise dark.

Making Access Easy — Keys, Codes, And Parking Restrictions

Smooth access is non-negotiable. Tenants want to know they won’t be locked out or inconvenienced.

Access Considerations:

1. Keys & Fobs: Always provide a spare in case of loss.
2. Digital Codes: Keep records of code changes when tenants leave.
3. Parking Policies: If your property has limited guest parking, set boundaries in writing.
4. Shared Driveways: Clarify turning space and access rights with neighbours.

I once worked with a family in Glen Waverley who rented a garage at the back of their property. The renter’s large ute kept blocking access to the neighbour’s driveway. A clear clause in the agreement about maximum vehicle size would have avoided weeks of tension.

Managing Garage Rentals Like A Pro

Digital Payment Systems And Record Keeping

Gone are the days of chasing envelopes of cash. If you want a stress-free arrangement, set up digital payments from the start.

Why Digital Works Best:

1. Proof of Payment: You’ll always have a record in case of disputes.
2. Consistency: Automatic transfers reduce late payments.
3. Tax Time: Clear transaction history makes it easier to declare income and claim deductions.

Payment Options in Australia:

• Direct Bank Transfer: No fees, but less protection.
• PayPal or Stripe: Adds security, but charges 2–3% fees.
• Platform Payments (Spacer, Parkhound): Automated, secure, but the platform takes a 10–20% cut.

A homeowner I know in Brunswick switched from cash to direct debit after a tenant went “missing” owing three weeks’ rent. With automatic payments, that problem vanished.

Communication And Routine Inspections

Clear communication builds trust and avoids misunderstandings.

Best Practices:

1. Set Boundaries Early: Let tenants know how you prefer to be contacted — phone, email, or platform messaging.
2. Be Responsive: Reply to queries within 24 hours. Small issues left unattended can snowball.
3. Routine Inspections: Every 3–6 months, check the garage to ensure it’s being used properly (with fair notice to the tenant).

One landlord in South Yarra ignored a tenant’s texts about a faulty roller door. Weeks later, the tenant’s car was scratched when the door jammed. Because the landlord hadn’t acted, they ended up covering the repair costs.

Ensuring The Space Is Used According To The Agreement

This is where a solid contract pays off. If the lease says “storage of household items only,” and you find the tenant running a small motorbike repair shop, you’re entitled to act.

Red Flags to Watch For:

• Flammable materials stored (paint thinners, gas bottles).
• Commercial use (business stock, vehicle repairs).
• Subletting the garage without permission.

How to Respond:

1. Document the issue with photos.
2. Refer to the specific contract clause being breached.
3. Send a written notice (email or letter) requesting correction.
4. If unresolved, move to mediation or termination.

A case I recall in Brisbane involved a tenant storing old mattresses in a garage. Neighbours complained about the fire risk. The landlord relied on the “no hazardous items” clause in the contract to end the lease quickly and safely.

Turning your garage into an income stream isn’t rocket science — but it does require a bit of forethought. From my experience, the owners who succeed are the ones who treat it like a small business: they clean and secure the space, write up a proper agreement, and keep their paperwork in order. Do that, and you’ll attract reliable tenants and avoid sleepless nights.

I’ve seen garages earn as little as $120 a month in the suburbs, and as much as $700 a month in inner Sydney. Add in short-term event rentals, and the numbers can surprise you. The beauty is that once your system is in place, the garage earns for you while you focus on the rest of your life.

If you’re thinking of testing the waters, start small: list your garage on a platform, price it competitively, and see what the response is like. You might find, as many of our clients have, that the garage you once ignored becomes one of the most valuable parts of your property.