How Much Commission Should You Pay a Holiday Letting Agent?

Posted by Linda Maclaughlan on 22 February 2016

Are you thinking about signing up to a holiday letting agency, but aren’t sure of the commission fees?

There are so many costs to take into consideration when running a holiday let, so commission fees on top of everything else can seem off-putting – however, they are for the most part a necessary evil when signing up with a letting agency.

As a letting agent myself, many new clients come to me feeling very unsure of what they can expect to pay in terms of commission – because hardly anyone mentions these rates on their websites – which is why I thought there was a real call for this blog post.

Below, I’m going to tell you the average commission costs you can expect to pay, how commission costs are worked out, and ways you can save on your budget.

How is commission worked out?

Commission fees via holiday letting agencies are usually worked out based on a percentage of the booking cost. Most agencies work out their costs this way, although some larger holiday letting websites (such as holiday lettings and owners direct) have a paid listing amount starting at around £300+.

Of course, if you’re also paying for services such as property management (cleaning, laundry and maintenance) then these costs can be charged on top of your booking commission.

The average commission fees

For an average holiday let, the fees you can expect to pay are roughly 20% – 25% for bookings only. However, some of the smaller agencies may offer more competitive rates – for instance, we charge 15%, which is highly competitive for the market.

Unfortunately, for most holiday letting agencies, the only way to really know how much commission you can expect to pay is to actually call them up and ask. This is because, like I said above, not many agencies will display these costs up front on their website.

Determining your costs

To figure out your costs, the best thing to do is to call up a few different agencies and work out exactly how much commission each will charge – as well as everything that’s included for that fee, such as:

  • Marketing
  • Administration
  • Property management
  • Changeovers
  • Cleaning/laundry
  • Professional photos

Once you have an idea of all you can expect to pay, you can factor this into your weekly costs and figure out your overall budget – I always recommend to only choose an agency that a) you’re happy with and b) makes financial sense. A balance of the two is usually the safest bet.

Ways to save on budget

Some agencies are able to offer holiday let owners a bespoke service tailored to fit their needs, and this can be a great way to save on costs if you don’t want to pay for a full property management service. So, all you need to do is pick the services you need, and do the rest yourself!

The trick here is to pick a holiday letting agency that is happy to let you do that, but also be around to offer support and advice if and when you need it. I used to be with an agency before I started my own, and I was so put off by how little they seemed to care, that I was prompted to create Lowland Lettings!

I’ve since heard many stories from holiday let owners who have been in the same boat, and have felt they’ve gotten very poor value from previous agencies, so please take your time when choosing and ensure you’re 100% confident it’s the right agency for you.

Conclusion

If you’re in the market for a holiday letting agency, one of the first things you’re going to want to learn is how much commission you can expect to pay, and exactly what you’re getting for your money – yet hardly any agencies actually display detailed costs on their website!

It’s usually worked out as a percentage of the overall booking cost, and the average you can expect to pay is around 20 – 25%. However, for full property management services, fees can be even higher, so I’d recommend talking to a few different agencies and getting some quotes to give you a rough idea.

You can save on your budget by choosing a bespoke service, and taking on some of the responsibilities yourself – however, I’d recommend finding an agency who will be there to offer support and advice when needed. An agency like that is worth its weight in gold!

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19 comments on “How Much Commission Should You Pay a Holiday Letting Agent?”

Written by Deleted User

 

Please send me information about using you as a letting agent. We are in the North Pennines OANB.

Written by Deleted User

 

Hello, I'm unclear regarding commission, booking fees and VAT charges. I am trying out an agent for the first time and have given them notice as I'm not happy. Incidentally I have had to give six months notice. Fortunately this was given six months into the contract and so I'm not stuck with them beyond a year. My current agent charges me a booking fee and then VAT charge on the overall cost of the booking which makes a huge deduction. The booking fee and the 20% VAT charge is taken out of the overall fee the holidaymaker pays. This leaves me as the homeowner with a fraction of the total to cover cleaning, maintenance, replacement of goods, bills and running costs etc. Is this the norm ?

