Renting your Holiday Home

We at Bookkept, Australian bookkeeping and accounting specialists, have done our research on Renting your Holiday Home and are here to share our findings.

A lucrative source of income for thousands of vacation homeowners is renting out their homes to travellers. We are here to walk you through the steps of renting your property out to tenants if you are considering doing so.

Holiday homes and investment properties are frequently rented out by their owners to defray the costs of upkeep and repairs. We walk you through the steps of renting your property out to tenants if you are considering renting it out to tourists. The process will involve a significant investment of your time. Many owners rent their vacation homes out and then hand over the day-to-day management to a property manager. A good property manager will promote your rental property to visitors, collect bookings and manage arrivals and departures, clean and maintain the property, and answer any guests’ questions.

The decision to rent out your property is highly dependent on your individual circumstances. The challenge is in locating a trustworthy housekeeper who is loyal and dependable. Vacation rentals are a more refined kind of travel than hotels, and they appeal to a particular type of traveller. Many homeowners view the management of their second property as a business opportunity. You can defend expensive home improvements such as remodelling and installing modern amenities such as a pool or spa.

My holiday home is expensive to maintain. How can I rent it and make it pay for itself?

To defray the costs of upkeep and repairs on their primary residence, vacation homes and investment properties are frequently rented out by their owners. This is one of the most typical motivations for this behaviour. Some homeowners may have purchased their property with the intention of using it as an investment, and they may choose to hold off on selling until the market has improved further; but they do not wish to incur any further costs in the interim.

Others have bought a home or apartment in the hope of retiring there someday, and in the meanwhile, they are responsible for paying the mortgage and any maintenance costs associated with it. But, no matter what the conditions are, there is one ingenious concept that has the potential to bring owners closer together, and that is the notion that, if you can get someone else to pay for your home in the meanwhile, why not?

Can I use my holiday home to make an income?

You can, in fact, generate income from your vacation home; but you should be aware that doing so successfully will involve a significant investment of your time. In addition, you have more control over the cost and availability of your house if you rent it out to short-term speakers of other languages rather than taking in long-term occupants.

For instance, you may be able to make a considerable amount more during the peak season compared to the off-peak season. Additionally, you will continue to have access to the home for your own personal use. The busiest times of the day change from place to place. Properties located in areas that are known both as summer and winter attractions have a peak season that lasts for a longer length of time. These time-honoured destinations more than make up for the fact that they have a shorter peak season due to the fact that they are consistently in high demand among tourists.

I already rent out my holiday home with a property manager. What’s the difference between doing this and renting myself?

People lead busy lives, which is why many owners rent their vacation homes out and then hand over the obligations that come along with doing so to a property manager. Each approach to renting has a number of benefits as well as drawbacks. Many owners choose to work together with a property manager in order to achieve what they consider to be the optimal balance between the two roles. Some owners do all of their marketing activities online or take reservations over the phone from their permanent residence while delegating day-to-day management of their rental property to a property manager. Finding a solution that is tailored to your specific needs is the most important step.

Utilizing the services of a property manager or property management firm comes with a plethora of benefits. A good property manager will promote your rental property to visitors, collect bookings and deal with the administration linked to those bookings (such as deposits and rental agreements), manage arrivals and departures, clean and maintain the property, and answer any questions that guests may have. On the other hand, you might not realize how simple it is to manage your own home. The key is to educate yourself, and you can get assistance with that here at the Owner Resource Centre. A second home or vacation property represents a considerable financial commitment for many people.

When travellers rent directly from a homeowner, the homeowner has the ability to vet possible guests and choose who, if anybody, would be a good fit for their house. Others have come to the realization that the greater quality of their services results in recurring business from customers as well as positive word-of-mouth referrals. There are further benefits, such as the ability to charge additional cleaning and service fees to the renters staying at your home, rather of having to pay for these costs yourself (at the property manager’s profit). On top of these savings, the fee that a property management charges every booking can range anywhere from 15 to 50 percent, which makes the procedure well worth it.

For property owners seeking a holistic approach to asset management, the expertise of a seasoned property advisor can be instrumental in achieving long-term success.”

