Your questions answered about short-term rentals
Maybe you need help covering the mortgage or just want to make some extra cash.
Many homeowners are turning to short-term rentals as the answer. According to Statistics Canada, from 2017 to 2023 short term rental listings increased by more than 60 per cent.
But there are things you need to know before jumping into the market. There are additional risks of letting strangers rent your home and different considerations depending on whether you live in an apartment or condo.
Q. What is a short term rental?
A. Officially a short-term rental is considered to be a rental accommodation – often furnished in full or part - in a private residence for 28 days or less. A person can rent a portion or all of the premises.
You must check with your municipality about local bylaws and whether you need a permit. There may also be regulations on the number of guests and overnight stays allowed per year.
In Canada, the two largest online platforms in the short-term rental market are Airbnb and Vrbo.
However, in practice short-term rentals can also include stays that longer - from a month to two years as long as it’s your principal residence and your are following local bylaws.
Different types of short-term rentals include apartments, condos and recreational properties.
Q. Can I rent my condominium?
A. The Condominium Authority of Ontario, states some condo corporations restrict short-term rentals because they can lead to disruptions in condo communities if guests do not comply with condo rules, municipal bylaws or other legislation. Check with your condominium association.
Q. How do I know if I can rent my apartment?
A. It may be a violation of the lease to use your apartment as a short-term rental, and if you do so you could be evicted, even if you inform your landlord beforehand. Be sure to know the fine print.
Q. Does my home insurance cover short-term rentals?
A. If you’re planning on renting out your primary home, the first thing on your list is to check with your broker to see if your home insurance policy already covers you for short-term rentals.
But if you’re planning on renting out your property for an extended period, your home insurance policy likely won’t cover damages caused by your guests or tenants. That’s because it’s assumed you are the owner and occupier.
You must always be honest with your insurer. If not, your policy can be invalidated on grounds of misrepresentation if the owner does not occupy the home for more than 30 to 90 days.
It’s critical to notify your broker if you rent out your property, since it may impact your home insurance policy. Short-term rental insurance, which covers more than theft and damage, is meant for the commercial use of your property, specifically when hosting guests, whereas your home insurance protects long-term occupancy.
What are the benefits of Short-term rental insurance?
A. Short-term rental insurance, also known as home sharing (where the owner is present), allows you to rent out a portion or the entirety of your home, condo or seasonal property. In some cases, it can be added to your existing policy. It protects for things such as:
- Theft and attempted theft caused by tenants and their guests
- Damage caused by tenant vandalism
- Theft of, or damage to, your tenant's property (up to $1,500)
- Intentional acts, criminal acts or failure to act by a guest
- Loss of rental income (fair rental value)
Your premiums will depend on much the same as home insurance: your location, amount of coverage and more.
Q. What insurance is offered by online platforms?
A. If you list your property for rent via Airbnb, you’re automatically covered for up to $1 million US in host liability coverage. This protects you if you’re held legally responsible for a guest getting hurt/injured, if there’s theft or damage to the guest’s property, and/or if there’s damage caused by the guest to shared spaces such as lobbies or elevators.
You’re also covered for up to $3 million USD under host damage protection if there’s damage caused by the guest to your home, furnishings, belongings, parked vehicles, any loss in income, and any extra cleaning costs required to restore the property to its original state.
Vrbo liability insurance, another online vacation rental platform, also offers up to $1 million US liability coverage for hosts in case of accidents on the property. It doesn’t offer coverage for property damage.
In both cases, the coverage is at no cost as long as the reservation is made through their platform.
Host damage protection doesn’t cover damage caused by acts of nature. And the liability coverage doesn’t cover intentional damage or injuries.
Their policies shouldn’t replace your existing home insurance policy. Rather, short-term rental insurance will protect you against any gaps in coverage.
Speak with your broker about short-term rental insurance since not all insurers offer it.
Q. How do I keep my property safe?
A. While insurance offers peace of mind, it's smart to take additional steps. Here are some tips:
- Lock up personal property: If you're renting a space you occupy frequently or will keep personal items on the property during your guests' stay, store them in an area that can be locked.
- Change passcodes: You many have to share passcodes with guests while they stay on your property – think garage doors, alarm systems and Wi-Fi. Change them after every checkout.
- Take an inventory: Document the contents of your rental space or property in the event of a claim.
- Leave a guide: Sometimes, even the best guests can cause damage unintentionally to household appliances, amenities and electronics. Leave a quick reference guide for renters, including what to do and who to call if something goes wrong.
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