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Written by Lowlandlettings

 

Hello there Thanks for getting in touch, Im sorry to hear you have been having problems, hopefully I can help. With larger agencies they will charge a commission for getting the booking for you - typically 20% - 25% and they then charge VAT on this amount as they will be VAT registered and required by law to collect this VAT. Can you give me some figures on what your weekly rate is and how much you are being charged? In previous blogs we have mentioned the very labour intensive and costly nature of holiday lets and compared to a longer term tenant it can be less cost effective and usually much more labour intensive. This depends on other factors too of course like does the tenant pay their rent and if there is any damage to the property or repairs required. When you take into account occupancy rates and here in the Scottish Borders the average is around 45-50% then a longer term tenant may be more cost effective and less work. It also depends on why you have the property as a holiday let ie if you wish to use it yourself then the holiday let route is the right choice but it all depends on your personal circumstances. If you'd like to give me a bit more info and/or a link to your property I will be able to look at this in more depth for you. I hope this helps.

Written by Deleted User

 

Generally agents charge the guests a booking fee and only the commission is charged to the owner. Some agents will also charge for photos, damages fee etc (we do not). Agree with the regular charges noted in the article, none missed. However agency fees can be as little as 15%, from local agencies like ours., though they can indeed go up to 25%.

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Written by Lowlandlettings

 

Hi Leanne Thanks so much for commenting on our blog. Im delighted to hear that you agree with the regular charges we've mentioned and that you, like us charge 15%. Its a pity more agents or really websites in general didn't display their charges upfront on their site - it really would be helpful! Best of luck for the forthcoming very busy booking time and I hope you have a very successful year! All the best Linda

Written by Deleted User

 

Hi, I am thinking of buying a property in Gairloch to use as a holiday let, I have no idea how things work with letting agents and how much I am likely to earn from the let. We have seen a 3 bed bungalow for sale up there. Would you be able to give me an idea of the income and costs involved, we live in Devon and would not be able to sort out the change overs or do any of the routine maintenance jobs, like cleaning and keeping the garden tidy or checking the property for any damage. We would want to use the property for our selves for a few weeks of the year. I would be very grateful if you send me the information in the next couple of days because I am hoping to travel up to view the property towards the end of next week. Thank you! Neil Chambers

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Written by Lowlandlettings

 

Hi Neil Thanks for getting in touch. What you will earn from the property is dependent on many factors and without knowing the property and what standard of accommodation you will provide its difficult to give you an answer to this. I think the best thing for you to do is get in touch with a local agent and do some thorough research on what is currently available in the area and what income you can expect to achieve. Here in the Scottish Borders there are many holiday lets and it is a very competitive market. Its vital you do this research before you buy. Also take into account the costs to get the property ready for guests. Finding an agency that can do everything for you may be difficult as many only do bookings. It is therefore vital to find a very competent caretaker to work alongside the booking agency especially as you live so far away. There are many aspects to running a successful holiday let and in a competitive market you need to be able to stand out. My blog https://www.lowlandlettings.co.uk/what-are-the-weekly-running-costs-of-a-holiday-let/ may help you with some of the weekly costs and if you wish to send me a link to the property I will happily look at it online for you. I hope this helps and do let us know how you get on - we'd love to hear about it! All the best Linda :-)

Written by Deleted User

 

hi we are thinking of letting are property do you only manage Scotland or do you cover other parts of the country

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Written by Lowlandlettings

 

Hi R East Due to the hands on nature of service we offer we only manage properties in the Scottish Borders unfortunately but Im happy to answer any questions you may have or put you in touch with a local agent. Do let us know how you get on - we'd love to hear about it :-)

Written by Deleted User

 

Hi wonder if you can help us, we have a chalet on a park in Aviemore, so there is ground rent, cleaning and laundry and then commission on letting charge (20%) Before applying the commission should the company who run the park extract the VAT from the letting charge then apply 20% to this figure plus VAT, or just apply 20% to the whole charge plus VAT as the commission? We are not VAT registered, we are also tied to the park for cleaning and laundry we are not happy with the standard of cleaning and would be able to do these tasks ourselves, but the park aren't happy about this! Any advice would be much appreciated. Kind Regards Roy

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Written by Lowlandlettings

 