I don’t live anywhere near my property. What if my guests have questions?

The vast majority of people who rent out their homes for vacations do not really reside in close proximity to such properties. The challenge is in locating a trustworthy housekeeper who is loyal and dependable in addition to a good service that can handle any maintenance concerns that may arise. This individual will be very necessary for the successful operation of your vacation rental business from a distance. They will act as your point of contact on the ground in addition to offering a regular cleaning service in the intervals between check-ins. Being present to assist travellers with day-to-day issues that you are unable to resolve over the phone or via email, checking people in, and acting as your eyes and ears on the ground are all possible responsibilities that fall under their purview.

I’m worried about what people might get up to in my home.

The decision to rent out your property is highly dependent on your individual circumstances. There is a deep emotional tie that many owners have to their vacation homes, which causes them to worry about letting outsiders stay there. To begin, there is no need to worry about this happening very often. It is essential to keep in mind that the majority of your renters will share your values and perspectives. Vacation rentals are a more refined kind of travel than staying in impersonal hotels, and they appeal to a particular type of traveller. The fact that a vacation rental is actually somebody’s home is one of the primary reasons why people travel; as a result, they treat the property with the utmost care.

If you rent directly from the owner, it is your obligation to take reservations. Every proprietor has to make it a point to call people who are interested in renting their property and appropriately screen them. Follow your instincts if you feel that someone isn’t being completely truthful with you or if you don’t feel comfortable renting to a bunch of college kids seeking a wild weekend. You are the one who will be making the decision.

Your guests will be required to operate within your limitations, just like any renters would be. You have the right to draft the lease agreement, just as any other landlord would, and you must collect a security deposit in order to safeguard yourself. Even while you probably shouldn’t put any expensive family antiques on show, it’s quite unlikely that the person who gave you a significant amount of their money will do anything to make you angry.

Will I still be able to use the property for my holidays?

Yes. You are in charge of taking reservations, and your choice determines which weeks are full. In addition, the fact that you are now producing money from your vacation house provides you with an excellent preexisting justification for travelling there and spending more time there.

Any additional advantages to this?

Many homeowners view the management of their second property as a business opportunity and the ideal pretext to build the house they’ve always envisioned for themselves. As a result, you are able to defend expensive home improvements such as remodelling, installing modern amenities such as a pool or spa, or purchasing the most up-to-date home entertainment system. Suddenly, these pleasures are not frivolous like they were before; rather, they are sensible business expenditures that might offer you an advantage over your competitors and enhance the rental prices.

It is not unusual for homeowners to freely acknowledge that their secondary residence is incomparably superior to their primary one. A person’s primary residence is one of the places that is most impacted by the hustle and bustle of everyday life, while a vacation house or cabin provides an escape from this. What could possibly be more desirable than having an opulent vacation home that you designed specifically for the upper echelons of the market all to yourself? In addition to this, many owners have stated on several occasions that they find it to be a highly fulfilling experience to rent out their vacation homes.

The upkeep of a vacation home is a labour of love for many people. If you own a vacation rental property with a “wow factor,” you will enjoy reading the gushing web reviews, receiving personal thank-you cards, and obtaining further bookings.

How to Run a Vacation Rental Home

It’s possible to make a lot of money by renting out your home during the vacation season, but in order to do it successfully, you need to be aware of the potential hazards and run your property management like a professional enterprise.

Who Should Manage a Property, the Owner or the Manager?

This information is geared specifically toward owners of vacation rental homes who either self-manage their properties or hire someone else to do so under their direction through a management contract. However, if you are a professional manager of vacation rental homes that belong to other people, we have a special handbook just for you.

In this legal guide, we discuss the benefits and drawbacks of holiday rentals, whether or not you should self-manage your home, the best ways to market your property, and why you definitely must utilize a Holiday Rental Agreement with your visitors.

Self-Managing

Should I offer my home for vacation rentals?

Suppose you own an investment property and want to rent it out. In that case, you have two options: You may either rent it as a residential property for an extended period of time, or you can rent it as a vacation rental property for a shorter period of time.

