| Property owners are gearing themselves for the lucrative
renting market in 2010 but should be cautious as the football party tenants
descend on mass.
The Soccer World Cup is less than three years away and South African property owners have spotted a potential gap in the market as a shortage of accommodation is likely with over a million tourists expected.
There are already advertisements in South African newspapers and on radios calling for homes to be registered as accommodation for 2010.
But, the party tenants could cost property owners as their risk profile increases as soon as the property becomes income earning.
There is the genuine chance there will be damage to the house or its contents that will only be discovered after the renting party has disappeared back to their country of origin, says Craig Young, national manager of short term insurance at MortgageSA.
Insurers may not be ready to pay.
Even if the property owner insists on a deposit, this may not be sufficient to cover the damage caused and, because of the change in risk profile, insurers may not be prepared to pay, warns Young.
Soccer fans cause hundreds of thousands of Rands worth of damage to property and the sport has a history of hooliganism. There has been an average of 3350 arrests in England in the past five seasons as a result of violent behaviour and property destruction.
As a general rule tenants do not look after properties as carefully as owners and, fuelled by alcohol, destruction to property becomes inevitable.
If you decide to rent out your property for the 2010 games, property owners should make certain they have the correct insurance in place, cautions Young.
An ordinary domestic insurance policy will not suffice.
The consensus amongst home insurance advisors is that your ordinary domestic insurance policy will not suffice, says Young.
We strongly advise that property owners inform their insurers well before the tenants are due to arrive, says Young. They will review the policy for the duration of the tenants' stay and underwrite the risk appropriately.
If the owner fails to inform their insurer they will most likely incur a hefty penalty should they claim for damages after the tenants have left.
While renting out your own property for the 2010 games may appear to be a lucrative scheme the party tenants may cause more damage than profit, says Young.
It is also worth noting that as soon as a property owner is earning an ongoing income from their homes, there is an increase in risk profile and their risk moves to be a business risk, much like a Bed and Breakfast, concludes Young.
Article from: www.iafrica.com