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costs of running a holiday let

Starting a holiday let requires many things to be taken into consideration, and one of the most important factors to think about is how much it’s going to cost to maintain and how this is going to impact your income.

To make your venture a success, it’s important to work out the costs of running a holiday let, so you can draw up a budget and work out your finances realistically. To help, here we detail some of the most common costs you’ll need to prepare for, from holiday letting agent fees and business insurance to furnishing your property and keeping it up to scratch.

holiday let running costs

1. Holiday Let Agency Fees
2. Holiday Let Insurance
3. Business Rates for Holiday Lets
4. Furnishing your Holiday Let
5. Utility Bills and Subscriptions
6. Holiday Let Changeover Costs
7. Holiday Property Maintenance and Gardening

Holiday let agency fees

The thought of buying and running a holiday let, along with all of your other day-to-day responsibilities, may feel overwhelming. This is where you can work with a holiday letting agency, such as Sykes, who can help take care of everything from support in choosing the right property to taking care of bookings, payments and marketing.

At Sykes, we can tailor our services to meet your requirements as part of our holiday let management costs – sorting out maintenance, laundry, key collection and cleaning your property through our fully managed service, or you can choose one or two of these services through our partially-managed service.

Holiday letting agent fees could be worth their weight in gold to keep the process as stress-free as possible, so it may be wise to budget for these. There are three main holiday let agency fees that you may be charged:

Commission rate

Holiday let agencies will take a percentage from each booking amount as commission for their services. Holiday let agency commission rates can range from 15% to 25% for each booking that you take.

The commission rates that your holiday let agency charge can change depending on multiple factors. The level of support that you need from your holiday let management company can influence how much commission you pay. As well as this, the amount of time that you want to use your property yourself can also have an impact on your commission rates, as the more time you spend using your holiday home, the less availability there is to attract bookings.

Don’t be put off by those holiday let agents charging a higher commission, as this is likely to indicate a more comprehensive service than those with lower rates.

Setup fees

It is possible that your chosen holiday let agent will take a one-off setup fee as part of the process of getting your holiday let up and running. You can expect your holiday let agents to charge anything from £100-£250 for your setup fee.

This can account for services such as getting your property listing live on the website with professional photography and descriptions, setting the pricing for your property and making your property available to book through third party sites.

At Sykes, we have two options with setup fees. We also offer a premium setup service, which as well as all of the above, will also allow you to be introduced to one of our selected managed service suppliers who can take care of the day-to-day maintenance and cleaning of your property.

Annual fees

Your holiday let management company may also charge you an annual fee to fund the general upkeep of your property listing. This can include keeping your property photos and description up to date, managing your pricing and keeping any third party listings up to date.

Holiday let annual fees tend to be anything up to £100 per year.

Holiday let insurance

It’s essential to insure your holiday property so that you’re protected financially should something go wrong, such as a break in, flooding or a fire. Generally, standard home insurance policies won’t cover holidays lets, so you may need to take out a specialist holiday let insurance policy. Our guide to holiday home insurance details this further.

Specialist holiday home insurance policies will include buildings and contents cover, and will also cover other items specific to holiday lets such as accidental damage, public liability insurance (covering legal costs if someone injures themselves in your property, or you accidentally damage something belonging to your guests) as well as a loss of rental income. Make sure you read the terms and conditions of the policy carefully so you’re happy with the protection you’re taking out.

Business rates for holiday lets

Business rates are another holiday let running cost to take into consideration before you begin your journey. Business rates is a tax that you pay instead of council tax, as your holiday let is classed as a business. The rules regarding these vary depending on which country your holiday let is in.

If your holiday let is in England and is available for short-let periods that total more than 140 days a year (20 weeks), it will be rated as a self-catering property and you’ll have to pay business rates, rather than council tax. In Wales, your property will be valued for business rates if it’s available to let for short periods that total 140 days or more in a year and it’s actually let for at least 70 days. In Scotland, you may have to pay business rates if your property is available to let for 140 days and is actually let for 70 days or more in a year.

