How to start a holiday let business
Whilst owning a holiday cottage can be a financially rewarding and exciting venture, it can be incredibly daunting knowing...
Owning a holiday cottage and letting it out can be a financially rewarding venture. But it is essential to work out the costs 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.
From holiday let council tax to cleaning and laundry, there are holiday let costs which will always need to be budgeted for, particularly with the cost-of-living and energy bills skyrocketing.
This guide provides you with the information to help draw up a budget and work out your holiday let running costs, to help you achieve the best possible return from your property.
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 the costs of running a holiday let.
To find out more about letting your holiday home with Coast & Country Cottages and get further expert advice, request a free Owners Guide today:
Click here to request an Owners Guide
Read our complete blog for the top nine costs of running a holiday let, or use the quick links below to find out about a particular topic:
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 guests look for and it has a huge influence on first impressions.
The costs of running a holiday let will vary according to the size and location of your property. Whether you use a professional company or choose to clean the property yourself will also have an impact on costs. It is also important to 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.
To make letting as easy as possible for our owners, we also offer a full agency managed service. This includes co-ordinating cleaning services, supplying and laundering bed linen and towels, operating changeovers, regular spot checks of the property, and arranging key collection.
Read more about choosing the right holiday home management service for you.
Important costs of running a holiday let that cannot be overlooked are crisp, clean and high-quality linen. 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.
Coast & Country Cottages’ in-house laundry service, Travel Lite 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.
At Coast & Country Cottages, we operate our own South Devon laundry service, Travel Lite. Linen is regularly updated and of an excellent standard, meaning there are never any quality concerns. Our current costs for linen, which includes the hire of linen and towels are: A two bedroom property sleeping four guests costs £50 per changeover for linen hire, and a three bedroom property sleeping six guests costs £75. Our policy is to make up all beds prior to each booking, ensuring our properties are always presented to the highest standard.
Read our blog on cleaning, housekeeping and laundry for advice on how to prepare your holiday home for guests.
Making your guests feel welcome and at home needn’t take much money or effort. Welcome packs are always well-received and appreciated. A pint of milk or a selection of local treats can add that personalised touch. While an additional expense, it is an important cost of running a holiday let. Happy guests will return and recommend your holiday home to others.
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.
Here is a brief overview of monthly/annual subscription fees to consider:
Every home, be it your own or a holiday let, will have bills. Running costs for utilities and additional provisions all need to be considered as guests expect a ‘home from home’. So, it’s vital to factor in the price of water, electricity, gas and heating bills when working out the costs of running your holiday let. WiFi is now considered an essential feature in a holiday property so it’s worth bearing this in mind when working out your budget.
If you have a TV on your property where guests can watch or record live TV, you will need to buy a license. Currently, the cost of a TV license is £159.00 per year.
If you’d like to provide entertainment subscriptions for guests, these are often run on a monthly basis. Average costs range from £8.99 for Amazon Prime, basic ad-free Netflix subscription from £6.99 and Sky TV bundles start from approximately £26 a month (subject to change).
If your property doesn’t have parking, and dependent on your location, you may have to purchase an individual area business permit. Contact your local council for information about the costs of parking permits in your local area.
For holiday cottages in South Devon, parking permits can be purchased from the South Hams Council for an annual cost of £1,620.00, dependent on the area your permit is valid. When the time comes for the permit to be renewed, it can be changed to an individual area business permit. Estimates of these costs are as follows:
(Prices subject to change, please see the local council’s website for up-to-date information).
As your property is being run as a business, you need to pay for trade waste collection so that it is collected more frequently.
Here in South Devon, prices start from as little as £8.05 per collection (plus bin rental), dependent on your location, property size and occupancy. Alternatively, you can opt for a private refuse collector who charge from £3.50 a bag (this can be out of any vestibule and can be collected on changeover day, so all guests arrive to empty bins). Please get in touch with our property experts and we can help you arrange this.
Here is a brief list of monthly/annual costs to consider:
Keeping your holiday home well-presented and in tip-top shape is important. Regular maintenance and upkeep are essential costs of running a holiday let, it keeps the property running well and prevents 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. Broken down boilers, appliances that fail and other maintenance issues could set you back financially unless you’ve allowed for them in your budget.
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.
Read our blog on how to optimise your holiday home’s outdoor living space for ideas.
The interior of a property is what makes a house a home. Stylish and comfortable furniture, as well as holiday home décor, are necessary expenses when considering the cost of running a holiday let. Read our blog for top tips on how to furnish your holiday let.
Regularly setting aside money to update and refresh the interior can be valuable as interior features tend to wear over time. Fortunately, you can claim Capital Allowances on interior spending, 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.
A useful addition when furnishing your holiday let is providing a detailed holiday let inventory checklist. This ensures your property provides all the essential amenities guests need. It also allows you to keep track of household articles between rentals and over time, and budget accordingly.
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 information about services we provide, read our blog choosing a holiday home letting agency in South Devon.
Furnished 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 third parties and accidental damage.
