Don't forget to update your insurance if you are letting out your holiday home or flat
DURBAN - The global short-term renting boom means that more people than ever are earning money by letting out spare accommodation.
But there are risks involved, and property owners would do well to consider these before going ahead.
If you have a holiday home or city apartment, you have the potential to rent it out to earn a bit of extra income. According to Airbnb’s 2018 report, hosts in South Africa have earned over $260 million, supporting over 22000 jobs.
Renting out your home over the holiday is a time-honoured way to boost your income and, in the past, this would normally be on a long-lease basis. However, with internet sites such as Airbnb, Booking.com and LekkeSlaap, it has never been easier to find holiday visitors for short-term rentals.
"While the extra money in your bank account every month is a definite plus, it’s important to consider that things can go wrong and that you should have insurance to protect you financially from any eventuality," Vera Nagtegaal, executive head of online comparison website Hippo.co.za.
There are at least three types of risks that you need to consider insuring against if you are letting a property in the short-term. The first is your liability for your lessee – if something happens to them on your property, you would potentially need to cover medical costs. The second is damage to your property by the tenant. And the third is theft of your property, either by the tenant or by another party, who perhaps gained entry because, for example, the visitor didn’t set the alarm properly.
She explained that different insurers may exclude certain risks, so it’s important to inform your insurer that you intend letting out a property. Also, discuss what risks are covered and whether you can extend your cover.
As the largest short-term letting platform, Airbnb has a $1 million Host Protection Insurance in place automatically with every instance of letting out your property. This will cover you against personal liability and damage to your property caused by the tenant.
"You are also not limited to Airbnb’s platform as there are many other accommodation bookings sites you could list with. If you are using a different website to let out your property, carefully read the terms and conditions to find out what kind of cover they offer you," said Nagtegaal.
In addition to insurance concerns, you should make sure that you have adequate security measures in place – as much for the protection of your property as for the safety of the visitor. If the visitor is sharing your property, be sure to educate them properly in terms of safety precautions. Burglar bars, electric fences, garden beams and alarms are all useful security features.
"Safety features usually have the added bonus of bringing down your insurance premiums, so be sure to list them with your insurer too," said Nagtegaal.
"As with any other source of income, there are risks involved in letting out a property. But don’t let this deter you from going down this path – you just need to be prepared so that you don’t find yourself out of pocket instead of banking the extra cash," concluded Nagtegaal.
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