Why does Sir Toby believe that he can act as he wishes in Olivia's house in Twelfth Night?

There are two reasons why Sir Toby feels he can act as he wishes
in Olivia's house. First of all, he is using his relationship to Olivia to get away with his bad
behaviour. As Maria makes clear in Act I scene 3, the two characters are cousins, and thus Sir
Toby is exploiting that relationship to get away with his partying and
carousing.

Secondly, it is important to realise that Sir Toby in
this excellent play symbolises the spirit of Twelfth Night, which was a festival celebrated on
6th January. This festival represented the last big party before the Christmas season was over,
the decorations we taken down and everybody returned to their normal, monotonous routines in dark
January. Twelfth Night was all about excess and chaos, and Sir Toby is definitely the character
in this play that represents chaos and excess. Thus it is in his nature to always behave as he
wills, to go to the very limits of acceptable behaviour, and then to consciously cross that line,
so that the party spirit he represents remains unchallenged.