Is now a good time to buy a holiday home in the UK? With abroad travel still clouded by...
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.
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
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 a letting agency, such as Sykes, can help take care of everything from support in choosing the right property to bookings, payments and marketing.
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. Letting agents typically charge on a commission basis per booking, but there may also be set-up fees and annual fees to take into consideration.
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.
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 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.
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.
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.
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.
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.
*Based on a 7 bedroom property in the Lake District with bookings between October 2017 to September 2018.
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