Renting out a room can be a strategic move for first-time homeowners looking to ease financial pressures while making the most of their property. With rising living costs and evolving government policies, many new homeowners are exploring this option to offset mortgage payments, access tax benefits, and even contribute to local housing demand. However, before taking this step, it’s important to understand the financial, legal, and lifestyle implications. Here’s a closer look at why more first-time buyers are considering this approach and what it could mean for homeowners in Queensland.
Why First-Time Homeowners Are Renting Out a Room
Renting out a room in your first home can provide much-needed financial relief, particularly in today’s challenging housing market. The following is why many first-time homeowners are considering it.
Offset Mortgage Payments
Additional rental income can help offset your monthly mortgage repayments, giving you breathing room in your budget.
Leverage Queensland’s Stamp Duty Concessions
Newly-minted homeowners in Queensland are offered stamp duty discounts. Renting out a portion of your property, while maintaining it as your primary residence, could allow you to maximise the value of these concessions.
Tax Benefits
You might be eligible for certain tax deductions on property expenses, such as utilities and maintenance, proportional to the rented area.
Ease into Property Investment
Renting out a room can help you gain experience as a landlord without the complexities of managing a standalone rental property.
Support Local Housing Needs
With demand for affordable housing high in areas like Brisbane and regional Queensland, renting out a spare room could also contribute to easing housing pressures.
Queensland’s Stamp Duty Concessions for First-Time Buyers
Stamp duty, a tax levied on property purchases, can add significant costs for first-time buyers. In Queensland, however, the government provides generous concessions to make homeownership more accessible.
Under the First Home Concession enacted on 9 June 2024, first-time buyers are exempt from paying stamp duty on properties valued up to $800k with their corresponding discount rates. They range from $17,350 for properties worth no more than $709,999.99 to $1,735 for properties in the $790k-$799,999.99 bracket.
Renting out a room does not typically void this concession, provided you live in the property as your primary residence. To keep the concessions, you could only rent out a room at least one year after moving into the property.
Stamp Duty Concession Secured for Renting Out Rooms
Liberal National Party (LNP)-Queensland leader David Crisafulli pledged in 2024’s state election campaign that an LNP-majority administration will let first-time homeowners put out a room to let and not lose the stamp duty discount.
However, in late November 2024, ABC Radio Queensland’s Jack Mackay reported that the Labor government enacted the LNP’s pledge into the existing policy in September, weeks before the polls that saw the LNP prevail and Crisafulli become the new state premier. Under the measure, first-time homeowners who landed a new tenant between 10 September 2024 and 30 June 2025 will not be penalised.
State Treasurer David Janetzki said the current government will do everything in its power to ensure the measure is enshrined under law, but castigated Labor for “copying” the idea. Aspley MP Bart Mellish, who held two state cabinet portfolios in the previous administration, insisted the government had been looking for improvements to better Queenslanders’ housing predicament.
Considerations Before Renting Out a Room
While the benefits are enticing, there are critical factors to weigh before deciding to rent out a room in your first home.
Legal and Regulatory Obligations
Ensure compliance with local council regulations for renting out part of your property. Familiarise yourself with your state/territorial tenancy laws, including the rights and responsibilities of both landlords and tenants. Queensland, though, may be a different fish – tenants are considered boarders and lodgers under common law if the homeowner lives on the property, therefore not covered by the Residential Tenancies and Rooming Accommodation Act 2008.
Tax Implications
Renting out a room could affect your eligibility for the full capital gains tax (CGT) exemption when selling your home. Make sure you have kept detailed records of rental income and related expenses to simplify tax reporting.
Privacy Concerns
Sharing your home with a tenant may impact your lifestyle and require clear boundaries and expectations to maintain harmony.
Insurance Coverage
Inform your home insurance provider if you plan to rent out a room, as this could affect your coverage.
Market Demand and Rental Rates
Research rental demand in your area and set a competitive rate. Popular areas like Brisbane and Gold Coast may allow you to charge higher rents, but competition could also be steeper.
Renting Out a Room in Queensland
Queensland remains one of Australia’s most desirable locations for homebuyers, particularly in cities like Brisbane, which offer a mix of affordability, lifestyle, and growth potential.
Househunting in Queensland has surged in recent years, with many first-time buyers drawn to government incentives like stamp duty discounts.
However, rising interest rates and living costs mean new homeowners must find creative ways to make ends meet. Renting out a room offers a practical solution, especially in high-demand areas.
In analysing LNP’s pledge, the team at property portal Domain noted in July 2024 that a first-time homeowner might be able to earn more money to help in mortgage repayments. They based the conclusion on analysing a three-bedroom house in Greater Brisbane, where median purchase prices are at $750k. If the homeowner bought the place on a 30-year-loan with a standard variable interest rate of 6.44 per cent and a 20 per cent deposit, their weekly mortgage repayment would be $943 – but what if they leased two rooms for $200 a week each room? Domain evaluators state that may help cover a good deal of the costs, considering three-room houses in Greater Brisbane have median rents at $595.
When Renting Out a Room Makes Sense
Here are some scenarios where renting out a room might make sense:
- You’re Struggling with Mortgage Payments – Rental income can provide crucial support in meeting your financial obligations.
- You’re Comfortable Sharing Your Space – If you’re open to cohabitation, renting out a room can be a low-effort way to generate extra income.
- You Want to Maximise Property Value – Having tenants can fund small improvements to your home, boosting its overall value.
However, it may not be the right fit if privacy is a top priority or if you’re unwilling to take on the responsibilities of being a landlord.
If you decide to rent out a room, here are some practical tips:
- Draft a Clear Rental Agreement – Outline terms, including rental amount, payment due dates, house rules, and notice periods.
- Screen Potential Tenants – Conduct background checks to ensure your tenant is reliable and trustworthy. For Queensland, the state government offers a tenancy database where landlords are required to submit details of their tenants.
- Maintain the Property – Address maintenance issues promptly to keep the living arrangement smooth and professional.
- Stay Informed About Policies – Keep an eye on changes in government policies or tax laws that might affect you.
Conclusion
Renting out a room in your first home can be a smart financial strategy, especially with the backing of Queensland’s stamp duty discounts. The bipartisan support for these concessions ensures stability, making it an option worth considering for househunting Australians, especially in Queensland. Whether you’re motivated by financial necessity or a desire to make the most of your investment, renting out a room is a practical way to turn your home into a stepping stone for greater financial freedom.
DISCLAIMER: This article is for informational purposes only and does not supersede established property investment advice. The data presented is based on the latest information available at the time of writing. 2 Ezi is not affiliated with the Queensland government and does not endorse or disparage housing-related policies.
