What Are the Weekly Running Costs of a Holiday Let?

Posted by Linda Maclaughlan on 22 February 2016

Are you thinking of starting up a holiday let, but are unsure of the regular costs to factor in?

You’re not alone – thinking about the seemingly endless litany of expenses is one of the most daunting things many people find when they first start up their holiday let, and a lot of my clients come to me for advice on things to factor in.

So, to save a bit of time in future, I thought to myself: ‘What better way to highlight this than to put it all in a blog post for easy reference?’ – And that’s exactly what I’ve done here!

Read on to find out the average running costs you should expect to pay, and which factors can affect this when working out your own costs.

What’s included in your costs per booking?

Instead of looking at things in terms of weekly costs, I prefer to take the more realistic approach of cost per booking – as you could easily get more than one booking per week.

I’ve decided the best place to start here is to give you a brief overview of all the different costs you can expect to pay – you’d be surprised how some of these can quite easily get overlooked!

Things you should take into consideration as far as costs are concerned, include:

  • Cleaning
  • Laundry
  • Welcome baskets
  • Gardening
  • Property maintenance
  • Agency commission fees (if applicable)

Some of the other costs that a holiday letting typically WON’T deal with – but you also need to factor in – include the following:

  • Utility bills
  • Insurance
  • Council tax
  • Setting up costs (furnishings and interior decorating)
  • Broadband/TV subscription
  • Gas/electrical and fire safety (cost of annual checks)

The average costs you can expect to pay

In this section, I’m going to focus on the main costs people think about paying per booking. These will of course vary depending on the size of your property, and very large houses may be well in excess of this.

Average cleaning costs: £40 – £80 per booking

Average laundry costs: £35+ per booking (As a rough guide, you can work this out as £1.80 per item of laundry i.e. bed sheets, pillowcases and towels)

Average welcome basket cost: £10 – 15 per booking

NOTE: In addition, investing in a good gardener for your property could cost you anywhere between an average of £40 – £100 per month. Window cleaning is also around an extra £15 per month.

TIP: On top of these costs – if going with an agency – you will have commission fees to pay. These work out on average at about 20% – 25%, although other factors can affect your fees. Read more in my blog entitled ‘How Much Commission Should You Pay a Holiday Letting Agent?‘.

Real-world examples of cost

To give you a better idea of how much you could be paying for your holiday let, here are some real-world examples which cover the costs for some of my own holiday lets based in the Scottish Borders and East Lothian:

A two-bedroom ground-floor property + slabbed courtyard:

  • Cleaning: £37.50 per booking
  • Laundry: £30 per booking
  • Minimal gardening = £40 per month
  • Welcome baskets = £10 – £15 each (optional)

A three-bedroom mid terrace property + small garden:

  • Cleaning: £45 per booking
  • Laundry: £40 per booking
  • Gardening = £50 per month
  • Welcome baskets = £10 – £15 each (optional)

A four-bedroom detached property + large garden:

  • Cleaning: £72 per booking
  • Laundry: £45 per booking
  • Gardening = £100 per month
  • Welcome baskets = £15 – £20 each (optional)

TIP: These costs will also vary depending on the location of your holiday let. For example, a property in Edinburgh may have higher costs than a same-sized property located in the Borders.

Calculating VAT

If you decide to go with an agency for some (or all) of the above services, you may find that VAT will be payable on top of these costs, in which case you should consider adding an extra 20% onto your budget. This only applies if the agency is a VAT-registered business.

Ways to save on budget

If budget is a bit tight, and you find the thought of paying for some of the above services a bit too expensive, you can choose to take them out of the equation simply by taking on the responsibilities yourself – or employ someone you know who is looking for some extra income.

The only thing I’d say here is to avoid cutting any corners – you should always ensure your holiday let is cleaned and laundered to a professional standard. I find guests can forgive a lot, but not a dirty property! In the past, I’ve seen holiday lets that had huge potential, only to be let down by owners who didn’t clean thoroughly.

If there’s one thing you should never skimp on, it’s cleaning and laundry. And putting it into context with the amount of money holiday lets typically charge, these are fairly reasonable expenses to pay. After all, if it was possible to get £500 – £1,000 per week for doing nothing – we’d all be doing it!

I’m sure you want your guests to have the best possible experience, and leave feeling relaxed, happy and ready to leave fantastic reviews! Plus, happy guests tend to come back time and time again, so you’ll definitely be doing yourself a favour. It’s much easier to deal with guests who have stayed before and loved your place!

Unexpected costs

When it comes to running a holiday let, there’s always going to be unexpected costs that can really knock you for six, which is why it’s always best to have some money stashed away for emergencies! You may have lights to replace, unexpected damage to the property, or even a boiler breakdown (those are the worst)!

There’s also the general cost of keeping your holiday let looking lovely to the high standards your guests expect and deserve – such as a lick of paint every few years, or an upgrade to the soft furnishings.

