Renting out your villa – This is what you need to know

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Renting out your villa – This is what you need to know

Investing in buy-to-let property, or renting out a holiday home or villa, has become a popular avenue for individuals looking to invest for the future; yet, while this may provide an attractive revenue stream, it is critical for such an asset to be properly protected to mitigate the financial risks.

Investing in buy-to-let property, or renting out a holiday home or villa, has become a popular avenue for individuals looking to invest for the future; yet, while this may provide an attractive revenue stream, it is critical for such an asset to be properly protected to mitigate the financial risks.

According to Lizette Erasmus, Head: Insurance Services at IntegriSure, there are normally certain policy stipulations that need to be adhered to when renting out a property, to ensure that an insurance claim can be submitted successfully if needed.

“If your insurance policy does not stipulate that your property will be rented out for periods of time, the contents of the property may not be covered for theft. Where valuables such as televisions and microwaves disappear while renting out their properties, the owners often find themselves out of pocket, without any insurance, because they were never properly advised,” says Erasmus.

It is important to inform your financial advisor of any rental arrangement in order to establish whether you will be covered in terms of your personal householder’s (contents) policy should anything happen.

Another common occurrence with holiday homes, Erasmus notes, is that of malicious damage such as vandalism, as some holiday rental guests sometimes justify their actions by thinking that any possible damages are covered by the rental paid for their stay. “It is therefore of the utmost importance for homeowners to be properly advised and covered to ensure that they are able to repair or replace damaged items.”

Also remember to inform your financial advisor of any change in your risk, such as when your property will be unoccupied for more than two months or when building alterations are planned.

Erasmus provides the following advice for anyone considering renting out their properties.

  • Make use of a reputable renting agency, and carefully read all stipulations before you agree to them.
  • Ensure that you obtain all necessary details of your prospective tenant(s).
  • Choose your prospective tenant(s) carefully. Often, this means screening them – contacting references, verifying vehicle details and ID numbers, etc.
  • Ensure that full payment details and recouping of damages are agreed upfront, and not upon arrival.
  • Put everything in writing. A written rental agreement should document all aspects concerning your relationship with your tenant(s).
  • Keep an inventory of the contents of your property, and ensure that it is regularly updated.
  • Take an appropriate deposit for breakages.

“It is advisable also to ensure that your policy provides cover in the event of accidental loss or damage, such as the accidental dropping of a television set or damages caused by a power surge. In many instances, this would be a cover option that should specifically be requested. Renting out a property or holiday home can be quite lucrative, but it is vital for anyone considering this to speak to their financial advisor in order to understand the potential insurance risks and ensure that they are comprehensively covered to avoid any financial headaches down the line,” Erasmus concludes.