There are many costs involved in running a holiday let including mortgage, business rates, cleaning, insurances and utilities. Here is s true reflection of the cost of running a holiday let and what you have to factor in.
A holiday let mortgage typically has a 5% interest rate, therefore if you have a £100,000 mortgage, you’ll be paying roughly £650 each month, £7800 per annum. Holiday Let rates tend to be more expensive than a standard mortgage. If your home qualifies as a Furnished Holiday Let, you can deduct the mortgage interest from your profit, lowering your tax liability.
Business rates/Council tax
It is required to pay business rates once your property is formally classified as a Furnished Holiday Let (meaning it is accessible to rent for 210 days or more per year, according to HMRC). These rates will differ from property to property and will be influenced by criteria such as the size, location, and number of people that the property can accommodate.
Insurance is required to safeguard your vacation home from potential damage or accidents. Burglaries, flooding, fires, and leaks are just a few examples. Standard home insurance policies typically do not cover holiday lets, so you may need to get a separate vacation rental insurance policy.
Buildings and contents insurance will be included in specialist holiday home insurance policies, as well as other items specific to holiday lets like accidental damage, public liability insurance (covering legal costs if someone is injured in your property or you accidentally damage something belonging to your guests), and loss of rental income. Make sure you read the policy’s terms and conditions thoroughly to ensure you’re comfortable with the insurance you’re purchasing.
Utility expenses must be factored into your holiday home. Consider your gas, water, and electricity bills, and then shop for an energy supplier to find the best deal. There are more strategies to cut your utility rates besides looking around for the cheapest utility supplier. After a promotional offer has finished, remember to update your tariff. Also, keep in mind that dual-fuel arrangements aren’t always the most cost-effective and that switching to online billing and paying by direct debit can often save you money. To have a cosy evening in, you’ll need a bit of light. Consider switching to LED or using energy-saving light bulbs which will also save money.
To make your holiday rental a relaxing getaway for guests, include the cost of entertainment, such as broadband, a TV licence, and possibly a TV streaming service, so they can relax in the evening. An annual hotel TV licence costs £157.50 at the time of writing, a monthly Netflix subscription starts at £5.99 for a basic plan, and a Netflix & Sky TV bundle with Sky costs £27 per month plus a set-up fee. These are only a few to consider. There are also other less expensive and more expensive alternatives available out there.
It’s simple to install broadband in your home. All you’ll need is a phone line and a basic broadband bundle to get started. This should be less than £20 per month, and it will come with a router. If you only let your house out for the holidays, suppliers like Virgin Media, NOW, and Direct Save Telecom offer a 30-day temporary internet service that may be more suitable if you don’t want to be locked into a 12-month contract.
It’s just as important to keep your holiday home in good shape as it is to manage your outdoor space — guests should arrive at a clean, neat, and well-prepared house. If you have a busy holiday rental with numerous reservations, you will almost certainly need to hire a professional housekeeping service.
A busy holiday rental, as comparison to an empty house, will surely incur additional, unanticipated operating expenditures from time to time. Furniture could be damaged, walls may need small touch-ups, glassware and dishes could be cracked, and so on. If you have many visitors staying at your house, the cost of such repairs and maintenance will almost certainly increase, since there will be significantly more wear and tear.
Maintaining a clean and tidy property is critical to the success of your vacation rental. One of the first things guests look for when visiting a holiday home is cleanliness, which has a significant impact on first impressions.
The cost of running a vacation rental varies depending on the size and location of your home, as well as whether you hire a professional cleaning service or do it yourself. It’s also vital to factor in spring/deep cleans at the start of a busy season and after you’ve had a lot of bookings during the quieter times. To keep costs down, you might be able to do some of the change-over activities yourself – if you live close enough. If you don’t, it’s something that should be reflected into your vacation let rental prices.