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:
- Welcome baskets
- 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
- 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.
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!
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.
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!