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Taking a deposit is a common practice in the short-term rental industry to protect property owners or managers against potential damages or rule violations by guests.


Always ensure that your deposit policies comply with local regulations and laws governing short-term rentals. Clearly communicate your terms to guests so they understand the purpose of the deposit and the conditions under which it will be returned or forfeited.


Here are some effective ways to take a deposit for short-term rental guests:


Credit card authorisation


Obtain a pre-authorisation on the guest's credit card. This doesn't charge the card but places a hold on a specific amount, which can be released after the stay if no issues arise. Most online booking platforms and payment processors support this feature.


Security deposit


Require a traditional security deposit. This involves collecting a specific amount upfront, separate from the rental fee. This amount is refundable after the stay, provided there are no damages or violations of terms.


Vacation rental insurance


Encourage or require guests to purchase vacation rental insurance that covers potential damages. This can be a more comprehensive approach and provides an additional layer of protection for the property owner.


Online booking platforms


If you use online booking platforms like Airbnb or VRBO, take advantage of their built-in security deposit features. These platforms often provide protection for hosts and have processes for handling deposit claims.


Rental agreement


Include a clear deposit policy in your rental agreement. Make sure guests are aware of the deposit amount, the conditions for its return, and any circumstances under which it may be partially or fully forfeited.


Damage protection programmes


Enrol in damage protection programmes offered by some vacation rental platforms or third-party providers. These programmes typically cover accidental damage up to a certain amount and may be offered as an alternative to a traditional security deposit.


Direct bank transfer


Request a direct bank transfer for the deposit. This method may take more coordination, but it provides a secure way to collect funds, especially for guests who prefer not to use credit cards.


Use a rental management software


If you use rental management software, leverage its features to handle deposits. Some software solutions provide tools for collecting and managing deposits seamlessly.


Discounts for lower deposits


Offer guests the option to pay a lower deposit if they purchase a damage waiver or insurance. This can be an incentive for guests to choose a deposit protection option that is more attractive to them.


Clearly communicate policies


Clearly communicate your deposit policies on your website, in your listing descriptions, and during the booking process. Transparency helps manage guest expectations and reduces misunderstandings.


Prompt refunds


If there are no issues after the guest's stay, promptly refund the deposit. Timely refunds contribute to a positive guest experience and can lead to positive reviews and repeat business.


Document and photograph


Before guests arrive, document and photograph the property's condition. This provides evidence in case a dispute arises, and you need to claim a portion or the full amount of the deposit.

Further reading:


HCH Directory – Deposits

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