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Holiday houses

Published: 18th November 2020

Author: Tanya Surrey, Mactodd

Published in: Fineprint

Rules for both owners and renters
With New Zealand’s borders closed and overseas travel restricted for the foreseeable future, many Kiwis will be looking to rent a holiday home for the traditional summer holiday this year.

There are plenty of options on sites such as Bookabach, Holiday Houses and Airbnb as well as renting a holiday house privately. Whether you own a holiday home and are looking for some extra income, or you want to rent a place for the whānau Christmas, there are a few things to remember.

Property owners
Houses should be presented in a clean and tidy way.

Paying the rent: The expectations about payment arrangements need to be clear from the outset. Property owners can ask for a deposit for a holiday house rental but, to avoid confusion, it’s im-portant to be clear about this requirement in the fine print in any agreement. In some cases, the property owner may require that the full cost may be retained if the booking is cancelled. In other situations, however, a partial refund could be made to the renter depending on the timing of the cancellation (for example a 50% refund could be given if the booking is cancelled not less than two weeks prior to the booking). Any refund arrangements not covered by the agreement are made at the discretion of the property owner. It is, however, advisable to make sure that any arrangements are fair and reasonable.

Health and safety: Property owners are generally subject to the duties and obligations in the Health and Safety at Work Act 2015. Under the Act, a host renting rooms could be prosecuted if he or she is negligent, resulting in a guest being injured (or even killed) as a result of that negligence. Although insurance cover may help with an owner’s liability, the legislation makes it illegal to insure against fines imposed by the courts. If you are unsure about your obligations under the Act, please don’t hesitate to contact us.

Hazards: Property owners should ensure the house and garden are free of any hazards that could cause an accident or injury, as well as being free of pests and vermin.

Residential Tenancies Act 1986: As a general rule, this legislation does not apply where the house is let for the tenant’s holiday purposes. However, the question may be asked — how long is a holiday? If the Residential Tenancies Act does apply, both owner and the holidaymaker (or tenant) must comply with the duties and obligations set out in the legislation. With the country experiencing a shortage of rental accommodation in some areas, those owning holiday homes may encounter those wishing to rent a holiday house for the longer term. This arrangement would then become a formal tenancy subject to the requirements of the Residential Tenancies Act.

GST and income tax: If the gross rental income is more than $60,000 over a 12-month period, property owners must be registered for GST. Property owners will also have to declare any income from a holiday house in their annual tax return.

Local authority: Depending where you are in the country, you may also need to register with the local authority and, in some cases, obtain resource consent. Do check with the relevant local authority on its specific requirements for the area in which the holiday house is located.

Insurance: It’s important to ensure you have the right type of insurance policy in place for a holiday house rental scenario, and that the insurer is notified that the property is being tenanted.

Renters
General: If you’re renting a house for the holidays, it’s important to read the owner’s terms for rental before you make a booking. Payment arrangements: Owners can usually choose to require full payment, or just a deposit, to be paid at the time of booking. If only a deposit is charged initially, full payment is often required 10 days before the rental begins.

The rules can vary but if you cancel at short notice, you are likely to be liable for some (or all) of the rental fee.

Damage to the property: You will be liable for damage caused by you or any other guests staying with you, including someone visiting the property.

No sub-letting: People renting holiday houses cannot sublet and/or let extra rooms to third parties. In a recent decision , the Tenancy Tribunal ordered Mr Kennedy to pay $12,500 to the landlord for various things including cleaning, property damage and sub-letting the property on Airbnb without the landlord’s permission.

While the Kennedy case related to a residential tenancy, a similar approach and monetary penalty could potentially be applied in any tribunal dealing with a holiday house situation.

Online feedback
Holiday house websites have feedback platforms. Any difficult homeowner or troublesome renters may find themselves the subject of a damaging review that would not help their future chances of renting out their house or making a booking.

It is important to be clear on your obligations before you pack the car and surfboards to away for Christmas. No one wants to start the New Year with a legal dispute on the horizon. 

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