But what happens when something goes wrong? Who is responsible for damage caused by the short-term tenant? Will insurance cover the damage?
An owner has an investment property in a strata building and they take out a landlords insurance policy to protect that property. A property manager leases the apartment to a tenant. The tenant decides to go on holidays for six weeks and during that period, in order to offset their rent while away, they list the property on Airbnb and subsequently let it out.
"Even the most experienced property manager can potentially get caught out if they don’t know that a property on their rent roll is being sublet via. Airbnb"
Unfortunately, the person that the tenant lets the property to causes substantial damage. An overflowing bathtub causes damage to the property, including carpets, paint and other fixtures. The water overflow also causes damage to the property below and common property.
Will insurance help the landlord recoup the cost of the damage?
Gary Triganza, Property Manager at Miles Felstead Realty and member of the REINSW Property Management Chapter Committee, said even the most experienced property manager can potentially get caught out if they don’t know that a property on their rent roll is being sublet via Airbnb.
“Most of the time you just won’t know it’s happening,” he said. “You might find out because there has been property damage or something has been reported to the strata manager. But in most instances, if the tenant is paying their rent on time it doesn’t trigger any warning signs unless it becomes obvious during a periodic inspection.
“A scenario [such as the one above] really underlines the importance of having the right insurance in place and understanding what is covered and what is not,” he said.