If you have a spare room in your home or are moving out for a few weeks, you might have considered the possibility of earning a little extra cash by letting the space through Airbnb.
Airbnb also offers a way of letting your holiday or second home during those periods when you are not going to be using it yourself.
Although you might have read about some of the disasters that have happened to so-called Airbnb “hosts”. One stand out story was reported by the Independent newspaper. You may be reassured by what is called the Airbnb Host Guarantee. This appears to offer some form of insurance against loss or damage caused by your temporary “guests” or tenants.
Take a closer look at the guarantee, however, and this is far from the case. Airbnb’s website explains that although the protection offers compensation of up to $1 million (approximately £740,000) for damage caused by guests, it specifically excludes:
- Loss or theft of cash or securities, jewellery, artwork or collectors’ items
- Injury to or the loss or death of any domestic pets
- Your liabilities as the owner and landlord of the property (the risk of claims alleging your responsibility for any injury to your guests and their visitors or damage to their property)
Airbnb itself warns that the host guarantee is not an insurance policy and that you are advised to arrange cover which specifically protects against the risks you are likely to encounter. Airbnb adds that your existing home or landlord’s insurance might contain explicit exclusions for any occasion when the whole or part of your home is temporarily let to tenants.
Because your existing insurance cover may be invalidated when you let to Airbnb guests and because of the severely limited protection offered by the Airbnb Host Guarantee, we have previously explained the need for a specialist, standalone Airbnb insurance – for your home or holiday home.
We offer such cover from a number of providers, and the details may vary from one insurer to another. Typically, however, the main features of all policies include:
- Indemnity against claims that you are liable for any injury or property damage suffered by one of your guests
- Since claims such as this may involve substantial sums, indemnity of at least £1 million is typically provided
- Specialist Airbnb insurance also makes good the limitation offered by the site’s own host guarantee which allows you to determine an appropriate level of cover for the contents of your home
- Our specialist policies may also extend cover for malicious damage caused by your Airbnb guests or their visitors
Loss of Income
- The Airbnb Host Guarantee offers no protection at all against the risk of your loss of rent because your accommodation has become temporarily uninhabitable (following accidental loss or damage, for example)
- Specialist Airbnb insurance, however, may provide an element of compensation for such loss of rental income (up to defined limits or as a percentage of the total sums insured)
If you are a landlord yourself, a major worry might be your tenants deciding to list the accommodation they are renting from you on the AirBnB site – indeed, whether they even choose to tell you they are doing so.
You have every reason to worry – there is a lot that might go wrong:
- The rights of tenants to use and enjoy the accommodation they rent from you are restricted only by the terms of the tenancy agreement and conditions either implied or expressed
- The potential for doubt makes any reliance upon implied conditions and you might want to ensure that the tenancy agreement is crystal clear about your tenant’s ability to sub-let, even on a temporary basis, through AirBnB
- If the tenancy agreement stipulates that they must seek your permission every time they let to an AirBnB guest, but they fail to do so or do so regardless of your having said “no”, they are then in breach of their tenancy agreement – and so expose themselves to the possibility of eviction
- Even where the tenancy agreement may grant your tenant the right to sublet on an AirBnB basis, you have reason to be worried about the “guests” your tenants may choose
- There have been a number of horror stories in the press about AirBnB guests trashing accommodation let in this way, at the cost of very large repair bills and cleaning costs – there is even a constantly updated website, AirBnB Hell, dedicated to recording events when things go wrong
- Rogue AirBnB guests have been known to rent accommodation specifically to hold unruly parties, celebrations and illegal activities – including the use of drugs
- It’s unlikely that you’re going to be successful in making your tenant pay reparations and you are left with a very large repair and cleaning bill yourself
- If an AirBnB host suffers an injury whilst staying in the accommodation rented by your tenant, or has any of their belongings damaged, they may claim for compensation from you as the landlord and owner of the property
- There may be grounds for such a claim against the immediate AirBnB landlord, your tenant. But the chances of success are likely to be slender, your tenant is unlikely to have arranged the necessary landlords’ liability insurance, and this leaves you next in line for any such claims
The Host Guarantee
- When seeking your permission to act as an AirBnB host, your tenant might point to the so-called Host Guarantee offered by the website, in respect of compensation for damage caused by guests – up to a seemingly generous £600,000
- There are significant limitations, conditions and exclusions surrounding your tenant’s ability to claim for such physical losses
- Any compensation through the Host Guarantee scheme is going to be paid to your tenant – and you may encounter significant difficulties in ensuring that your tenant uses any compensation to make the necessary repairs or pay any cleaning bill
- Those costs may far outweigh the amount of any deposit you have taken from the tenant at the start of the tenancy and held by a third party in accordance with the tenancy deposit protection scheme.
Your own tenants might be tempted to earn a little extra income by subletting their accommodation to AirBnB guests. In order to control that potentially damaging activity, the tenancy agreement needs to require your express approval – and, as the principal landlord, you are perfectly entitled to deny such permission, either in the tenancy agreement or at any time your permission is sought.