A security deposit is an extra money collected from the guest and held by a host for possible charges incurred during the resident’s stay. Property damage and legal fees are examples of such additional fees.
While security deposits are standard and expected in most regions, some hosts seek additional deposits under certain circumstances. This is usually to compensate for the possibility of damage.
All types of landlords—Airbnb and otherwise—are exposed to the danger of a guest failing to pay or causing damage to the property. A security deposit is one method of mitigating this risk. However, there are regulations and recommended practices much like any other aspect of the industry when it comes to security deposits.
How Do Security Deposits Work for Airbnb?
There are two basic types of security deposits for Airbnb: those required by the platform, and those required by the host.
In the case of an Airbnb-required security deposit, an authorization hold for the amount is put on the payment method. This means that while neither Airbnb nor the host will hold this amount, the guest will not be able to access those funds until the hold is released. Should check-out be uneventful and no property damage occurs, a release of the hold will be initiated.
Host-required security deposits are made clear to guests before reservation. No authorization holds are placed for this type of deposit. Rather, guests are only charged if a host has to collect on the amount. Security deposits in this case are always handled according to the Host Guarantee Terms and Conditions.
How Much Should I Charge for a Security Deposit as a Host?
Before adding a security deposit to your listing, you have to establish a reasonable amount.
Airbnb-required security deposits are always capped at $1,000 USD. They are usually calculated at 60% of the listing’s nightly rate. However, the platform does not always require deposits. If hosts set a security deposit amount for guests, the one they have set will be used.
Host-required security deposits are generally within a similar range and will depend on how much you assume potential damages to cost. Airbnb does not suggest an exact rate, so you will have to exercise your discretion. Keep in mind that the more you ask, the more you may discourage potential guests from making a reservation.
Should I Request a Security Deposit on My Airbnb at All?
Ultimately, the decision of whether or not to set a host-required deposit rests with you. Consider the type of guest you are targeting and whether a deposit will put them off or protect you in case of any losses. Keep in mind as well that Airbnb’s Host Guarantee will provide you with some protection, but in the case of minor damage and unforeseen issues, a small security deposit of no more than 20% of the total booking may be a better option.
A security deposit is a one-time, refundable sum of money that a host can hold from a guest to protect themselves from the financial repercussions of property damage and/or unsavory guests. It is not required, and ultimately, you will have to decide whether it is more of a benefit or cost.
If you do choose to set a security deposit, don’t forget to also set house rules and outline the requirements in your listing description. This will ensure all expectations are clear from the get-go and you book guests who are happy to comply!
Want to learn more about how to score more bookings and maximize the earning potential of your Airbnb? Come to my next free training session, where I'll go through how we've helped hosts boost their earnings by up to 112%!