This week I attended the Stayz conference for holiday rental owners. The conference covered a lot of informative topics and had some great speakers.
But when talking with some of the attendees during the breaks, I realised that there were 3 misunderstandings that a lot of the holiday rental owners had.
Don’t get me wrong, the rental owners are great at marketing and running their businesses – but they were missing some of the risks of operating a holiday rental property.
They had probably overlooked these because everything had gone well (so far) when renting out their holiday properties. And luckily these things are easily fixed. So here they are – 3 essential things every owner needs to know about how to manage a holiday rental property:
1. Have the right insurance
Your normal landlord or home and contents insurance is not enough – it doesn’t cover short term holiday rentals. And you know how insurance companies love to use any loophole to get out of paying! This one is a classic, don’t get caught.
Ensure your insurance is a ‘short term rental’ policy not a ‘landlord’ or ‘home and contents’ policy. Call your insurance company and ask them these questions:
- Is my property covered under my policy for short term (under 3 month) holiday rentals?
- Do I need a formal short term rental agreement with my guests?
- If I use a rental agent to manage my properties, and they sign the agreements with the tenants, am I covered?
At the conference, one of the ladies I was talking to (who had 3 holiday rental properties) took me up on these suggestions. She had her husband call their insurer and found out that in fact they had a ‘landlord policy’ which did not cover them or their properties for short term rental. She told me the next day and really appreciated that I’d told her to check.
There are only a few insurance companies in Australia that sell holiday rental or short term rental policies – so make sure you and your property are covered.
2. Have a signed Agreement with your guests
Legally, you have a ‘contract’ with your guests if you have agreed dates, the rental price and paid a deposit – even if everything has been done via email and electronically. However, what you don’t have is agreed Terms of the holiday rental. If anything unfortunate happens, you are very exposed if you can’t point to an agreed Term that the guest has breached.
So, for example, if they say 2 people are staying but in fact they bring another 4 of their friends to stay you can point to your agreement term. Or if the property is non-smoking and they smoke and you need to have the property professionally cleaned, etc. I think you can see how things might go wrong – and in some cases badly wrong.
You need to have a signed holiday rental agreement with your guests and you must give them the agreement prior to payment to ensure they can review and agree to it. If you don’t, they could argue that they did not see or agree to the Terms when they paid and can’t be bound by them. So send your guests your agreement when you ask for a deposit and get them to sign and return it to you.
In addition, did you realise that, depending on the wording of your agreement, you could be subject to the Residential Tenancy Act of your State or Territory? This is bad news. You’ve heard of all those eviction restrictions landlords have? Those are in the Residential legislation. You don’t want to be covered by those.
In Victoria, for example, just by using the term ‘tenant’ in your holiday rental agreement, you may be subject to the Residential Tenancy Act and end up with additional legal requirements that you did not foresee. So get a professionally written holiday rental agreement and use it with every guest.
3. Have ‘House Rules’ clearly posted
It’s a good idea to post your ‘House Rules’ in your holiday rental property. These are just everyday rules for living in your holiday home – things like taking out the garbage, noise, leaving keys behind, etc. It’s a good way to reinforce good behaviour or highlight potential issues during their stay.
Some of these things are inappropriate (or over-kill) to include in a signed rental agreement – but you still want your guests to be aware of them. Make sure the rules don’t contradict any of the terms in your rental agreement. And make sure to keep both the notice of House Rules and your rental agreement up-to-date.
A list of House Rules will further protect you and your property. Renters are subject to them, so make sure a list of them is given to your guests on arrival or the House Rules are posted prominently in your holiday rental property.
Stay tuned for more tips and tricks from Legal123 on how to manage your Holiday Rental property.