In most cases, when someone refers to “short-term,” they indicate that the most amount of time that they may rent out their home is around six weeks. Because the laws are different in each state and territory, you should research the limits that apply in your area. Every available rental choice has both advantages and disadvantages.

In the case of a residential property that is rented out on a long-term basis, you are certain of receiving money after you have located a tenant and settled on a monthly rent amount (unless they stop paying rent and need to be evicted). On the other hand, you are required to comply with stringent residential tenancy regulations, which addresses both the tenant’s rights and your responsibilities as an owner. These are the following:

• How much you may ask for rent, in addition to the security deposit,
• When and where you are required to turn in the security bond
• When you are allowed to make a claim against the security bond for any harm that was caused.
• What kinds of maintenance and repairs need to be done, and when should they be done?
• How much you are allowed to charge for various utilities like water, electricity, and gas.

When it comes to vacation rentals on a short-term basis, you have a lot less certainty regarding your revenue. On the other hand, you are exempt from the burdensome residential tenancy regulations. You will discover that your vacation rental property management is subject to far less constraints as long as you comply with the laws established by the Australian Consumer Protection.

Do I require a licence to rent out my home as a vacation rental?

No, you do not need a license in order to rent out your home or apartment during the vacation season as a vacation rental property. The only people who are obliged to have licenses are letting agents; individual property owners are exempt from this requirement.

If you own property in New South Wales (NSW) and want to hire an agent or broker to manage it for you, the person you hire must be licensed to do so. In the state of Victoria, real estate agents who solely manage properties that are rented out for short periods of time (less than ninety days) do not required to obtain a license. The regulations in the remaining states and territories are lenient at best, and in some cases, there are none at all.

You need to do your own research in the area to verify that you are in compliance with the regulations.

How should I advertise my holiday rental property?

Because of the proliferation of information and services made available by the Internet, marketers today have access to a wide variety of practical and economical solutions. You should look for websites that cover your region that provide vacation rentals and compare their advertising fees, the amount of listings they offer, and where they come up in internet search results. Some websites charge a “one-time” cost or an annual price to advertise, while others charge nightly fees for successful reservations.

While you are browsing websites that provide vacation rentals, don’t forget to compare your property’s nightly and weekly prices to those of other nearby homes that are comparable. Make sure you’re competitive.

Your marketing for the vacation home you are renting needs to be crystal clear and factually correct, regardless of the website you choose to utilize. In order to avoid infringing on the Fair Trading Act, you need to ensure that the information contained in your advertisement is accurate on the features and amenities of the property. Be sure to provide a list of any limitations, including those pertaining to minors, smoking, or pets.

The more explicit you are, the fewer problems you will have with misunderstandings or enquiries that force you to communicate with the other person many times and waste time. Therefore, you need to make sure that you are honest and transparent with people in order to be able to acquire your appointments most quickly and effectively possible.

What do I need to be aware of when advertising my property?

According to the Fair Trading Act and other pieces of laws pertaining to consumer protection, it is against the law for you to make any false or misleading comments to customers or potential customers concerning your lodging.

In advertising or brochures, it is prohibited to misrepresent accommodations in any manner, regardless of whether the misrepresentation was intentional or inadvertent. You have an obligation to reflect your property’s quality and sophistication accurately. Make sure that the description of your property, the distances to attractions, transportation, and shopping, etc., are all true. Also, make sure that the property images are thorough and that they are updated on a regular basis.

Also, make sure that the number of beds and types of bedrooms that you are advertising are crystal clear. For instance, if there is a couch bed in a sunroom, this needs to be specified because a sunroom is not considered a real bedroom.

Property Managers

Should I hire a management or handle my vacation rental property myself?

After making the choice to use your home as a vacation rental property, the next step is to determine whether you will manage the rental yourself or seek the assistance of a property management company.

If you do not reside in close proximity to your vacation rental home, it is quite likely that you will need to employ a manager. You can work with a commercial real estate and property management firm or find an individual property manager to handle your needs. Always be sure to complete your homework before hiring a property management business or individual property manager. Make sure they have a solid reputation in the industry and reasonable rates.

