Vacation rental agreement - your ultimate guide & FREE template

The short-term rental agreement for holiday home owners

By renting out your property via Airbnb, VRBO, or Booking, to someone you don't know.. a good holiday let agreement is a must-have for every property owner. I have been a property manager for almost seven years on the beautiful island of Ibiza, and love to share my thoughts with you. Ultimately you can download a free copy of the Airbnb rental agreement that I use myself, which will cover you against all liabilities and cover / prevent damages to your property.

A Man Executing a Short Term Rental Agreement with a Pen

Party and duration

The last thing you want as a property manager is for guests to stay indefinitely and claim that they have signed a contract with rental protections in place. There are cases in Spain where guests booked a property, exploited the contract, and occupied the property. As a holiday homeowner, you must report any squatting activities within 48 hours to the police. Otherwise, you have to go to court, which could take years. It's super important that you name the booking contract well, it should include ´Short term rental´ or ´Vacation rental agreement´ and a definite time of the stay should be defined.

Limiting the number of guests allowed on your property is essential to minimize the risk of damage. Be clear about the maximum number of guests allowed during the rental period. It's a good idea to prohibit guests altogether, even if the rental agreement states a maximum number of guests. This is because unknown guests could jeopardize your insurance or Airbnb Aircover in case of theft or damage. It's better to be safe than sorry.

The only circumstance under which a short-term lease agreement may not be appropriate is when the proposed duration of a guest's stay exceeds 30 days. In such an instance, it would be more suitable to formulate a formalized month-to-month or fixed-term lease agreement.


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Rental price, Deposit, and Payments

When renting out your holiday home, clear rules about payments and deposits are essential. It is hard to give a percentage that you should ask for a deposit, but think reasonably about potential damage. For a Holiday Villa with a rental price of 7500 EUR per week, we usually take a 2000 EURO deposit, to be paid before or upon arrival in cash. You have to state the rental price in the contract clearly and also show the amount per night so that the term and prices are clear for both parties.

As in tourism, clients from all over the world need clear payment instructions. When using a bank account, it should include the name of the bank, BIC/SWIFT, IBAN number, and Beneficiary name for international payments. To work efficiently, we suggest working with an internet bank such as Qonto, N26, and Revolut. Most also give the opportunity to link receipts and booking contracts to each transaction, which makes bookkeeping very easy.

Cancellation policy

Including a clear cancellation policy is a wise way to prepare for unexpected situations, such as the COVID-19 pandemic. It helps maintain high occupancy rates and ensures good profits from your holiday rental. While popular platforms like Airbnb,, and VRBO have policies in place for you to choose from, it's equally important to have a simple cancellation mechanism when renting out your property to acquaintances. We recommend including a cancellation policy that works well for your company in your booking contract.

  • Cancellation more than 60 days before arrival: 50% of the rental price  

  • Cancellation between 59 and 15 days before arrival: 70% of the rental price  

  • Cancellation between 14 and 8 days before arrival: 80% of the rental price  

  • Cancellation 7 days or less before arrival: 100% of the rental price 

House rules in the short-term rental contract

The booking stage is the moment to agree on what is allowed and what is not. If the goal of a group of people is to organize a party with amplified music, they probably will not sign the rental agreement upon finding out that this is not allowed. They sign to be responsible for following the rules and have to transfer a deposit which they could lose. You should use this power mechanism to ensure that they deliver the house in the same condition as received, but also to avoid, for example, professional photography or wedding parties.

Things to write in a vacation rental agreement:

  • Pets policy 

  • Party and guest policy

  • Garbage policy

  • Fair use policy utilities (water, gas, electricity)

  • Minimum age

  • Smoking and use of drugs

  • Check-in time and check-out time, Keys, and Welcome

  • Noise Levels

  • Cleaning Expectations

  • Parking rules

  • Damage reporting

General tips on writing a good vacation rental agreement

While I can continue writing for hours to explain it in minor detail, I am sharing my short-term rental contract template with you. I have made all input fields yellow, if you put your own data in, you should be covered for most liabilities. I am not responsible for any penalties when using my short-term rental template; you can use it as a template for yourself, but ultimately you are responsible for your agreements. Use it as a template and add your own specifics; I will save you a lot of time so you can focus on your business.

Remember to test Holidayhero as well. It will save you time and increase satisfaction and rental revenues! Happy Renting!

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