Holiday Let Damage Deposits Guide

Damage deposits are a major factor when considering turning your second home into a holiday let.

Damage to properties can happen from time to time, and it’s best to be in the right place should this occur. In this guide, we will go through the positives and negatives of having a security deposit in place.

Read more in this guide to find everything you need to know about holiday let damage deposits, and if it is a positive addition for holiday letting.

What is a holiday let damage deposit?

A holiday let damage deposit is a sum of money held by the owner from the guests throughout their holiday, in case any damage is caused. The amount is refunded back if no damage is reported.

The deposit can be taken in a couple of different ways, it can be managed by the owner, who contacts the guests before arrival to discuss extra payment. If it is done through a holiday letting agency, then the security deposit will be taken during the booking stage.

Another option is that the owner/agency will keep hold of the guest's card details, but only take the deposit charge if any damage were to occur.

Owners have around 24-48 hours to report any damage that has occurred at the property if the deposit is taken through a holiday let company. This maximises the chances of a claim being successful.

Advantages of damage deposits

There are several benefits to having a damage deposit secured for your holiday let.

• Owners feel the property will be maintained better if guests are aware a security deposit is in place. They feel safer knowing that they have a security buffer, just in case.

• Adding a security deposit can deter stag/hen parties from renting your property.

• If set up with an agency, the card details for the guests are kept on file, with the set amount added to the booking details.

Disadvantages of damage deposits

There are a couple of possible disadvantages to having a damage deposit on your property listing.

• If the security deposit process is done by the owner, it can take time to contact guests separately to make sure the deposit is in place before the holiday begins. This then needs crediting back once no damage has been identified. If you would prefer your holiday let agency to complete the deposit process, please contact us to discuss our housekeeping bond procedure.

• Having a security deposit can deter some guests from booking your property. The majority of guests would not be too concerned, because if the guests look after the property, then they will receive their deposit back.

• With a damage deposit in place, guests may also not enjoy their holiday experience as much. This can be due to the worry of breaking anything by accident, which could result in loss of their deposit either partially or in full. This could potentially affect repeat bookings at the property.

How to deal with damage to your holiday let

Damage at the property can be rare, but if you notice damage after a guest has vacated the property, then it is best to have a plan in place.

Take photos and videos of any damage.

This is to show as proof to the guests and holiday letting agency if the security deposit is not direct through yourself.

Let the guests know as soon as possible that you are looking to keep a specific amount from the security deposit. This can be via a text message or email. Photos of the damage can also be sent to the guests to confirm this.

If you are unsure which booking caused the damage, and whether it may have been from an earlier guest, do not look to deduct the damage deposit.

If damage is minor or accidental, it may be worth considering letting the damage deposit go. Accidents are part of the holiday letting process.

If you were to pursue an amount for breakages, this could lead to lengthy discussions with guests, with the owner’s word against theirs. This can then cause negative reviews from guests which could have an effect long term.

Consider amount to charge

If you are looking to charge guests for damage, only deduct a reasonable amount. Guests should not be expected to pay a full security deposit for one broken item, e.g., chair leg.

Again, it may be worth asking guests to let you know if any damage occurs during their stay. This is so you are aware of any breakages before they leave.

There may be certain occasions when the security deposit amount is less than the cost to repair the damage. This can be mentioned to guests about covering the extra costs.

Insurance

You can claim on your insurance, but check on the full costs of the damage repair, as it may affect any claims in future insurance renewals.

Note: Inspecting your holiday home after every guest has vacated the property is important to catch any damage as soon as possible. If you live further away, ask the cleaning company or property manager if they can assist with this.

The importance of holiday let insurance

Making sure your holiday let is insured, no matter if a security deposit is included, is vital. This will protect against any damages to the property. But please read policies from each insurance company before purchasing. Some insurers can limit the amount they will cover for specific items.

Tip: Have a document containing your most valuable items in the property and their estimated value. This will give you a rough idea of how much contents insurance you need.

Read our full holiday let insurance complete guide.

Click here for Holiday Let Insurance from Pikl.*

Summary

Damage deposits can be an important factor in protecting your holiday let from enduring extra costs. Damage to a holiday property is quite rare, but it may give you peace of mind if the eventuality occurs.

The cost of the deposit can deter some guests from booking, but it will not be an issue for many guests, as they know their deposit will be returned when they leave the property as found on arrival. Accidents can happen from guests at the property - by letting smaller, genuine accidents off from paying the damage deposit, it will more likely reflect in a positive review on the listing.

It is also important to make sure the damage is reported immediately after guests' departure - with clear photo/ video evidence to prove this.

*Sykes Cottages Ltd is an Introducer Appointed Representative of Pikl Insurance Service Limited Registered Number 10449346 who are authorised and regulated by the Financial Conduct Authority firm number 773457. Registered Office: Suite B, 2nd Floor, The Atrium, St Georges Street, Norwich, England, NR3 1AB.