Some property management businesses demand high costs for performing few tasks, which may quickly eat into whatever earnings your vacation rental home produces. If you choose to work with one of these organizations, be prepared to pay high fees. The majority of management organizations assess a base cost of between 18 and 20 percent of rental earnings and additional fees for linen, callouts, advertising, and other such services. These expenses may rapidly pile up and determine whether or not your vacation rental property will be profitable for you in the long run.

How can I reduce the amount I pay the property manager?

A cheaper option to hiring a property management business is working with an individual property manager, such as a friend or acquaintance of yours or a neighbour you find through an advertisement. If you do not know this individual directly, it is imperative that you verify their experience and check their references. In addition, there is a possibility that there is a hotel management school or a tourism degree offered in your immediate area. Make contact with them to get a referral from them or make an offer to provide one of their pupils some work experience.

You may handle the reservations for the property on your own if you want to save money on management fees and do it for your own convenience. This will need to collect rent and security deposits, offer quotations, and advertise the property online. Our observations have shown that engaging an independent property manager and taking on some of the responsibilities yourself can result in significant cost savings when it comes to management costs.

Nevertheless, you should make certain that you have a written contract with your property management. It is a very excellent idea to include a list of their obligations and commitments in the professional contract you get into with them. By doing so, you may guarantee that you have a positive connection with your management as well as reduce the likelihood of misunderstandings occurring.

Holiday Rental Agreements

What exactly is a Holiday Rental Agreement?

A Holiday Rental Agreement is a contract that you enter into with your renters that outlines the guidelines for renting and maintaining your vacation rental home and the terms and conditions for doing so. Your visitors will need to sign the agreement and then mail it back to you or send you an email with a scanned copy.

Request a photocopy of your guests’ passport or another form of identification if they are travelling from another country. This provides you with the assurance that they are who they say they are, it demonstrates that they have signed your contract, and it has the potential to discourage any violation of the contract or damage to your property.

Should I have a Holiday Rental Agreement with my guests?

Yes, without a doubt; without a doubt, this is the single most significant piece of information included in this manual. You and your visitors need to come to an agreement that is specific and all-encompassing. This should contain a crystal clear declaration regarding the beginning and ending dates of the rental as well as the amount that will be assessed.

You and your property will be protected if you have a Holiday Rental Agreement. It will guarantee that both you and your tenant are aware of all of the rental conditions, it will provide them with comfort and make you appear more professional. You also have remedy, which you may not otherwise have if you have a Rental Agreement, and that is against any damage, destruction, noise, or other undesirable difficulties that might emerge.

Once you have indicated that you would honor a guest reservation, you are obligated to do so, subject to any terms and limitations that you have communicated to the visitor. Alterations to the conditions of the reservation can be made later only if both you and the visitor are in agreement regarding the modification.

What terms should my Holiday Rental Agreement include?

In the Holiday Rental Agreement that you have, the quantity of the following elements must be specified:

• Booking dates
• Times for checking in and checking out
• Rates on a nightly or weekly basis
• Reservation deposit
• Deposit of collateral and conditions of agreement
• Cancellation policy
• The mode of payment and the terms
• Additional costs for things like housekeeping and utilities, for example.
• fees assessed for missing items such as keys, swipe cards, remote controllers, and so on.

“House Rules” govern matters like smoking, dogs, noise, and more.

You need to make a decision on the total amount of your reservation deposits when they will be made, and whether or not these deposits will be non-refundable. The time of all final payments must also be mentioned in the Agreement before it can be considered complete. Make sure that prospective tenants are aware of the existence of a security deposit if you want to collect one. The terms of the refund, which must also be clearly stated, must include the time of the return and the rationale for the return.

Before agreeing to accept any booking, you are required to make customers aware of your decision to implement a cancellation fee if you want to implement one. If the charge and the terms surrounding it are not fair and reasonable, then the fee itself may be seen as a “unfair contract term”, and the terms of the contract may be contested.

In addition, were you aware that the Residential Tenancy Act of your State or Territory may apply to you based on the terms of the agreement that you have made if it is applicable? This is very unfortunate news. Have you heard about the many regulations that landlords must adhere to while evicting tenants? These provisions can be found in the relevant residential legislation. You definitely don’t want to be under their protection.

