The pitfalls of renting out your home over the summer




By Tim Grafton

Summer’s arrived and a good number of Kiwis will either be on holiday at baches, family homes and campgrounds around the country or looking forward to heading there soon.

And for many of those taking a holiday away from their house, the idea of renting it out for the break on a service like Airbnb might be tempting. Just imagine, instead of paying your mortgage and campground fees, you could have someone else pay the equivalent of your mortgage – all for 30 minutes on the computer to sort out a listing on Airbnb or Bookabach.

If it sounds too good to be true, it’s worth taking a closer look. In New Zealand, it’s far from simple to let your home out to other people for a few days. Sure, the website might be easy but there’s a whole bunch of other stuff to consider.

First, you need to check whether your local council has any requirements around home sharing or rental accommodation. Queenstown Lakes, for example, require all rental providers to be registered with them.
Then there’s your insurance. Domestic house and contents policies aren’t set up for home sharing situations and in many cases, having someone pay to stay in your home without telling your insurer might mean that come claim time, you aren’t covered. Domestic contents policies, for example, don’t cover for items stolen by individuals allowed access into the home. That means you’re not covered if anyone who has a key nicks your stuff.

Ditto if they do deliberate damage to your property.

Most house and contents policies also contain exclusions related to operating a business on the premises or extended periods of inoccupancy. If you’re planning to rent out a room, section or the whole property, or you’re going to be gone for more than 60 days, it’s important you check with your insurer about whether your policy will still apply.

Of course, you could get commercial or landlord’s insurance for your property to make sure you’ve covered off the points above, but that comes with its own challenges for short-term rentals. Many insurers’ policies for landlords contain conditions around running reference checks for tenants and conducting regular inspections of the property. You’ll likely need to keep written records of all of these and if you don’t, you may find come claim time that you’ve invalidated your policy.

And what if there’s a natural disaster? Most domestic house insurance policies don’t cover properties that aren’t usually owner-occupied and if you don’t have domestic house insurance then you probably won’t be covered under the EQC Act. And if you’re not covered under the EQC Act and you don’t have commercial building insurance, then you’ve got no cover if an earthquake, landslip or other natural disaster occurs.

But that’s not everything. In 2016, Worksafe confirmed health and safety legislation applies to properties rented out through home-sharing services like Airbnb and Bookabach in the same way that it applies to other landlords. That means owners have a duty to make sure their property is safe and healthy, including installing smoke alarms and checking them every three months and providing protective gear for any tools, vehicles or equipment that might be used by tenants.

It also means that as a landlord, you could be deemed liable for an injury or accident a tenant suffers while using the property. While some home sharing services may provide property owners with a limited amount of liability cover, anyone considering renting their property out for any length of time should make sure they have adequate public liability insurance in place.

With all these things to consider, it’s worth making sure you’ve thoroughly looked into it before listing your home on a home sharing site. If you have and you’re keen to go ahead, call your insurer before you start filling in that listing.

– Tim Grafton is chief executive of the Insurance Council