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Home » Industry News » Do Airbnb hosts have enough protection in place?

Do Airbnb hosts have enough protection in place?

With tougher economic conditions and high debt burdens this year, many consumers are turning to alternative income sources to supplement their income over the festive season. Some homeowners, particularly those who have second homes or are going away over the December period, are turning to short-term rentals, such as Airbnb, as a form of additional revenue to help line their pockets.

While there is no doubt that the rise short-term rental online platforms can be considered one of the biggest disruptors of the rental space and a positive boost to our ailing economy, Vera Nagtegaal, Executive Head of Hippo.co.za, cautions homeowners to be aware of the various regulations and bylaws governing the rental sector. “Short-term rentals are a fantastic way for homeowners to earn a little more spending money. But, for any homeowner who is considering renting out their home, it is important that they are aware of the regulations, insurance implications and security risks involved.”

Realising the growth opportunity that comes with Airbnb, The City of Cape Town signed an agreement with the company in October this year in order to promote the benefits of people-to-people tourism for Cape Town residents and their communities and promote Cape Town across the world as a unique travel destination.

According to Airbnb’s ‘Overview of the Airbnb community in South Africa’ report, approximately R817 million was earned by local households and more than R2.4 billion in total economic activity was generated between Airbnb hosts and guest spending in the country in 2016. In Cape Town alone, there are 17 600 active listings on the short-term rental website and hosts have earned a combined income of R762 million over the past 12 months. 

Nagtegaal points out that in interviews post the City’s announcement encouraging tourists to make use of short-term rentals, Counsellor Brett Herron warned that homeowners should be mindful of the municipal planning by-laws, which indicate a block of flats cannot be used for holiday accommodation or hotel purposes. Any owner wishing to do short-term holiday letting from a block of flats, irrespective of the platform facilitating such letting – such as Airbnb or otherwise – must ensure the property is appropriately zoned and must apply for consent from the city’s development management department.

“In letting out your home, this also has an impact on your insurance cover,” explains Nagtegaal. “Should the home be used for commercial purposes, an insurance claim can run the risk of being repudiated if inadequate cover or the incorrect type of cover is in place.”

Nagtegaal says it is extremely important that homeowners also understand the different types of cover available to protect against theft, damage and any other possible claims that can be made.

She explains that as the home is technically being used for commercial gain this has an impact on the type of cover homeowners should have in place, which could also include public liability cover.

“As we gear up for the festive season, short-term rental hosts are encouraged to review and compare their existing cover against the various types of cover available to ensure that they are adequately and appropriately covered against any eventuality,” concludes Nagtegaal.

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