Are you planning to lease your property for short-term or holiday rentals? If so, it is crucial to establish a formal agreement between you and your guests. Though you do have to comply with general legal requirements, short-term agreements give you more freedom to impose flexible terms and conditions compared to a long-term residential property agreement. Having a clear and comprehensively drafted agreement ensures both parties understand their obligations and prevents disputes around your property. This article will explain some essential matters to address in your holiday rental agreement.
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1. The Who, What, When, Where and Why
Your holiday rental agreement will need to include basic information about your guest/s, such as:
- who your guest is;
- how many people will be staying;
- how many people the property will accommodate;
- whether children are allowed to stay and if your property is suitable for accommodating children; and
- whether pets are allowed on the property and if they are allowed on furniture.
Importantly, you must also clearly state details about their stay, which include:
- Duration of stay: This should include not only booking dates but also check-in and check-out times. For added security, include a penalty for overstay, as this will hinder your ability to prepare the property for the next guest.
- Method of checking in and out: You should provide clear instructions regarding the process, including key pickup, return, and any other specific procedures your guests need to follow.
- Location of the property: This should be specific and may also include information about specific entrances/exits available to your guests.
- Prohibited activities: For instance, many short-term rental properties prohibit guests from using the property to hold parties. Clearly outlining these requirements at the outset of your relationship with your guest will help protect not only your investment but also your relationship with your neighbours.
- Additional inclusions: Your agreement needs to specify what other utilities and services are included in the rental fee. Some examples are Wi-Fi, electricity, water or cleaning services.
2. Payment for the Booking
Your holiday rental agreement should set out the rental fees for the property. It should also include whether or not a deposit is required and when it must be paid to secure the booking.
Deposit
A deposit is useful as a financial safeguard, ensuring that your guests have confirmed their stay through partial payment. You must state how much of a deposit you will need at the time of booking. For example, you could include in the agreement that upon booking, all guests must pay a 30% deposit to secure the booking. Other relevant considerations are:
- whether the deposit is refundable or not;
- the method of payment for the balance (amount not yet paid); and
- the deadline for guests to make the final payment.
Bond
It is sensible to charge your guests a security bond. This is an amount paid by your guests that you hold until the end of their stay. The bond will be refunded if your guests comply with their obligations under the agreement.
Unlike long-term rental agreements, you do not need to lodge the bond with a government authority, such as your State’s rental bond board. This means there are no formal regulations when it comes to determining the security bond, and you have more flexibility to include factors relevant to your property.
Your agreement should also set out what the security bond will cover, such as additional cleaning, repairs or a penalty for overstaying the booking.
Continue reading this article below the form3. Changes and Cancellation of Booking
Your agreement must cover cases where guests change their minds or cancel bookings. It should specify if and on what conditions a guest can cancel or change a booking and any applicable penalties. Commonly, a deposit will be refundable to the guest if you can lease the property to someone else.
You should also include under what circumstances you may need to cancel the booking. This might be when the property is damaged or you intend to sell it. In this case, it is important your agreement outlines how you will return the deposit and bond, as well as any costs you will be liable for.
4. Emergency Contact Information
To prioritise guest safety at your holiday accommodation, you should provide the following emergency contact information:
- details of the property owner (you) and management;
- local emergency services;
- the nearest hospital with an emergency room; and
- a fire escape plan.
Clearly outlining and defining guests’ responsibilities during emergencies can help ensure property management and emergency services are contacted swiftly. Integrating these measures into the agreement enhances guests’ stay and provides you with peace of mind.
5. Signatures
Including a section at the end of the agreement for the signatures of both parties is very important. Signing the agreement indicates that both parties have thoroughly reviewed and accepted the terms and conditions specified in the agreement. It creates a formal record of consent.
You may also wish to include a checkbox that ensures the person signing is over the age of 18 years and has read, understood and accepted the agreement.
Key Takeaways
Having clear and substantial holiday rental agreements improves your guests’ experience whilst preventing disputes and growing your reputation as a short-term lessor. Including basic information on your guests and their stay, as well as details about payment, cancellation and emergency contacts, make both parties aware of their obligations. You should ensure that the agreement is formally acknowledged with a signature from you and your guest.
If you would like assistance drafting your holiday rental agreement, contact our experienced contract lawyers as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us today on 1300 544 755 or visit our membership page.
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