Simply by including the word “tenant” in the rental agreement for your vacation property in Victoria, you run the risk of becoming subject to the Residential Tenancy Act and being forced to comply with a host of new legal obligations that you were not previously aware of. So get a professionally written Holiday Rental Agreement in Australia and use it with every guest.

Does my Holiday Rental Agreement need to be signed?

Even if everything was done by email and electronically, you legally have a ‘contract’ with your visitors provided you agreed on dates, the rental amount and paid a deposit. What you don’t have, though, are agreed-upon vacation rental terms. So if anything goes wrong and you can’t point to an agreed-upon Term that the visitor has broken, you’re in big trouble.

You can point to your agreement term if, for example, they claim two people are staying but bring another four friends to visit. Alternatively, if the property is non-smoking and smokes, and you need it properly cleaned, etc. I believe you can understand how things may go horribly wrong in some circumstances.

You must have a Holiday Rental Agreement signed by your visitors, and you must provide it to them prior to payment so that they can examine and agree to it. If you don’t, they can say that they can’t be held accountable because they didn’t notice or agree to the Terms when they paid. So, when you ask for a deposit, give your visitors your agreement and have them sign and return it to you.

Should I tell guests my holiday rental Terms and Conditions?

Yes, you are required to make all of your Terms and Conditions explicit in the advertising that you post on the internet. Specifically, cancellation fees and security deposits, as well as the terms and circumstances that are linked with them, need to be stated and clarified. In addition, you need to additionally specify any other charges that are not included in the nightly or weekly rental rate, such as cleaning fees upon departure, internet access, utility bills, and so on.

Maintaining complete openness on your Terms and Conditions is one of the best ways to head off any potential legal conflicts. It is important to keep in mind that the Fair Trading Act considers it misleading or dishonest for a business to omit disclosing any of the requirements listed above.

Should I include my ‘House Rules’ in the Agreement?

It is a smart move to put up a sign in your vacation rental home that states the “House Rules.” Simply put, these are the ground rules for living in your vacation home, and they include things like keeping the noise level down, putting out the trash and leaving the keys behind. It is an effective method for rewarding appropriate behaviour or drawing attention to any problems that may arise during their stay.

Although including some of these items in a legally binding rental agreement might be incorrect (or excessive), you should ensure that your renters are aware of them all. Check to see that the guidelines don’t go against any of the lease agreement provisions that you have. In addition, make sure that the notice of house rules and the rental agreement are kept up to date.

You and your property will be protected even further if you have a list of House Rules. Because renters are expected to abide by them, you should either hand a copy to each visitor as soon as they check-in or publicly display a list of the House Rules in the vacation rental home you manage.

Security Deposits

Should I charge a security deposit?

Yes, without a doubt. Additionally, it makes it simple for your visitors to make payments, and it makes it simple for you to provide refunds at the conclusion of the rental, all while minimizing the expenses associated with the transaction.

Keep in mind that any security deposits paid for using a credit card or through PayPal may be readily cancelled. This can typically be done shortly after the visitor has vacated the property. Therefore, it is imperative that you either take the security deposit in cash or agree to have it deposited straight into your bank account.

Make sure that you are able to take payment in currencies other than the Australian dollar if you anticipate having customers from other countries. In order to avoid any waiting periods or the possibility of losing bookings, you should make sure that any payment mechanism you use is set up well in advance.

How much should my security deposit be?

The size of the security deposit is up to you, but it should be sufficient to pay your insurance deductible at the very least. In the event that you need to make a claim on your insurance, you won’t have to pay anything out of pocket. The initial deposit needs to be increased for rentals with a higher market value or a greater number of amenities. In addition, think about the amount of the security deposit that other landlords in the region are requesting from their tenants.

Because you can never be sure of anything and accidents may occur, you need to think about a reasonable amount depending on the worth of your home and the level of comfort you require.

What am I allowed to charge visitors for the problems they cause?

Before accepting any booking, make it clear that any and all damage caused by a visitor, whether unintentional or due to their negligence, will be invoiced to them. If you pay a security deposit, you have the right to deduct any damage from that sum.

