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It is against the law unfortunately. Has to be a separate house\unit to do it legally. Probably doesn't stop the tenant from sub letting it out though which sux. Don't, cause I notice you live in Victoria. I have another house in a different council all together and their rules are the same.

Just checked, can't rent it out separately. Still haven't decided on how to advertise though.

I've just purchased a 3 bedroom IP which has a decent size bungalow in the backyard(1 bedroom with toilet and shower). When marketing this property for rental, should I market it as 4 bedroom and bump up the rent by $10-20 per week or market it as a 3 bedder stating that it has a bungalow in...