8 Costs of Running a Holiday Let

Starting a holiday let requires for many things to be taken into consideration. One of the most important factors to think about is the costs of running a holiday let and how this is going to impact your income.

To make your venture a success, it's important to work out the costs of running a holiday let, so you can draw up a budget and work out your finances realistically.

To help, here we detail some of the most common costs you'll need to prepare for, from holiday letting agent fees and business insurance to furnishing your property and keeping it up to scratch.

Use our Holiday Let Income Calculator to estimate how much you can earn.

1) Holiday let agency fees

The thought of buying and running a holiday let, along with all of your other day-to-day responsibilities, may feel overwhelming.

This is where you can work with a holiday letting agency, such as Sykes, who can help take care of everything from support in choosing the right property to taking care of bookings, payments and marketing.

At Sykes, we can tailor our services to meet your requirements as part of our holiday let management costs. This includes sorting out maintenance, laundry, key collection and cleaning your property through our fully managed service, or you can choose one or two of these services through our partially-managed service.

Holiday letting agent fees could be worth their weight in gold to keep the process as stress-free as possible, so it may be wise to budget for these.

There are three main holiday let agency fees that you may be charged:

• Commission rate

• Setup fees

• Annual fees

Let's explore these fees in greater detail.

Commission rate

Holiday let agencies will take a percentage from each booking amount as commission for their services, adding to the costs of owning a holiday home. Holiday let agency commission rates can range from 15% to 25% for each booking that you take.

The commission rates that your holiday let agency charge can change depending on multiple factors. The level of support that you need from your holiday let management company can influence how much commission you pay.

As well as this, the amount of time that you want to use your property yourself can also have an impact on your commission rates, as the more time you spend using your holiday home, the less availability there is to attract bookings.

Don't be put off by those holiday let agents charging a higher commission, as this is likely to indicate a more comprehensive service than those with lower rates.

Setup fees

It is possible that your chosen holiday let agent will take a one-off setup fee as part of the process of getting your holiday let up and running. You can expect your holiday let agents to charge anything from £100-£250 for your setup fee.

This can account for services such as getting your property listing live on the website with professional photography and descriptions, setting the pricing for your property and making your property available to book through third party sites.

At Sykes, we have two options with setup fees. We also offer a premium setup service, which as well as all of the above, will also allow you to be introduced to one of our selected managed service suppliers who can take care of the day-to-day maintenance and cleaning of your property.

Annual fees

Your holiday let management company may also charge you an annual fee to fund the general upkeep of your property listing. This can include keeping your property photos and description up to date, managing your pricing and keeping any third party listings up to date.

Holiday let annual fees tend to be anything up to £100 per year.

2) Holiday let insurance

It's essential to insure your holiday property so that you're protected financially should something go wrong, such as a break in, flooding or a fire.

Generally, standard home insurance policies won't cover holidays lets, so you may need to take out a specialist holiday let insurance policy.

Specialized insurance policies for holiday homes typically provide coverage for both buildings and contents, along with additional protection tailored for holiday rentals.

This may include accidental damage, public liability insurance (to cover legal costs in case of injury to guests or damage to their belongings), and coverage for loss of rental income.

Make sure you read the terms and conditions of the policy carefully so you're happy with the protection you're taking out.

For more information, read our complete guide to holiday let insurance.

3) Business rates for holiday lets

Business rates are another cost of running a holiday let to take into consideration before you begin your journey. Business rates is a tax that you pay instead of council tax, as your holiday let is classed as a business.

The rules regarding these vary depending on which country your holiday let is in.

If your holiday let is in England and is available for short-let periods that total more than 140 days a year (20 weeks), it will be rated as a self-catering property and you'll have to pay business rates, rather than council tax.

In Wales, your property will be valued for business rates if it's available to let for short periods that total 140 days or more in a year and it's actually let for at least 70 days.

In Scotland, you may have to pay business rates if your property is available to let for 140 days and is actually let for 70 days or more in a year.

The Valuation Office will work out the rateable value of your property, which is used by your local council to calculate your business rates bill. You may be able to claim small business rate relief to reduce this cost if you only let one property and its rateable value is less than £15,000.

To find out more, check out our guide to holiday let business rates.

4) Furnishing your holiday let

Knowing the design dos and dont's of your holiday let's furnishings and décor will help to make it stand out from the rest, giving guests a lasting impression of it, and hopefully resulting in repeat bookings.

When furnishing your holiday let, choosing high quality furniture will help create a welcoming environment to make guests feel at home. In addition to this, you'll want to include at least 3 sets of bedding per bed with colour coordinating towels.

So, while you don't need to spend a small fortune, allow a decent budget to invest in good-quality furniture and fittings that will last and make your holiday cottage stand out.

It's also wise to put some money aside each year that will allow you to update items as and when required to keep your property looking up-to-date, with the kind of features that guests expect.

In addition to ensuring that your visitors enjoy their stay, doing this will save you money over time by lowering the frequency of repairs and replacements.

It's also important to take into account the operational issues of equipping a holiday rental. This can include features such as storage space, seating capacity, and the property's general layout.

For example, if you're running a family-friendly holiday let you may want to include a larger dining table with more seating options in your property. If your holiday cottage is aimed at couples, then decorating with an open fire or wood burning stove will help create a cosy and inviting atmosphere for guests.

