Ensure you have all your insurance aspects covered before you begin your holiday rental. Picture: Steven Ungermann/UnSplash
Global short-term renting is again on the up – and this means that more people are earning money by letting out spare accommodation.
According to Airbnb, the typical South African host earns just over R26 000 – equivalent to about one month’s additional pay for the average income earner – by renting their space on the platform.
The November 2022 Airbnb survey also revealed how the rising cost of living has seen South African families look for more affordable accommodation on the site when considering their holidays.
More people are also considering hosting visitors to make money to supplement their income.
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The survey notes the high cost of living is leading to a new wave of people considering hosting for the first time. In fact, new private rooms listings added to the platform in South Africa were up over 50% between Q3 2021 and Q3 2022.
Meanwhile, the hotel industry has also been slowly but steadily recovering globally since 2021; data shows this trend continuing into the festive season of 2022.
FNB says the hotel sector’s income is clawing its way back out of the lockdown dip, but is still under significant pressure, albeit getting nearer to full recovery.
John Loos, property sector strategist at FNB Commercial Property Finance says surges in fuel prices earlier this year, as well as in overall inflation (driven mainly by fuel and food prices), with rising interest rates and a slowing economy, have become a more recent source of financial pressure on business and consumers.
“This, in turn, may have constrained the pace of recovery in demand for tourism trips of both a holiday and business nature, albeit it not stopping the recovery entirely.
“I expect that ‘full recovery’ back to where real (inflation-adjusted) hotel income reaches 2019 levels, may only occur well-into 2023 at best.”
He says this December 2022 holiday season looks set to see improvement on December 2021, “but may still be below the December 2019 level of occupancy rate and income, given the recent economic constraints mentioned above”.
Estate agents – especially along Cape Town’s famed Atlantic seaboard, say they are seeing a boom of short-term rentals which some say are expected to reach, and possibly exceed, pre-Covid levels.
It’s the pent-up demand to travel after two years of being grounded because of Covid travel bans and fears, that could see the season being better than expected.
The State of Cape Town Central City Report 2021 – A year in review, published by the Cape Town Central City Improvement District (CCID), says this season will be strong and they are expecting a full recovery to 2019 levels by the end of 2024.
In KZN, the closure of beaches due to sewerage problems may dampen the strong holiday return.
For those wanting to rent out their home there is still time for the last-minute travellers to choose your property and for you to make some money. Estate agencies are still filling spots.
There are, however, risks involved, and property owners would do well to consider these before going ahead, say the experts.
Online comparison website Hippo.co.za says while the extra money in your bank account every month is a definite plus, it’s important to have insurance to protect you financially from any eventuality.
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.
1. Your liability for your lessee – if something happens to them on your property, you would potentially need to cover medical costs.
2. Damage to your property by the tenant.
3. 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.
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 $1m (17.3m) 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.
There are also many other accommodation bookings sites you could list with, just be sure to carefully read the terms and conditions to find out what kind of cover they offer you.
In addition to insurance concerns, you should make sure 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, says Hippo.co.za
Charnel Hattingh, head of group marketing and communications for Fidelity ADT says a staycation means you are visible and the home is not empty attracting baddies.
If you are going away or even if you are staying at home she advises you to dedicate time to testing your alarm and other security systems.
“Don’t leave it until the last minute as service providers are generally inundated with technical calls over the festive season. Book your call early to avoid your security systems letting you down.”
“Your alarm can only do its job if it is functioning properly, so regular testing and servicing when required is very important.
“In fact, all security systems linked to your alarm, like electric fencing and outdoor beams, should be tested regularly. Their functioning is part and parcel of a reliable alarm system.”
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