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cost of running a holiday let

Owning a holiday cottage and letting it out can be a financially rewarding venture. But with all things, it is essential to work out the cost of running a holiday let. You know what you will be earning, but it’s important to keep track of all your outgoings in order to make your holiday let a success.

Whether they are fixed or variable costs, it is important to budget for everything – especially those unforeseen expenses.
Here at Coast & Country Cottages, we have over 20 years of experience in marketing and managing holiday cottages in South Devon, so our knowledgeable team can offer advice on all aspects of letting, including what costs to expect.

We’ve drawn up a brief overview of the top 9 top costs of running a holiday let:

1. Holiday let changeover costs

• Cleaning costs
• Laundry and linen
• Welcome packs

Cleaning costs

Having a clean and tidy property is paramount to the success of your holiday let. Cleanliness of a holiday cottage is one of the first things guest look for and it has a huge influence on first impressions.
Costs will vary according to the size and location of your property and whether you use a professional company or choose to clean the property yourself. It is important to also factor in ‘spring/deep cleans’ at the beginning of a busy season, and during the quieter time after you’ve had a lot of bookings.

Linen and laundry

Crisp, clean and high-quality linen is another essential that cannot be overlooked. Purchasing and cleaning your own linen can be quite costly, although it can be offset against any profit made. The option of renting linen may prove to be an option which appeals.

cost of running a holiday let linen

Coast & Country Cottages in-house laundry service allows you peace of mind in knowing that all laundry is cleaned to a professional standard, and available to you without having to outlay the cost for the linen.

Linen hire and laundering are priced at a simple cost per head depending on property size, enabling owners to easily calculate their outgoings per booking. Hiring linen means that you can avoid the initial cost of supplying multiple sets of bedding and towels, and the worry of replacing items that gets worn or damaged. All Travel Lite linen is regularly updated and of an excellent standard, meaning there are never any quality concerns.

Our current costs for linen are £11.50 per head, which includes the hire of linen and towels, collecting dirty laundry from your holiday home and returning after laundering.

Read our blog on cleaning, housekeeping and laundry for advice on how to prepare your holiday home for guests.

Welcome packs

Making your guests feel welcome and at home needn’t take much money or effort. Welcome packs are always well-received and are appreciated. A pint of milk or a selection of local treats from the area can add that personalised touch. While it is an additional expense, it’s an important one to consider. Happy guests will return again and recommend your holiday home to others.

cost of running a holiday let welcome pack

Costs for welcome packs can vary. In our experience, some property owners like to leave a small selection of tea and coffee, whilst others order a welcome hamper from a local company like Delimann or Aune Valley Meat.

2. Utilities and subscriptions

Here is a brief overview of monthly/annual costs to consider:

• Gas, electric and water
• Broadband
• TV license/Netflix/Sky
• Annual parking permit
• Refuse collection

Every home, be it your own or a holiday let, will have bills. Running costs for utilities and additional provision all need to be considered. Many of these costs can be accurately budgeted for annually, so there aren’t any nasty surprises.

If your property doesn’t have parking and dependent on your location, parking permits can be purchased from the South Hams Council for £650 annually.

As your property is being run as a business, you may need to consider paying for waste collection in addition to the domestic collection facilities, so that it is collected more frequently. Prices can vary from between £220 – £570 and for a 52 week contract and from £440 – £1140 for a 26 week contract dependent on your location, property size and occupancy but our local team can help you arrange this.

3. Property maintenance and gardening

Here is a brief list of monthly/annual costs to consider:

• Gardening – around £15 – £25 per hour, dependent on garden size
• Window cleaning – dependent on size and number of windows, standard can be around £25 per clean
• Unexpected costs – Boiler, damage, appliances
• Annual maintenance and appliance servicing

Keeping your holiday home well presented and in tip-top shape is important. Regular maintenance and upkeep are essential in order to keep the property running well and prevent major issues arising.

