What is the cost of running a holiday let?
- Starting a holiday let business is rewarding but can be costly
- License and planning requirements
- Safety checks and upgrades, Business costs
- Property costs, Property Management Company costs
- Attract bookings, Manage bookings
- Manage guests' needs, employee costs
The Holiday Letting industry isn’t new, but there is a growing demand by guests for unique holiday stays that has opened opportunities for new holiday rental businesses.
Managing holiday rentals can be lucrative. But what is the cost of running a holiday let business? Don't miss these 11 important charges.
11 Costs of Running a Holiday Letting Business
New to the business? You’ll be asking “what is the cost of running a holiday let?”
Depending on where your business is registered and where your properties are located, there will be different costs to consider. It requires careful research.
1. Complying with local licence and planning requirements
- Licence - in some locations you are required to register properties with a local authority
- Planning - you may also need planning permission
2. Safety checks and upgrades
- Electrical Safety Tests - Electrical Installation Condition Report (EICR), Portable Appliance Tests - (PAT Testing)
- Gas tests
- Legionella tests
- Oil Safety Certificate
- Fire Risk Assessments and Smoke Alarm fittings
- Carbon Monoxide assessments and detector fittings
- Safety Risk Assessments
3. Business costs
- Business rates, council tax, tourist tax and other taxes relevent to your local area
- VAT or Sales Taxes / Occupancy taxes
- Professional Indemnity insurance
- Buildings insurance
4. Property costs: Basics
- Mortgage or Loan payments
- Water and Sewerage
- Parking permits
- Waste removal
- Internet access (wifi)
- Cable TV
5. Property costs: Short term lets specific
- Furnishing improvements for fire and safety compliance
- Breakages and damage
- Linen cleaning and replacements
- Guest supplies, eg toilet paper and washing up liquid
- Welcome baskets for holiday lets
- Window cleaning
- Hot tub, BBQ and Pool cleaning
6. Property Management Company
Typically there are two types of service Property Management Companies or Agencies offer:
- Marketing: work on your behalf to attract bookings
- Full Service: manage all aspects of your rental
7. Attract bookings: Your Own Website
At some point (the earlier the better) you will want to attract direct bookings. Your own website may cost something to build and almost certainly a monthly fee to host.
8. Attract bookings: Advertising
- Booking fees (also known as platform service fees) payable to each channel eg Airbnb
- Channel manager fees payable to a software that makes it easy to connect your properties with multiple channels
- Advertising costs, eg Newspaper adverts
- Social media adverts, eg Facebook
- Free (e.g. the free version of Bookster)
- Paid: property management software provider, eg Bookster
10. Managing guests needs: Guest Communications
e.g. Booking confirmations, sending key codes, replying to messages and newsletters.
You may wish to pay for a system or service that helps you with these communications.
11. Cleaning and turnovers
After each booking, you will need to clean the property and change all the laundry.
You will need to account for:
- Sheets and towels
- Cleaning products
- Welcome pack items
There are a number of costs to consider when setting up a holiday let business. These should be researched when you're preparing to start your business.