The Valuation Office will work out the rateable value of your property, which is used by your local council to calculate your business rates bill. You may be able to claim small business rate relief to reduce this cost if you only let one property and its rateable value is less than £15,000.

If you are looking for more detail, our guide to holiday let business rates tells you all you need to know.

Furnishing your holiday let

Your holiday let’s furnishings and décor will help to make it stand out from the rest, giving guests a lasting impression of it, and hopefully resulting in repeat bookings. So, while you don’t need to spend a small fortune, allow a decent budget to invest in good-quality furniture and fittings that will last.

It’s also wise to put some money aside each year that will allow you to update items as and when required to keep your property looking up-to-date, with the kind of features that guests expect.

Discover our top tips on furnishing your holiday let to turn your property into a successful business.

Utility bills and subscriptions

As with your own household finances, you’ll have to factor the price of utilities into your holiday let running cost budget. Think about gas, water and electricity bills, and shop around for your energy supplier so you can find the most competitive deal for you.

Refuse collection is also different for holiday let owners, as a self-catering property is classed as a business, so you’ll have to pay for commercial waste collection.

To make your holiday let a relaxing getaway for guests, you should also factor in the price for entertainment, including; broadband, a TV licence and perhaps a TV streaming service so your guests can kick back in the evening. For an indication of costs, at the time of writing, the price of an annual hotel TV licence is £157.50, a monthly Netflix subscription starts at £5.99 for a basic plan, and a Netflix & Sky TV package is £27 a month with Sky, plus a set-up fee.

Holiday let changeover costs

First impressions count for everything when it comes to holiday letting – nobody wants to arrive to a property that hasn’t been properly cleaned. This may take some time and effort to do in between each booking however. So if you’d like to bring in professionals to help, holiday home cleaning prices is a running cost to factor in, whether you opt for a cleaning company or use the services that your holiday letting agency can arrange.

Welcome packs are another touch that will be appreciated by guests upon their arrival. This could include; milk, bread, tea, coffee and condiments, but could also be extended to include toiletries, local goodies and more if you’d really like to impress. Your budget for this could be anything from £10 upwards, depending on the number of guests your property accommodates and how much you would like to include

If completing changeovers is something that you don’t have time for, then you can leave all of this to Sykes. From full property cleaning to assembling welcome packs, Sykes can do all of the work for you as part of our Managed Service.

How much do holiday let cleaners charge?

As you’d expect, holiday let cleaning fees vary depending on the size of your property and what you want to be done.

For full cleaning of a two-bedroom property, you can expect to pay anything between £50-85. If your property has five bedrooms, holiday let cleaners could charge between £80-150. For those that would like to give their property a refresh before each guest arrives, a lot of holiday let cleaners provide this as an extra service for a fee of around £15-20.

If you’re looking for your laundry to be done as well, this will require additional costs. Depending on how much needs doing, your holiday let laundry costs could be anything in the range of £15 for one-bedroom properties, to up to £120 for larger properties.

Holiday property maintenance and gardening

Running a holiday let requires constant work to keep things running smoothly and looking good, therefore it is common for holiday let owners to pay for people to come and take care of this for them.

To keep your holiday let looking good and in working order, think about ongoing costs such as a professional gardener and someone to do any repairs that are needed. Depending on the size of your property’s garden, this may need to be a monthly cost.

You’ll also have to schedule and pay for annual safety checks including; a fire risk assessment, a gas safety check and certificate (from £75 a year with British Gas) and install other safety features such as a carbon monoxide alarm in every room containing a fossil fuel-burning appliance. Read more about what tests and checks you may need to conduct in our holiday let rules and regulations guide.

Let your property with Sykes and earn up to £125,000 per year*

  • Join over 15,000 holiday properties already working with Sykes Cottages
  • We welcome over 26 million web visitors a year
  • Many of our owners achieve more than 45 bookings a year
  • We specialise in turning your holiday property into a profitable year-round income for you

*Based on a 7 bedroom property in the Lake District with bookings between October 2017 to September 2018.

holiday let owner pack

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