What's A Holiday Let's Weekly Cost To Run?


Thinking of investing in a holiday let? While you can certainly make money as a landlord, running a lakeside retreat or a seaside apartment is not all plain sailing. To make sure your holiday home doesn’t turn into a holiday headache, you need to factor in all the costs involved right from the start. So in this guide to holiday let running costs, we’ll cover everything you need to think about - from agents’ fees to holiday home insurance. That way, you won’t get caught out by any nasty surprises.

Taxes and rates

Taxes for holiday home owners can be bewildering, but when drawing up your weekly budget, it’s vital that you get them right. Fortunately, there are many tax relief schemes that might apply to your holiday let, reducing your weekly costs. Check out the Government’s pages on Furnished Holiday Lettings for full details.
Essentially, if you offer self-catering accommodation in a furnished home in the UK or European Economic Area for more than 140 days a year, HMRC will treat your earnings as a trade, not an investment.

Your rental income is subject to tax. But many of the expenses detailed below – from holiday home insurance to letting agents’ fees – may count as allowable expenses, so you can offset them against your revenue for tax purposes.

You don’t pay council tax on a holiday let – instead, you must register for Business Rate Property Tax. However, you may be able to claim Small Business Rate Relief, which can be as high as 100%, depending on the value of your property and the area where it’s located.

A word of warning: if you own several holiday lets, or have another business, your turnover may exceed the VAT threshold, increasing your costs in many areas.

Finally, do you pay stamp duty on a holiday let? Yes, you do – and there’s a 3% surcharge on all second homes.

You may well prefer to employ an accountant or financial adviser to help you navigate the red tape and make sure you are optimising your investment and your income. Remember to add their fee into your budget spreadsheet as well.

Letting agents’ fees

To make sure your holiday let is seen by as many people as possible, you may want to enlist the help of the experts. Letting agents usually charge on a commission basis, typically around 20-25% of your booking cost. For that, they’ll handle all the marketing and administration to do with your property, freeing up your time for other things. But if you want a full-scale property management service, covering aspects such as cleaning and maintenance, you’ll obviously be paying considerably more. If you’ve got the time to be more hands-on, some large holiday websites will charge a fixed fee for a simple listing and a link back to your property.  

Furniture and décor

Although soft furnishings are usually included in the set-up costs, you might like to set aside money each week towards a revamp in a few years’ time.  The good news is that you can claim capital allowances on your furnished holiday let, meaning you can deduct the costs of kitting it out from your pre-tax profits. 

Utilities, broadband and TV

Gas, water, electric – everything you pay off in your main residence will be needed in your holiday let, too. Wifi is pretty standard in holiday homes nowadays, so unless you’re marketing a remote rural retreat that’s completely off grid, you’ll put most customers off if you don’t offer access to high-speed broadband. And finally, think about what TV package you might offer your customers. After a day of building sandcastles or hiking up mountains, they may well be glad of a lazy evening in front of a film, meaning you might need to stump up for the latest movie package.

Cleaning and laundry

If there’s one thing that will prompt bad reviews from guests, it’s poor standards of cleanliness in your holiday home. Investing in a thorough clean between lets is essential for your business – allow several hours for this, depending on the size of the residence.

Laundry needs to be crisp and fresh, too. If you employ a cleaning company, they may well offer laundry services, too. But costs could start to add up if you have a professional clean after every set of guests. To keep costs low, perhaps you could take on some of the change-over tasks yourself - if you live in close proximity, of course.  If you don’t, this is definitely something that needs to be factored into the holiday let rental fees.

Maintenance and gardening

Holidaymakers expect the highest standards of property maintenance – and rightly so. A holiday can be ruined by tepid showers, lukewarm heating, or a broken dishwasher.

You need to build links with a good local maintenance company, and make sure they can respond swiftly especially in the case of an emergency.
Also, remember to factor in the cost of annual gas, electric and fire safety checks. It’s crucial to keep your certificates up to date, and your guests safe. No matter how well maintained your holiday home, accidents or breakdowns can and do happen. That’s why it’s vital you have holiday home insurance in place to cover your liability towards your guests, or pay for those emergency boiler repairs!

If your holiday let has a garden, you may also need to budget for a regular gardener, especially during the summer. Many landlords choose low-maintenance designs to keep things as simple – and as cheap – as possible.

Welcome packs

It’s often the little personalised touches that turn a good vacation residence into a great one. A complimentary bottle of wine in the fridge; a hamper of snacks and nibbles in the kitchen – all very welcome especially if your guests have travelled a long way to get to you.

If they’re made to feel at home, they’re more likely to return – and recommend you to their friends. So while a welcome pack may add a tenner or so to your weekly budget, it could certainly pay off in the long run.

Protecting your investment with holiday home insurance

One final cost to add to your weekly budget is holiday home insurance. Standard home insurance policies won’t cover holiday rental residences, whether they are businesses or personal second homes for family use.

Since they are often left empty for long periods of time, insurers regard holiday lets as vulnerable to burglars. Furthermore, early signs of damage may not be spotted until it’s too late: a frozen pipe, for example, can burst and flood your property – not the kind of welcome your guests have in mind!

Plus, if you let out your residence, then your holiday home insurance must include public liability and legal cover in case a guest is injured during their stay.
Insurance Choice allows you to compare quotes from a panel of different providers, so you can find the right one for your circumstances. That way, your asset is protected and your holiday let should prove to be a great investment for years to come. Call the team today for a quick and easy quote.