Conclusion

If you’re thinking of starting up a holiday let, there are so many costs to take into consideration, including cleaning, laundry, welcome baskets, gardening and more! Above, I’ve given you some real-world examples of holiday let running costs, as well as how much you can expect to pay per booking.

There are ways you can save on budget; for example, you may wish to take on some of the cleaning or laundry responsibilities yourself – just be sure not to cut any corners, as your guests will expect the best!

Finally, unexpected costs can also be a challenge, so try to keep some money saved aside in the event of any extra expenses or emergencies!

28 comments on “What Are the Weekly Running Costs of a Holiday Let?”

Written by Karen La Borde Bowman

 

Thank you Linda for an extremely informative article. We have also factored in costs for business rates and income tax for our holiday accommodation. Can you clarify the laundry cost? Is it for at home or laundry cleaning? Kind regards, Karen

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Written by Lowlandlettings

 

Hi Karen Thanks very much for your kind words - we are delighted that you found the article helpful. The laundry costs mentioned here are from a laundry and not home laundry costs. Just a point on business rates if you have a qualifying property and are based in Scotland you can take advantage of the Small Business Bonus Scheme which in some cases can mean there are no business rate to pay. Do let me know if you require further information on this subject. Similar schemes may be available outside Scotland.

Written by Karen

 

Good morning! Oh my goodness! I did not know that you had replied so I am sorry for my late response! I came back to the site to review running costs. I live in Hastings, East Sussex but thank you for the tip! Kindest regards, Karen

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Written by Lowlandlettings

 

No problem Karen, glad to have been of help! All the very best for your venture and do not hesitate to get back in touch if you have any further queries. All the best. Linda

Written by Karen La Borde Bowman

 

Thank you Linda! Kind regards, Karen.

Written by Christine N

 

Hi Thanks for the great information. Can you let me know a bit more info on the Scotland business rates? We are considering letting a property in the Glentrool area. Thanks very much

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Written by Lowlandlettings

 

Hi Christine Thank you!Im delighted you found the blog informative! If you are letting a property as a holiday let you need to apply to have the property removed from the council tax register and placed on the non domestic rates register. You can contact your relevant council at https://www.saa.gov.uk/ Once this has been done you can then apply to the Small Business Bonus Scheme to receive an exemption from council tax and if you meet the criteria this can be a 100% discount. However please be aware that Scottish Water have the right to fit a water meter to your property and you may be charged for water and sewerage and in councils such as East Lothian they will charge for collecting household waste and recycling too. So in reality it may not equate to 100% discount. I hope this helps. Please feel free to contact me again with any further queries and we wish you every success with your new venture. All the best Linda

Written by Christine N

 

Thanks so much for the information Linda

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Written by Lowlandlettings

 

You are very welcome! Anytime.

Written by Sarah

 

Great information, thank you for your honesty!

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Written by Lowlandlettings

 

Thank you Sarah! So happy that you have found it helpful. You can sign up to our blog to be the first to see any new content that we post. We wish you luck with your holiday let venture!

Written by Hels L-U

 

what a great article, thank you and it has certainly given us something to think about when we take the plunge. You mentioned the Welcome Baskets, and I wondered what would you generally put in them?

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Written by Lowlandlettings

 

Hello Helen Thanks so much - we are delighted that you gained something from our blog post and that you are thinking of taking the plunge into holiday lets - it really is a lovely business to be in! Regarding the welcome baskets we think homemade or local is best! We have local chocolate, tablet, coffee that is ground here in the Scottish Borders and locally brewed beer. Its also nice if you have a garden to leave some flowers - bought ones are fine too. A hand written personalised welcome note goes a long way to show your guests that you really care - after all thats what its all about isn't it? I hope this helps and please do not hesitate to get in touch if you have any further questions - I will always answer them as best as I can. Good luck with your new venture if you do decide to take the plunge! All the best Linda

Written by Carl Cattell

 

Hi, a really useful guide for starting out.. good stuff! For me I've worked out very roughly I would retain about 60% of the letting fees after costs, I'm sure this can vary, but does open my eyes to not only what's involved but the work too... Thanks again

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Written by Lowlandlettings

 

Thanks Carl its great to hear that the guides are useful as was the intention when writing them! We wish you much success with your venture and if we can answer any questions for you don't hesitate to get in touch! All the best. Linda

Written by Penny Lawson

 

Very useful Linda, thanks. Can you give me any idea of insurance costs for holiday homes? We are looking into building a house to let on the west coast of Scotland. I'm guessing its a lot more than insuring your own house? Thanks Penny

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Written by Lowlandlettings

 

Thanks Penny - so glad you found it helpful. The West Coast of Scotland - what a beautiful place- we love it there!! Yes holiday let insurance is more expensive than normal residential insurance and even buy to let - this is because the insurers feel there is a greater risk due to the potential longer periods when the property is actually empty. The other problem is that less and less companies are doing it. Two companies we have used are Vaslek and Spectrum Insurance. Id suggest contacting a local insurance broker who will be able to search the market for you or do some research online. I hope this helps and please do not hesitate to get in touch if you have any other questions. Best of luck with your exciting new venture!! Linda

Written by Penny Lawson

 

Thanks very much Linda, will do as you suggest. This may stay just an idea, for a while anyway, but have to admit it is an exciting one! Penny

Written by Lea

 

Hi Linda, how do gas/electric supply rates normally work for holiday rentals? Is it a business rate or do I sign up for a normal account with he supplier? Many thanks, Lea

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Written by Lowlandlettings

 

Hi Lea Thanks for getting in touch! As far as we are aware a normal account is fine with the supplier as it is still a residential property if it is yours. Best of luck with your venture and dont hesitate to get in touch if we can answer any further questions for you! Warmest regards Linda PS Have you remembered to claim for your council tax discount? (If you are based in Scotland?)

