Holiday home rentals boom, but expert warns of hidden risks

More homeowners in South Africa are opting for short-term rentals during holiday seasons to generate extra income.

This trend is driven by the rising cost of living and strong seasonal demand.

Property investor and Airbnb expert Ridhwaan Basa says renting out a primary residence for a week or two can be lucrative, particularly in desirable suburbs and coastal areas, with some households covering major expenses such as school fees or holiday costs.

However, Basa warns that the financial upside comes with significant logistical and legal responsibilities.

He advises homeowners not to manage short-term rentals on their own, citing risks around guest vetting, security, insurance and compliance.

"In terms of logistics, I wouldn't recommend most people do this on their own.

"I would really recommend you use a property managing company that specialises in short-term rentals for this.

"So, for example, security reasons, vetting. There are people who, for example, keep their garage off limits, and they put certain documents or certain private things in the garage or in a locked room or something like that.

"But then it comes to vetting, right? How do you vet? If you don't know how to vet a guest, then you can end up with a lot of issues.

"There are things that you don't think about if you are not in this industry. For example, insurance. If you have short-term lets at your house and something goes wrong, technically, if you keep your normal home insurance, the insurer can say, listen, you are actually insured incorrectly, and I'm not paying out your insurance claim.

"These are things that if you are not in the industry, familiar with the industry, you might not know and understand what needs to be done."

Basa stresses that income earned from short-term rentals is taxable, regardless of whether payments are made through local or international platforms.

To listen to Ridhwaan Basa in conversation with CapeTalk's Lester Kiewit, click the audio below: