– Do you know the top 10 costs of running a holiday let?
– Are you aware of the changing regulations and how they affect your property?
– Are you looking for a professional and reliable company to take care of your property and guests?
If you answered yes to any of the above, then you need to speak to SODA Property Management. We are experts in the field of holiday let property management and can take care of all the important details, so you don’t have to.
We get asked all the time What are the costs of running a holiday let? Here are the top 10 costs of running a holiday let that you need to be aware of:
- Holiday letting changeover costs
- Mortgage or rental Costs
- Utilities and subscription fees for services provided
- Property maintenance
- Holiday Let décor and furniture
- Professional Serviced Accommodation property management
- Furnished holiday home insurance
- Council Tax and/or Business Rates for Serviced Accommodation
- Accountancy
- Holiday Lets safety checks
- Guest Costs and Running Costs
SODA Property Management can help you with all of the above, and more. We will take care of your property and guests, so you can relax and enjoy your holiday let stress-free. Contact us today for a free consultation.
1. Holiday let turnaround costs
As a holiday let property owner, you need to be aware of the fees associated with running costs of your property. These can include:
• Cleaning costs – to ensure your property is clean and presentable for guests
• Laundry and linen – to provide clean towels and bedding for guests
• Welcome packs – to provide guests with essential information about your property and the local area
If you are thinking of letting out your property as a holiday let, it is important to factor in these costs to ensure you are making a profit. Let’s look at them
Cleaning Costs for your Holiday Cottage
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. The costs of running a holiday let 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. By factoring in these costs from the get-go, you can ensure that your property is running smoothly and providing guests with the best possible experience.
Linen and laundry costs
As a holiday let property owner, one of the costs you cannot overlook is clean, high-quality linen. Purchasing and cleaning your own linen can be quite costly, but it can be offset against any profit you make. One option that might appeal to you is renting linen.
We outsource our linen services to a third-party laundry service. This allows us peace of mind in knowing that all laundry is cleaned to a professional standard and we don’t have to worry about the cost of the linen. Linen hire and laundering are priced at a simple cost per head depending on the property size, which makes it easy for owners to 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 hired linen is regularly updated and of an excellent standard, so you never have to worry about quality.
Our current costs for linen are £11.00 per head, which includes the hire of linen and towels. Therefore, a two-bedroom property sleeping four guests costs £44.00 per changeover for linen hire, and a three-bedroom property sleeping six guests costs £66.00.
For consistency and to ensure our properties are always presented to the highest standard, our policy is to make up all beds prior to each booking. This way, you can relax knowing that your property is in good hands.
Welcome packs for Serviced Accommodation Guests
Running a holiday let property can be a costly endeavor, but one of the ways you can make your guests feel at home is by providing a welcome pack. Welcome packs are always well-received and appreciated, and can be as simple as a pint of milk or a selection of local treats from the area. While it is an additional expense, it is an important cost of running a holiday let. Happy guests will return again and recommend your holiday home to others. Vanessa’s local delicatessen is one great option we use for ordering welcome hampers for some of our holiday let properties. Keep in mind that the costs of running a holiday let property can vary, so be sure to budget accordingly.
Mortgage or rental Costs
The cost of a mortgage for a holiday letting property can vary greatly depending on the size of the deposit and the cost of the property, in turn, based on the location, type of property, and market conditions. However, as a general rule of thumb, you can expect to pay anywhere from 3-6% of the purchase price of the property in mortgage costs. For example, if you were to purchase a £100,000 rental property, your mortgage interest costs would be somewhere in the range of £3,000 to £6,000 per year.
It is also possible to rent someone else’s house and then use it as a holiday let, please read our specific blog on this type of process. The costs of this rent depend on the local market and the length of your lease
2. Utilities and Subscription fees to consider
If you’re thinking of turning your property into a holiday let, there are a few running costs you’ll need to take into consideration. Utility bills such as Gas, electric and water bills will still need to be paid, and you may also want to subscribe to a TV license or Netflix. On top of utility bills you may also need to purchase an annual parking permit. refuse collection will also need to be arranged and paid for. However, many of these costs can be accurately budgeted for annually so there shouldn’t be any nasty surprises. If you have any questions about the minimum services you should include in your holiday rental or anything else, our property experts would be more than happy to help.
Most holiday letting properties will require some form of commercial waste collection service in order to keep the premises clean and tidy. The cost of this service will vary depending on the size and location of the property, but as a general rule of thumb, you can expect to pay around £100 per month for a small holiday cottage.
3. Property Maintenance
If you’re thinking of letting your property as a holiday home, it’s important to factor in the monthly and annual costs of maintaining the property. These can include gardening, window cleaning, servicing and repairing appliances, and unexpected repairs.
While regular upkeep is important to keep your property in good condition, there will always be unforeseen costs that can arise during the year. This is why it’s important to have a budget for unexpected expenses. By being prepared for these costs, you can avoid financial stress if something goes wrong.
Properties with gardens or outdoor spaces require regular care and attention. We 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.
For more tips on optimising your holiday home’s outdoor living space, check out our blog.
4. Holiday home décor and furniture
If you’re thinking of renting out your property as a holiday home, it’s important to be aware of the additional costs involved. Holiday home décor and furniture can be expensive and obviously can vary depending on the level of finish, but it’s worth investing in to make your guests feel at home. You may also need 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.
5. Professional Serviced Accommodation property management
As a holiday let property owner, it’s important to be aware of all the potential costs associated with running your property. Enlisting the help of a professional agency like SODA Property Management can ease some of the burden, but there are still other costs to consider on top of the management fees. Things like taking photos, creating marketing material, and website hosting can add up quickly.
When you work with SODA Property Management, our small annual fee helps contribute to continuing innovation in marketing. Plus, we charge an agreed, bespoke commission rate on your bookings, depending on the level of service you choose. So if you’re looking for a hassle-free way to run your holiday let property, be sure to give us a call. Sample holiday cottage management costs vary from 10 to 25% of bookings taken. SODA Property has some of the lowest management fees within self catering accommodation
6. Furnished holiday let insurance
If you own a furnished holiday let property, it’s important to make sure you’re adequately insured. Furnished holiday let insurance is a specialist form of cover that covers a wide range of potential risks, including damage to your property and liability for injury to third parties.
Public liability insurance is an essential cost of running a holiday let, and you should aim to have cover for at least £2 million. Other costs to consider include insurance for accidental damage and loss of earnings if your property is unavailable for letting due to damage.
Make sure you’re fully aware of the essential costs when running a holiday let property before you take the plunge – it could save you a lot of money and hassle in the long run!
7. Council tax and business rates for holiday lets
If you’re thinking of turning your property into a holiday let, it’s important to be aware of the different rates and taxes that apply. Unlike residential property, a furnished holiday let is subject to business rates rather than council tax. However, you may be eligible for small business rate relief, which can reduce the amount of council tax you have to pay. If you can pay business rates then there can be tax benefits which effect the monthly cost
For more information on business rates and council tax for holiday lets, check out our guide or visit the HMRC HS252 help guide. With a bit of planning and research, you can make sure you’re fully prepared for the council tax or business rates costs involved in running a holiday let property.
8. Accounting Costs
As a holiday let property owner, it’s important to understand the different tax rules and allowances that you may be eligible for. Utilising the services of a professional accountant or bookkeeper can help ensure your finances are in order, and that you’re making the most of any government allowances. This can help maximise your return on investment, and ensure you’re meeting your obligations as a property owner and paying the correct level of income tax.
9. Annual holiday home safety checks
As a holiday let property owner, it is important to be aware of the potential costs associated with running your property as a holiday home. Gas safety checks, PAT testing, fire risk assessments and electrical installation condition reports are all essential in ensuring that your property meets the legal safety requirements. These tests and checks can cost anywhere from £80 to £400, depending on the type of test and the frequency with which they need to be conducted. It is therefore important to factor these costs into your budget when owning a holiday let property. For more information on the tests and checks required, please see our holiday let rules and regulations guide or electrical safety requirements guide.
10. Guest Costs
Most people when they think about holiday lets and the costs of being a holiday let property owner, they think about mortgage repayments, bills, cleaning and laundry costs. But there are other, more unexpected costs that can crop up. Things like damage to furniture or fittings, or guests checking out late and leaving you with a void period.
These sorts of things can really eat into your profits, and that’s why it’s so important to have a good property management company looking after your property. SODA Property Management are experts in holiday let property management in Yorkshire, and we can make sure that when these sorts of things happen we’ll make sure everything is in order, and we’ll deal with any problems swiftly and efficiently.
So there you have it, 10 hidden costs behind holiday letting a property. Of course, this is just a snapshot of some of the potential costs you might face – there could be other unforeseen costs that crop up along the way. But with a bit of planning and preparation, you can make sure you’re ready for anything!
If you’re thinking about turning your property into a holiday let, or if you’re already a holiday let property owner and looking for a professional property management company to take care of everything for you, then get in touch with us today. We’ll be more than happy to send you our FREE owner pack and chat through your options and help you find the perfect solution for your needs.