Home sweet ruin

Should you rent your home out during the Fifa World Cup? There is money to be made in renting out your home, but is it worth the risk to your family heirlooms and having strangers rifling through your underwear drawer?

By January, Seeff properties alone had rented out 10000 beds for the World Cup, and this was before the tickets were allocated in the final draw. There is a demand for residential properties, which work out cheaper than hotels, and, if you have a decent home within even an hour’s drive of one of the stadiums, you could use this opportunity to repay a portion of your bond.

Alicha Paterson, head of Seeff Rentals in Sandton, says owners of an average residential home can expect to rent out their property for R1 000 a person a night. Although there are some ultraluxury homes renting out for five-figure sums a night, the demand is for reasonable accommodation around R650 to R1 200 a person sharing.

If you have a home that sleeps six people, you could make R6000 a night — just 10 nights would chip away at your mortgage payment. If you have an investment property, renting it out is a no-brainer, but what if it is your home, which houses granny’s antique table and the silk Persian you bought in Turkey?

Football does bring to mind images of hooligans — groups of drunken men re-enacting the match in your living room or having riotous pool parties with total strangers.

Paterson believes these concerns are overdramatised. “Judging from the people I have dealt with, they are just ordinary people like you or me. Certainly, when I go to a hotel the last thing I think about is throwing the lamp against the wall.”

Paterson says bookings are mostly made by corporates looking to accommodate staff for the event, families and groups of friends, usually made up of two or three couples. She has taken no bookings from groups of men looking for a wild time. You may find that your property is let to a local family. There have been reports of Cape Town residents looking for accommodation while they let their homes.

But even if you do not have the guest from hell, your property could still be damaged and there are questions about whether your insurer will cover damages.

Christelle Fourie, CEO of MUA Insurance Acceptances, says many insurance policies will only pay out if there are signs of a break-in. Most insurance does not cover malicious damage to property.

There are also issues around liability cover. If the tenant slips on the tiles and breaks his neck, you could be sued and the amounts could be stratospheric. Your average personal legal liability cover usually excludes liability arising from the conduct of income-earning activities.

Paterson says Seeff will not rent out properties without additional third party and personal liability cover, and damage deposits are also taken. But even if you are just renting to a group of friends, if they are paying, you may not be covered.

Santam, one of the top insurance companies in South Africa, confirms that if you rent your house out you will need special insurance.

Santam has extended its personal lines policy to offer limited cover for small B&B owners who previously did not qualify for B&B insurance because of the size of their business. The new extension for limited B&B cover will only apply if three or fewer bedrooms are rented out to guests and, importantly, the policyholder lives on the premises.

Shehnaz Somers, head of personal lines underwriting, says if you are intending to rent out more than three bedrooms, you’re advised to take out a commercial policy such as Santam’s insurance for guesthouses, which could include your personal insurance. A requirement of this policy is that you or the guesthouse manager live on the premises. In addition, accommodation is limited to a maximum of 20 rooms for paying guests.

If you plan on letting a number of properties, there may be certain exclusions, as you’d be considered to be involved in the business of a rental agent or something similar.

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