Written by Sue Guppy

 

Hello. I'm about to complete on a small cottage in Cumbria. I have had holiday cottage company out to look at the property and sounds good so far! Your advice is great, I will keep reading.

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Written by Lowlandlettings

 

Hi Sue Thank you so much! I'm delighted you got value from the post. Best of luck with your holiday let adventure and dont hesitate to get in touch if you have any questions - I will be delighted to help. Warmest regards Linda

Written by Fenella Hamilton

 

Hi Linda, Your articles are very informative and you evidently know a lot about the business, so I hope you don’t mind my asking – can you say what water and drainage rates are likely to be for a holiday let? Scottish Water have told us that as we have switched to Business Rates for our one bedroom flat, we have to register with a licensed supplier – but the suppliers won't say what we will have to pay, until we have signed on with one of them. I think this is an extraordinary situation, like signing a blank cheque and it’s making me too wonder whether we should go back to paying council tax.

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Written by Lowlandlettings

 

Hi Fenella Thanks for getting in touch and for your very kind words. Im delighted you are gaining something from our content. I can totally understand your frustration with Scottish Water it really is an absolute minefield! You can visit Scotland on Tap at https://www.scotlandontap.gov.uk/ if you haven't already although it really is very vague. According to Scottish Water the majority of non household properties should have a water meter already fitted which is definitely not the case! You should also be able to choose which supplier you use by comparison - another minefield Im afraid. If you do nothing Scottish Water will simply appoint a supplier for you and you may or may not receive a bill. The system seems very chaotic and Scottish Water seem unable to provide any valuable information which I do find surprising as really as a company generally I find Scottish Water to be very good. I am actually researching this subject further and if I do get any clearer advise I will certainly let you know. I really hope this is of some help to you although I realise its not the perfect answer. Wishing you every success with your holiday let and if I can answer any other questions please do not hesitate to get in touch. Warmest regards Linda

Written by Fenella Hamilton

 

Hi Linda, thanks for reassurance that I'm not alone thinking this sector is bit of a mess. One of the suppliers I contacted did send a tariff sheet, though without info about the likely water consumption this seemed a bit pointless. Then I had the idea of Googling for average water consumption = 110 cubic metres for a 2 person household = £400+ in water and drainage charges, using the tariff sheet. That's half of the council tax, including water rates, that we used to pay! You noted rubbish collection might be chargeable too, so it does look like we may go back to council tax. If nothing else it's just one bill and easier! Best wishes with your lets too, Fenella

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Written by Lowlandlettings

 

Hi Fenella I am not sure if you will be able to remain with council tax if your property qualifies as a furnished holiday let then I believe you need to register for business rates. In the Scottish Borders the council tax is doubled for an empty properties too after 2 years!! I have contacted Scottish Water again and again they have referred me to the list of providers - stating that they have nothing to do with businesses water! not much good really but I will keep researching. With regards to rubbish collection in East Lothian we are charged for this by annual bill every two years. I will keep you posted when I get a definitive answer on the water rates. Funnily enough the one that has recently had a meter fitted has stopped receiving bills after the first two when I queried that no one was reading the meter? All the best. Linda

Written by Nicola Carey

 

Hi Linda We are just in the process of completing the development of a 4 bedroom bungalow near loch ness,. Although it is very rural there is a small village nearby We do not live near the property so are ideally looking for someone to help with the management and maintenance as well. We have found someone who is interested in potentially do everything, which is wonderful, but wondered what your thoughts were on as how to best arrange fair payment for the adhocs etc. They mentioned the possibility of a retainer to cover the weeks that the property is vacant and wondered how widespread this is and how best to cost this if we do go down this route? Any help is much appreciated. Thanks Nicola

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Written by Lowlandlettings

 

Hi Nicola Thanks for getting in touch! Wow Loch Ness what a wonderful location!! Yes a retainer is a possibility or they could invoice you every month which is what our caretakers do. Obviously this depends on them being happy/able to do this as they will be out of pocket so I always ensure they are paid very promptly. We have great relationships with the people who care for our properties which is vital as they are one of THE most important members of your team. I hope this helps and please send us a link to your property so that we can share this for you. Best of luck with your venture - creating memories for guests - its a great business to be in! If I can help in anyway please don't hesitate to get back in touch. Warmest regards Linda

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