Annual maintenance on not only the property but appliances and fixtures is essential and prevents major repairs. But, no matter how well your property is looked after, there are unavoidable and unforeseen costs that may occur throughout the year that will need to be factored in. Burst boilers, appliances that fail and other maintenance issues could set you back financially unless you’ve allowed for them in your budget.

cost of running a holiday let gardening

Properties with gardens and outside spaces require regular care and attention. We would recommend booking a gardener around once a month during the summer and every three to four months over winter. Low maintenance gardens are always going to be a cost-effective option for owners.

4. Furniture and décor

cost of running a holiday let decor

The interior of a property is what makes a house a home. Stylish and comfortable furniture in a tasteful décor need to be included when you consider the start-up costs of a holiday let. It may be worthwhile setting aside money to refresh and update the interior on a regular basis, as things can get worn with regular use. Fortunately, you will be able to claim Capital Allowances on what you spend on your interior, which can be deducted from your pre-tax profits.

Read our comprehensive guide on Furnished Holiday Let tax which details allowable expenses as well as tax benefits.

5. Holiday letting agency fees

cost of running a holiday let

Enlisting the help of a professional agency such as Coast & Country Cottages to manage your holiday let will make your life easier. Benefit from years of expertise, local contacts, as well as national and regional marketing. When looking after your own holiday let, additional extras sometimes aren’t considered. Taking photos, creating marketing material, website hosting costs etc. can begin to add up. When letting with Coast & Country Cottages, our small annual fee contributes towards continuing innovation in marketing. We will charge an agreed, bespoke commission rate on your bookings, depending on the level of service you choose.

For more about the type of service we provide, read our blog on choosing the right holiday home management service for you.

6. Insurance

Holiday let insurance is a specialist form of cover for owners that rent their furnished holiday homes. Insurance of this sort covers a multitude of elements that a normal home insurance policy generally won’t. These could include injury to 3rd parties and accidental damage.
It is always advisable to ensure that you are covered not only for damage to your property, but for guests who are staying. Having public liability insurance for up to £2 million, which will cost around £250 a year, is highly essential.

7. Council Tax and Business Rates for Holiday Lets

Rates and taxes on a Furnished Holiday Let differ from a residential property. If your holiday home is available to rent for 20 weeks (140 days) or more in a year, then you should be registered for Business Rates Property tax rather than council tax. But don’t despair…you may be able to claim Small Business Rate relief, which will reduce the amount of council tax you will have to pay.

For more information, read our guide to holiday let business rates and council tax or visit the HMRC HS252 help guide for more information.

8. Accounting / bookkeeping

Understanding the intricacies of tax rules and allowances is imperative to ensuring your finances are all correct, and that you have a positive return on your investment. Using the services of a professional accountant or bookkeeper to manage your finances could ensure that you are paying the correct tax, as well as making the most of the allowances that the government gives.

9. Annual safety checks

Here are a few annual safety checks to budget for:

• Gas safety check – around £80 – £120 annually
• PAT testing electronics – £50 – £150 annually
• Fire Risk Assessment – around £80 – £200 annually

cost of running a holiday let

As a holiday homeowner, it is crucial for your property to meet the legal safety requirements and ensure annual testing, making sure your certificates are up to date and checked. It is vital to ensure that all tests are thorough, and certification must be carried out by a qualified engineer. To find out more about the safety checks required or for help booking these, speak to our locally based managed services team.

Read more about what tests and checks you may need to conduct in our holiday let rules and regulations guide and electrical safety requirements guide.

Inevitably, there will be costs involved in letting your holiday home, but keep in mind that you will be able to deduct holiday home expenses from your income tax. Deductible expenses include refurbishment costs, insurance, utilities, mortgage interest, and even travel to the property. Any losses can be carried forward to the next tax year.

Ensuring you have a clear understanding of the cost of running a holiday let and making sure every eventuality is prepared for will help make your holiday let profitable.

Contact our local team in our Salcombe and Dartmouth offices to talk to our Owners Relation Team for further advice, or visit our ‘let your cottage’ page to request a free owner pack.

* All costs are accurate to the best of our knowledge as of 24 February 2021. Cost estimates are dependent on supplier, size of property and location.