You want to protect your Airbnb property from damage, but should you charge an Airbnb security deposit? Here is everything you need to know to help you decide if an Airbnb security deposit is a good idea for your business.
An Airbnb security deposit is a set amount of money that is collected from a guest in order to cover damages to the property incurred during a stay. A security deposit may be necessary because the Host Guarantee does not protect Airbnb hosts against “reasonable wear and tear” to their properties. It is actually only designed to protect against “rare instances of damage.”
As a result, Airbnb allows hosts to set up a security deposit to cover minor damages that would not be covered under the Host Guarantee. For example, if a guest breaks some glasses while staying at your property, you’ll have to incur the additional expense of a deep cleaning to ensure that the property is safe for the next guests.
However, Airbnb won’t consider this damage to be major and won’t cover it under the Host Guarantee. As a result, this becomes an out of pocket expense for you, unless you charge the guest a security deposit.
If there is a security deposit in place, then you will be able to deduct the cost of this deep cleaning from the amount you collected from the security deposit. The guest is then penalized for the damage and you don’t have to spend any of your own money to fix the problem.
When guests make a reservation, they are not immediately charged for the deposit. Instead, the host must make a claim on the deposit in order for the guest to be charged. Hosts are allotted a maximum of 14 days from the guest’s check-out date to make a claim on the security deposit in the event that damages to the property have occurred.
The security deposit also isn’t collected immediately after the host decides to make a claim. Instead, the host must contact Airbnb via the Resolution Center in order to provide evidence of the damage that has occurred. The evidence should include photos and receipts for repairs. The host also has the option to work out the collection of the security deposit with the guest directly or they can have Airbnb mediate the claim.
Currently, about 59% of Airbnb hosts require a security deposit. Deciding whether or not to charge a security deposit is really up to the individual discretion of the host. Airbnb doesn’t recommend a specific amount for a security deposit. Figuring out what to charge is something that you will need to determine on your own.
From reviewing what Airbnb hosts have reported on several forums, there seems to be no set amount to charge for an Airbnb security deposit. However, a common theme seems to be that the security deposit shouldn’t exceed about 20% of the total cost of the booking. On average, hosts appear to be charging anywhere from $100-500 per booking for an Airbnb security deposit.
While a security deposit might be a good way for hosts to protect themselves in the event of damage to their properties, there seems to be a number of downsides to an Airbnb security deposit.
Here are some of the issues that we uncovered:
Some hosts worry that charging a security deposit will actually deter guests from booking. In fact, this may be true based on what some hosts are saying around the web. One Airbnb host on Reddit reported that he had been receiving a lot of questions about the security deposit from guests who were new to Airbnb.
These guests wanted to know whether the security deposit would be charged up front or if it is included in the booking price. In fact, this host believes that some guests are deciding not to book because they think that they will be charged the security deposit upfront. This is despite the fact that Airbnb says that they won’t be charged upfront.
This example also highlights the fact that hosts simply don’t believe that Airbnb is doing enough to educate guests about the Airbnb security deposit. Instead, hosts are forced to explain the process to guests on their own. As a result, the booking process only ends up seeming more complicated to guests, making them less likely to book.
The other issue is that charging a security deposit also makes certain hosts appear as if they are less trusting of guests since hosts aren’t required to set an Airbnb security deposit. In fact, an Airbnb host reported that she has a regular guest who says that she won’t book from hosts who charge security deposits.
The guest says that she simply wants the host to trust that she will leave the place clean and free of damage. In her eyes, a host who charges an Airbnb security deposit is likely picky and just looking for a way to claim it as an extra source of revenue.
Although Airbnb’s official help pages state that guests are not charged for the security deposit unless a claim has been made, some reports are saying otherwise. Several people have reported that Airbnb did indeed create pending charges to their payment method for an Airbnb security deposit. This also puts hosts in a bad situation because it makes them look like they lied to their guests.
Airbnb host lincoln points out that hosts may still be forced to take guests to court in the event that neither Airbnb Host Guarantee nor the amount they charged for an Airbnb security deposit fully covers the hosts out of pocket expenses.
In light of these concerns about Airbnb security deposits, you’ll have to decide if it is worth the risk of losing some bookings in favor of protecting your property. To figure out the best approach, talk with your insurance agent to ensure that you have adequate coverage.