Remember that glasses break inadvertently and plates chip in normal use, so be cautious about how much and what you charge your visitors. Normally, more significant losses or damages that require repair as a result of your visitors’ stay should be charged. Consider what you would expect to pay as a visitor in a vacation rental and use that as a guideline.

When a visitor leaves, the easiest and quickest approach to manage your property’s last inspection is to utilize a checklist. Stuff are often overlooked, or guests change items like lamps or chairs, so keeping a list ensures you don’t forget to double-check everything.

Inspections should also be done as close to the visitors’ departure as feasible, so you may correct and resolve any broken, damaged, or missing goods.

What type of property insurance do I need?

Home and Contents Insurance or Landlord Insurance are not the same as Holiday Rental Property Insurance. And if you try to file a claim for damage caused by your vacation rental guests under ‘regular’ property insurance, your claim will almost certainly be denied!

You’ll need special Holiday Rental Insurance to cover damage to your property while it’s being rented to a holiday rental visitor. Many insurers provide Home and Contents or Landlord Insurance, but only a handful offer short-term rental or holiday rental insurance in Australia. As a result, be cautious and double-check your insurance coverage.

Most insurance plans also require a Holiday Rental Agreement with your visitors. So don’t take any chances and utilize a Holiday Rental Agreement to protect yourself.

Make a phone call to your insurance provider and ask them the following questions:

• Is my property protected under my policy for short-term vacation rentals (less than three months)?
• Do my visitors, and I need to sign a formal short-term rental agreement?
• Am I insured if I employ a rental agent to handle my properties and sign the renters’ leases?

Refunds

When must I return visitors’ money?

A guest has the right to a refund if something has changed in the accommodation promised. For instance, if you used to have a three-bedroom house but now only have a two-bedroom property, you will only be able to give them two bedrooms. Or if there is something that is grossly misrepresented in your brochure or on your website, such as a lift or facilities for the disabled that are not in operation.

You are under no obligation to issue a refund to guests who change their minds after you have already accepted their deposit. For example, you are not required to issue a refund to the customer if they cancel their reservation because they did not enjoy the hotel or found another cheaper lodging elsewhere.

You cannot be held accountable for external environmental conditions that are beyond your control, such as rain, wind, lack of sun, or snow. These factors are beyond your sphere of influence. This is all a normal aspect of travelling on vacation, and if a visitor decides to cancel their reservation because of something like this, they will not be eligible for a reimbursement of any kind.

To be on the safe side, you should make sure that your guests fully comprehend your Terms, and you should clarify your cancellation costs and Conditions in advance.

What if I unintentionally make two reservations that conflict?

A visitor has the right to a refund if something has changed in the accommodation offered. For instance, if you used to have a three-bedroom house but now only have a two-bedroom property, you will only be able to give them two bedrooms. Or if there is something that is grossly misrepresented in your brochure or on your website, such as a lift or facilities for the disabled that are not in operation.

You are under no obligation to issue a refund to guests who change their minds after you have already accepted their deposit. For example, you are not required to issue a refund to the customer if they cancel their reservation because they did not enjoy the hotel or found another cheaper lodging elsewhere.

You cannot be held accountable for external environmental conditions that are beyond your control, such as rain, wind, lack of sun, or snow. These factors are beyond your sphere of influence. This is all a normal aspect of travelling on vacation, and if a visitor decides to cancel their reservation because of something like this, they will not be eligible for a reimbursement of any kind.

To be on the safe side, you should make sure that your guests fully comprehend your Terms, and you should clarify your cancellation costs and Conditions in advance.

The Residential Tenancy Act of your State or Territory may apply to you based on the terms of the agreement that you have made if it is applicable. If the charge and its terms are not fair and reasonable, then the fee itself may be seen as an ‘unfair contract term’. The Fair Trading Act considers it misleading or dishonest for a business to omit disclosing any of the requirements listed above. You need to additionally specify any other charges that are not included in the nightly or weekly rental rate, such as cleaning fees upon departure. It is imperative that you take the security deposit in cash or have it deposited straight into your bank account.