Renting out an investment property as short stay accommodation can be lucrative, but it can also come with some associated risks. Furniture, games consoles, cutlery and crockery can be broken or stolen – making inventory management and insurance for short stay letting a must.
Holidaying guests are more likely to enjoy a drink or three, which raises the prospects of them injuring themselves, damaging your furniture and/or annoying the neighbours. Short stay lets in properties zoned “residential” are very common but, surprisingly, lie in legally murky waters.
In two recent landmark court decisions, authorities ruled that short stays did not constitute “dwelling” and, as such, were not permitted under a residential zoning.
The first case, heard by the Building Appeals Board, related to an apartment block in the Watergate Complex in Melbourne’s Docklands, which was nicknamed ‘Partygate’. The building’s manager, Marshall Delves, testified that short-stay guests caused the majority of problems including: fire brigade call-outs; parties involving large groups of young people; blocked fire exits; and increased maintenance charges.
In the second case, the owner of a six-bedroom holiday home in New South Wales was banned from renting the property for periods of less than three months. The NSW Land and Environment Court was told that the Terrigal property had been used for short stays for bucks and hens parties, with late-night noise and strippers disturbing a family who lived next door on a year-round basis.
Gosford City Council is preparing to address the ruling by specifically allowing holiday lets in certain types of residential-zoned properties. This would follow the lead set by other proactive coastal areas in which holiday rentals are an important source of revenue.
General Manager of EBM Insurance Brokers RentCover, Sharon Fox-Slater, said the decisions could potentially have ramifications in every state in Australia.
“The common thread here is that action was taken because the holidaymakers caused problems,” Ms Fox-Slater explained.
“Short-stay accommodation requires more work than a regular rental arrangement. Professional property management is key to making sure that your investment isn’t occupied by troublemakers.
“Regular landlord insurance is not appropriate for guests staying only a day or two. Owners need an insurance specific to the industry, such as RentCoverShortTerm.”
Conflicts between long-term residents and holidaymakers have prompted the Real Estate Institute of New South Wales to develop a Holiday Rental Code of Conduct, launched in March.
Source: EBM insurance