Protecting your holiday let profits and your guests
One of the most important pieces of paperwork you are responsible for as a buy-to-let landlord is your tenancy agreement. When running a holiday let, the same principles apply. Your holiday let rental agreement outlines your responsibilities as the holiday let owner, and the holidaymakers as your temporary tenants.
Most holiday bookings are made over the internet. You won’t vet holidaymakers as you would long-term tenants of a buy-to-let property. This lack of certainty works in both directions, of course. The holidaymakers have no idea who you are, and, unless they are repeat customers, they only have online photos and reviews from which to judge your holiday let property.
For all the above reasons, it is vital to ensure that your holiday let rental agreement includes all it should to provide you with a safety net and put your holidaymakers’ minds at ease. Here is a list of seven essential clauses for your holiday let rental agreement.
1. Cancellation policy
Though this is likely to be at the end of your holiday let rental agreement, it’s probably the most important clause of all. If you don’t get this right, it could cost you some, if not all, all your profit. If you allow holidaymakers to cancel at the last minute, your holiday let business could get burned badly.
Therefore, you should include a schedule of penalties for cancellation, which escalate the closer the cancellation is made to the booking date. You may also include explicit policies which cover exceptional circumstances, such as storms or travel cancellations. This will protect your finances while also being fair to the holidaymaker.
2. Maximum occupancy
Now, I have nothing against rave parties, and certainly not against rugby teams, but you really don’t want your holiday let being used as the venue for a weekend house party rave, or as a temporary barracks for a touring rugby team. You can avoid this by including a maximum occupancy clause, based upon the number of people your holiday let can comfortably accommodate.
You may decide to charge more for extra guests, levy charges for damage caused because of too many guests, or ‘evict’ the holidaymakers without the return of letting fees should they break the maximum occupancy clause.
3. Pets and no smoking policies
Allowing pets may increase the potential market for your holiday let, but it could also lead to pet damage and a smellier property. The same applies to smokers.
If you don’t wish to let to people with pets, it is not enough to simply include the words ‘no pets’ on your website. You must include a no pets clause in the holiday let rental agreement.
Let smokers know exactly where they stand – or should stand – with regards to smoking. If smoking is allowed outside only, or anywhere on the property, state this explicitly in the rental agreement.
4. Payments schedule and deposit terms
Always ensure that payment is received in full before your holidaymakers step inside the property. A payment schedule allows your guests to budget and enables you to take full payment in plenty of time to avoid an empty property earning nothing for a couple of weeks.
The terms of the deposit should be clearly stated, including linking to the cancellation policy, and it’s a good idea to collect the total payable by at least two to four weeks before the rental begins.
5. Check-in and check-out dates and times
Being strict about check-in and check-out dates and times is important. You want holidaymakers to have a great first impression when they walk through the door of your holiday let, so you need time to clean and prepare the property for your next set of guests.
The only way to do this is to clearly state check-in and check-out dates and times. You might also include these on the confirmation email that you send after you have received final payment.
You should also include a check-out policy, stating how you expect the property to be left by your guests. For example, you might include obligations such as:
- Turn off the electricity
- Lock all doors and put the keys through the letterbox
- Ensure that all windows are closed
It’s probably both impractical and unworkable to except your guests to leave the property in pristine condition, but you do have the right to expect it to be reasonably clean, and certainly secure.
6. Details of damage deposit
I’ve yet to meet a holidaymaker who deliberately damages a holiday let property, but accidents do happen. This is why you should take a damage deposit. However, you must stipulate the circumstances under which you will withhold some or all of that deposit. This clause should also state how and when a refund will be made.
7. Protect yourself the easy way
When you accept a booking, always take a deposit. Whatever you do, never accept payment without the holidaymaker signing your holiday let agreement. Finally, make sure that your holiday let rental agreement is well-written, legally binding, and up to date. A well-written and professionally presented holiday let agreement helps you present yourself and your property in a presentable way while giving you peace of mind and holidaymakers confidence.
A little effort and diligence with your holiday let rental agreement pays dividends and is key to maximising the exceptional income yield potential.
Live with passion