Any holiday rental property must prioritise the visitor experience if it wants to succeed. Make sure your place is tidy, maintained, and furnished with everything visitors require for a comfortable stay. Think about including extras like welcome baskets, neighbourhood guides, and suggestions for nearby attractions.

Working with a professional interior stylist company, such as Genesis, can help create the ideal appearance for your holiday rental, whether you are beginning from scratch or remodelling an existing holiday let.

An interior stylist can help establish the right style preferences, colour schemes and aesthetics for your property, along with an exclusive 10% discount on all furniture for Sykes owners, saving you both time and money.

5) Utility bills and subscriptions

As with your own household finances, you’ll have to factor the price of utilities into your costs of running a holiday let and the eventual costs of owning a holiday home.

Some of the bills you need to think about include:

• Gas

• Water

• Electricity

• WiFi

You can shop around for your gas, electric and WiFi suppliers to get the best deal possible.

You can also use a free online tool, such as Snugg to see how you can reduce energy costs by making efficiency upgrades like adding insulation, double-glazing windows or installing solar panels. Snugg will even estimate your energy savings depending on the type of upgrades you choose, and they can connect you with a local installer to get an accurate quote.

Refuse collection is also different for holiday let owners, as a self-catering property is classed as a business, so you’ll have to pay for commercial waste collection.

To make your holiday let a relaxing getaway for guests, you should also factor in the price for entertainment, including; broadband, a TV licence and perhaps a TV streaming service so your guests can kick back in the evening.

Here are some of the annual costs for TV related products (accurate to the time of writing):

• Hotel TV licence is £157.50

• A monthly Netflix subscription starts at £5.99 for a basic plan

• Netflix & Sky TV package is £27 a month with Sky, plus a set-up fee

• Disney+ £7.99

• Amazon prime starts at £5.99

• Apple TV £6.99

• Now TV £9.99

Minimum EPC Rating for Holiday Lets

If your holiday let is in England, Scotland or Wales, you should be aware of potential changes to Energy Performance Certificate (EPC) requirements coming in 2025.

To reach net-zero emissions by 2050, the UK government is considering requiring holiday lets to have an EPC rating of C or better. This would apply to new lets starting in 2025 and extend to existing tenancies by 2028.

In Scotland, existing holiday lets have had to have an EPC rating between A and E since March 2022. And new lets have needed a rating of D or better since April 2022.

Although the UK government's proposals aren't law yet, it's important to prepare for the possibility of stricter EPC requirements.

Upgrading your holiday let to achieve a C rating may involve making efficiency improvements, from insulating walls and windows to fitting solar panels and heat pumps. You can use a free online tool like Snugg to estimate the potential up-front costs and long-term energy savings of each type of installation.

6) Holiday let changeover costs

First impressions count for everything when it comes to holiday letting - nobody wants to arrive to a property that hasn't been properly cleaned. This may take some time and effort to do in between each booking however.

So if you'd like to bring in professionals to help, holiday home cleaning prices are a running cost to factor in, whether you opt for a cleaning company or use the services that your holiday letting agency can arrange.

Welcome packs are another touch that will be appreciated by guests upon their arrival. This could include; milk, bread, tea, coffee and condiments, but could also be extended to include toiletries, local goodies and more if you'd really like to impress.

Your budget for this could be anything from £10 upwards, depending on the number of guests your property accommodates and how much you would like to include.

If completing changeovers is something that you don't have time for, then you can leave all of this to Sykes. From full property cleaning to assembling welcome packs, Sykes can do all of the work for you as part of our Managed Service.

Find out everything you need to include in our holiday let cleaning & changeover checklist.

7) How much do holiday let cleaners charge?

As you'd expect, holiday let cleaning fees vary depending on the size of your property and what you want to be done.

For full cleaning of a two-bedroom property, you can expect to pay anything between £50-85. If your property has five bedrooms, holiday let cleaners could charge between £80-150. For those that would like to give their property a refresh before each guest arrives, a lot of holiday let cleaners provide this as an extra service for a fee of around £15-20.

If you're looking for your laundry to be done as well, this will require additional costs. Depending on how much needs doing, your holiday let laundry costs could be anything in the range of £15 for one-bedroom properties, to up to £120 for larger properties.

Read more about the cleaning essentials our ultimate guide to holiday let cleaning.

8) Holiday property maintenance and gardening

Running a holiday let requires constant work to keep things running smoothly and looking good, therefore it is common for holiday let owners to pay for people to come and take care of this for them.

To keep your holiday let looking good and in working order, think about ongoing costs such as a professional gardener and someone to do any repairs that are needed. Depending on the size of your property's garden, this may need to be a monthly cost.

Using a professional maintenance and gardening service, such as Archpress, can help you manage your property effectively.

They provide a nationwide 'priority subscription' service with an exclusive 10% discount for Sykes owners, offering 24 hour support for guests should they experience maintenance issues in your holiday let, as well as taking care of your annual safety checks, including a fire risk assessment, a gas safety check and certificate.

It's crucial to keep your holiday let in good working order and keep up with the statutory and recommended certifications. You must make sure your property includes all the necessary safety features, including a carbon monoxide alarm in every room containing a fossil fuel-burning appliance.

For more advice, read our top tips on maintaining your holiday let.