When you think of letting property, the conventional arrangement involves a tenancy lasting at least six months on a fixed or periodic basis.
What is a short-term let in the UK?
One measure used to define a short-term let is that it fails to meet the minimum duration required for the more common AST of six months. A short-term let – by this definition – is simply one that endures for less than six months.
There are numerous examples:
You might have invested in a property specifically for use as a second home; when you’re not using it as such, however, you might decide to make it available to other holidaymakers or paying guests as a short-term let;
Another scenario would be investing in property specifically intended for letting to visiting holidaymakers and paying guests. Apprehension around travelling abroad and platforms such as Airbnb have increased demand for this type of let. Airbnb has attracted criticism for its alleged damage to the broader private rental sector (PRS) and the detriment of tenants looking for the security of longer-term tenancies. However, Airbnb did respond to this by issuing a statement of the overall benefits of their involvement in the PRS.
This is where the full range of amenities and facilities such as cleaning and housekeeping is provided within the terms of the tenancy – can be short-term or long-term;
The Association of Serviced Apartment Providers (ASAP) maintains standards and a code of practice with which accredited members agree to comply.
As the thirst for ‘staycation’ accommodation has surged, other property types have been repurposed as short-term lets – including self-contained annexes to regular residences.
The insurance implications of a short-term let
It’s evident that an array of different property types can be short-term lets. This is good news for both the property owners and the holidaymakers searching for short-term accommodation.
But the sheer range and choice of types of accommodation also have a critical bearing on the insurance used to safeguard the respective properties. Quite simply, the insurance must meet the purpose or purposes for which the property is used. If it is ever used as a short-term let, this must be recognised by the particular form of insurance policy that protects it against loss or damage.
Short-term lets may need to be covered by specialist insurance such as Airbnb or holiday home insurance.
Can I use holiday home accommodation for an Airbnb let?
If you plan on becoming an Airbnb host, it is important to speak to your insurance provider to check whether you’ll still be covered. Some insurance providers may allow you to extend your policy to cover this, whereas others may refuse to cover you.
The specialist insurance you arrange for your short-term let must match the actual use of the property – different types of property may require appropriate alternative insurance.
Will my home insurance cover a self-contained holiday annexe?
The same reasoning applies to any attempt to use your existing home insurance when a self-contained holiday annexe is the subject of a short-term let. You may not be able to extend your home insurance to cover the additional risks of a holiday annexe, so make sure to check with your current provider.
What does short-term let insurance cover?
Subject to those restrictions and requirements, you will nevertheless recognise the principal elements of any short-term let property insurance in that it typically covers:
- The structure and fabric of the building itself;
- Any contents of the let property;
- An element of compensation for loss of rental income following an insured event that renders the property temporarily uninhabitable and unlettable pending repairs and reinstatement; and
- Third-party liability indemnity insurance to safeguard your role as a landlord in the event of injuries or property damage sustained by your tenants, neighbours, or members of the public.
Getting the correct type of insurance for your short-term let is critical, so make sure you understand what type of let yours is. If you’re unsure, always speak to your insurance provider, who will be happy to help.