Hi Roy & Judith Thanks for getting in touch - hopefully we can help! As far as I understand it the VAT element that the company charges is only in relation to the commission they make so they charge the commission on the full booking price and then charge VAT on the commission. I appreciate that you are not VAT registered and most holiday let owners aren't but this is something that the company must charge and collect for HMRC. With regards to the cleaning and laundry we'd always suggest that where possible holiday let owners do this themselves for two reasons: 1. Obviously to save on costs 2. We feel that an owner will possibly take greater pride and care when preparing the property for guests. This is not always the case and all of our cleaners are chosen and trained to give the guest the best experience possible and its not just a case of giving the place a once over. This to me is one of the most important aspects of a holiday let second only to the safety of guests. Id advise that you check the terms and conditions of your holiday let with the company and if it is the case that you are tied to them then if the cleaning is not up to standard this is simply not acceptable and I would discuss this with the company. Cleaners are a key part of our business here at Lowland Lettings and to be fair to cleaners everywhere they have a hard task sometimes depending on how previous guests have left the property. They are also working often in extreme heat in the Summer and perhaps they are not being given enough time to do the job properly. I actively take part in the presentation of our properties so I can certainly vouch for the work they do. Sometimes owners for cost reasons think they can clean a house top to bottom in two hours and its simply not possible if you want it done to the standard that guests expect and certainly deserve. I hope this helps and do let us know how you get on - we'd love to hear about it. If anyone else has any comments on this subject please feel free to comment below. Best of luck everyone :-)

Written by Deleted User

 

Thanks for the article Linda which offers a clear and concise breakdown of how commission is levied. I wholeheartedly agree that anything below 15% is very competitive - we are a small, independent, customer service led cottage letting agent covering Warwickshire / Shakespeare Country and only charge 12.5% + VAT ! This is a brilliant area to invest in a holiday let with year round visitors and we don't have enough larger properties to satisfy demand at the moment, so if anyone is looking to expand their portfolio beyond Scotland it's definitely worth a look. Best of luck and thank you. Jan, Exclusively Warwickshire

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Written by Lowlandlettings

 

Thanks very much for your kind words - Im delighted you gained something from the article. Best of luck with your own letting agency and if anyone is reading hopefully they will get in touch. All the best - let us know how you get on, we love a success story!

Written by Deleted User

 

Hi I wonder whether you can help me understand this problem..i rent my property out through holiday cottage company recently they contacted me to say at the last minute due to illness a family had cancelled the 2 weeks but I am covered by extra insurance that I pay them for they rebooked those two week to someone else but kept the money for themselves plus commission is this lawful ?

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Written by Lowlandlettings

 

Hi Claire Thanks for getting in touch. Can I just clarify if you received all the money due to you for the two weeks that was cancelled but covered by insurance?

Written by Deleted User

 

Can I ask - is the 15-25% commission you mention not including cleaning and laundry? I am new to all this. What does the commission fee 'normally' include? Thank you.

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Written by Lowlandlettings

 

Hi Kathryn Thanks for getting in touch. The commission rates do not normally include cleaning and laundry. The commission rates depending on what you require would be for obtaining bookings on your behalf. Cleaning and laundry costs would depend on the size and complexity of the property. As an example one of our own properties is a 2 bedroom ground floor apartment and cleaning costs are £45 per changeover and laundry is usually around £37.50 each changeover. Other changeover costs like gardening, window cleaning and maintenance should be taken into account as well. We also leave a nice local welcome basket for each guest. I hope this helps and if you have any further questions please do not hesitate to get in touch. Good luck and do let us know how you get on - we love a success story! Linda :-)

Written by Deleted User

 

Hi I enjoyed reading these comments and am learning a lot from them. I have a property in Cumbria, 50 miles from Carlisle. Would you be able to put me in touch with a local agency please. Pity you don't cover Cumbria - it's not too far away.

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Written by Lowlandlettings

 

Hi Lyndsay Thanks very much for your lovely comments, Im delighted you found the blog helpful. Are you currently advertising the property or is this a new one? There are lots of things you can do yourself to promote it. Feel free to email me and I will do my best to help.

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