Coverage for both property damage and guest injuries is highly recommended. Having public liability insurance for a minimum of £2 million, is an essential cost of running a holiday let.
Rates and taxes on a furnished holiday let differ from a residential property. If your holiday home meets certain availability and occupancy criteria, 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.
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.
Holiday home safety checks are essential when anticipating the costs of running a holiday let, here are a few to budget for:
As a holiday homeowner, it is crucial for your property to meet the legal safety requirements and ensure annual testing to make sure your certificates are up to date and checked. Ensure thorough testing, and have certification 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.
Costs are inevitable when letting your property, however there are plenty of ways you can reduce your holiday let costs. With just a few simple changes to how you run your holiday cottage, you could save yourself a substantial amount of money.
If your property meets the required criteria, you may be eligible for various tax relief schemes. All of which will save you money and reduce your holiday let running costs. These can range from deductible expenses including refurbishment costs, insurance, utilities, mortgage interest and even travel to the property. Any losses can be carried forward to the next tax year.
Read our comprehensive guide on Furnished Holiday Let tax which details allowable expenses as well as plenty of other tax benefits.
With the cost of energy rising at an unprecedented rate, you can reduce your bills with a few simple changes. Not only will these changes help in cutting your holiday lets costs, but they also reduce your homes carbon footprint and have less of an impact on the environment:
Installing smart home technology can help you take control of your holiday homes energy bills in various ways.
Good quality LED bulbs use at least 75% less energy, and last 25 times longer than incandescent lighting. A quick and fairly simple way to reduce your property’s carbon footprint and save money in the long run.
The energy rating of an appliance shows how much power it’s likely to use. Investing in an appliance with an A+++ rating will save you money over time compared to an appliance of a lesser rating.
Make sure that you keep your holiday let warm and snug for guests by insulating your property and keeping the cold air out with effective draught-proofing. Both methods are relatively cheap and easy to do but help keep room temperatures warm and use less energy to heat up your home.
These are just a few ways to reduce your energy costs. For more top tips, read our blog on how to make your holiday home more eco-friendly and sustainable.
There are plenty of ways to reduce the amount of water a holiday home uses. The following methods will help bring down the cost of your bills.
Installing water-efficient taps and showers will save both water and energy by minimising the use of heated water. This reduction in water and energy usage will cut your bills.
Cut down on water usage in your property by using a dual flush toilet. They have a split feature button, which gives the option of how much water to use. A normal system uses up to 13 litres per flush, however a water efficient system typically uses only 4-6 litres.
Water leaks will often start so small that they are barely noticeable. However they can quickly become costly when it comes to your water bill and its repair. Being aware of the most common water leaks and how to fix them is essential to protect your home.
Also be sure to protect your pipes against cold weather. Leakage can increase after a burst pipe due to frost. Read more for our advice on holiday let winter maintenance tips.
Maintaining any property is a time-consuming and costly affair. But, keeping your holiday home well maintained will reduce the risk of any long-term damage and expensive repair costs. Whether it’s a lightbulb that needs changing, or a more substantial breakdown, Coast & County Cottages provides a 24-hour emergency support service. Giving guests peace of mind over any problems that may occur.
Over the years, we’ve built a vast network of loyal contractors across South Devon. From electricians and plumbers to gardeners and window cleaners, we always know someone in the local area to fix any issues that may arise.
We also handle invoice payments on behalf of our owners and provide cost breakdowns in our monthly owner statements. Ensuring everything is easy to keep track of.
Throughout the winter we carry out fortnightly checks, helping to keep properties secure. This means that if you decide to come to your property for an owner booking, you won’t have to spend time worrying about whether the boiler will work when you arrive. It’s already covered!
By understanding the costs of running a holiday let, and preparing for every eventuality, you can increase the profitability of your holiday let.
At Coast & Country Cottages, we have over 20 years’ experience in marketing and managing holiday homes in South Devon. Our portfolio consists of over 500 self-catering properties in the local area, with teams based in Salcombe and Dartmouth. Our teams are on-hand to offer expert knowledge, advice and support to both our owners and those thinking of investing in a second home in the region.
We’ve put together a selection of blogs to help answer any of your queries and take the hassle out of holiday letting:
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.
Click here to request an Owners Guide
* All costs are accurate to the best of our knowledge as of January 2023. Cost estimates are dependent on supplier, size of property and location.
Please Note: The information contained in this article was accurate at the time of writing, based on our research. Rules, criteria and regulations change all the time, so please contact our prospective new owner team if you’d like to hear how. Nothing in this article constitutes the giving of financial, tax or legal advice to you; please consult your own professional advisor (accountant, lawyer etc). in this regard. If we have referred within the article to a third-party provider of unregulated holiday let mortgages, this is due to the fact that such mortgages aren’t currently regulated by the FCA.
As a helpful reminder, your home may be repossessed if you do not keep up repayments on a mortgage, so again anything you decide to do in this particular area this is one on which you should take your own professional advice on too, as we aren’t providing and can’t provide you with this.
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