Our industry experts will also explain the best ways of fitting out your property, how to maintain it properly as you go, and what additional costs you need to take into consideration.
The panel will also go into just how much you can earn from a holiday let if you do it in the right way.
Listen to Episode 2 of the Inside Holiday Letting podcast here:
Hello, this is Inside Holiday Letting - a podcast series from Sykes Holiday Cottages.
Today's episode is offering practical advice - sharing the tools you need to get a holiday let business up and running.
Joining us again in this episode are our team of experts from the holiday letting industry:
Vanessa Warwick - A full-time residential landlord, and co-founder of the Property Tribes forum
Rachel Brennan - Sykes Holiday Cottages' Sales and Operations Manager
And we also have a special guest today, as well:
Elaine
Hi, I'm Elaine Watt, it's a pleasure to be here. I'm from the Holiday Let Success podcast, which I host and produce, and have done over the last seven years. My goal with the podcast is to help owners, hosts, increase bookings, reduce costs and save time and just enjoy their businesses and get the most out of it.
And there's a series of courses that I help them with - it's all about support, making the best for themselves and making the best of their businesses and for the industry as a whole.
What do you need to consider when buying a holiday let?
Presenter
Welcome to Inside Holiday Letting, Elaine. Now, what are some of the things to consider when buying a property with the intention of holiday letting?
Elaine
I think the most important thing you need to consider when you are looking at getting involved with a holiday let is the destination - the location of the property. Have a look at that area, what is it that people actually come to this area for, and check that there is really a support system there. Are people visiting the area already? Is there lots of fun things to do in the area? Is there great infrastructure?
And then, if the people that are coming to the area are coming to do all of these different things that you've just found out about, is the property that you're looking at going to be the right property for that type of client? So, if it's really a family destination - if you're looking at a one-bed property, there's most likely going to be a bit of a mismatch there.
So, the property is not going to be doing exactly what you want it to do, in terms of that market. So really, to look at the destination, is it going to do what you need it to do? Is there a market there? And then, make sure that you are matching up with the type of property.
Presenter
So, do your research, look at the location, property type as well - that's the easy part. Now, the logistics and the hard work actually starts in taking it to that next level.
Elaine
Absolutely, most definitely. And there are so many different things to to consider. And I think, first of all, you've got to really ask yourself some important questions, along the lines of, "Am I going to be equipped to be able to deal with a constant stream of turnovers?", "Am I really prepared for what that actually involves?", "Is that something I'm going to do in-house?", "Is it something I'm going to get somebody else in to do?", "Am I going to go down the employment route?", "Am I going to outsource?".
There's many, many things to consider, and that's the operational side. Of course, before you even get to that point, you've got to set up the property and ensure it's fully equipped. And, the most important thing, really, is to have the person, or the people, that are going to come and stay, in your mind when you are setting up that place.
If you think about when you've been away and stayed in a short-term rental holiday home in the past, what has made you think, "Amazing, that was a fantastic holiday!"?, and really think, what is just going to ease the stay for somebody coming to stay at your place?
But, yes, multiple things to think about at that stage. So, it's along the lines of guest care and really hand-holding them, making sure that they are going to enjoy their stay. Can you bring them in? Can you constantly fill this property? And are you going to be equipped to do that?
10 things to consider when buying a holiday let
Presenter
Vanessa, you've got a top 10 list as well, haven't you?
Vanessa
I have. It just goes into a bit more detail, similar to what Elaine was saying.
1. I believe that the property should be within one-and-a-half-hour drive of a major population density. And the reason I say that, is to capitalise on this trend of the 'long weekender', or the 'staycationer', that we've seen developing over the last five years. Most people want to leave their desk at 6 o'clock on a Friday evening and be sitting on their balcony or patio with a glass of wine by 8 o'clock. So, you know that you're going to have guests within the radius of the holiday let to fill the property.
2.A year-round programme of activities and events in the area. So, capitalise on existing footfall, this will help fill your occupancy during the low-season months.
3. I'm a very big fan of coastal holiday lets, so number three would be a great, safe and sandy beach that families and children can enjoy.
4. Very important, fine dining options in the area. We are becoming a nation of foodies, people do like to dine out, or in more recent times, have their home deliveries. So, fine dining options in the area is a must.
5.A property that is externally attractive and/or has great views, because these will really stand out in the marketing photos on the portals - and we all know that people buy with their eyes. It's a real asset to have a very, very attractive property, or a quirky property, or a great view that really jumps out on the portals.
6.Superfast WiFi. You just cannot have a holiday let without WiFi these days. It is expected and we've mentioned that there might be six, seven, eight devices on at any one time, so you need to make sure that the WiFi can accommodate that level of use.
7.Easy access and parking. Somebody that arrives on a rainy Friday evening doesn't want to find that they have to park across the road, on a very busy road, and climb 20 steps up to the holiday let, to the front door. So, having access and parking, very easy, and within the environs of the property, I think is vital. And you should state that in your marketing, because that's a big plus point.
8.Pet-friendly. Pets are part of the family. I go away in holiday lets with my pets, I take my three cats with me, I wouldn't be without them. Obviously, this saves on kennel costs as well.
9.Decorated and done to a very high specification. That's absolutely expected now.
10.Outside relaxation space. Such as; a decked garden or balcony with furniture, and maybe a dining table and chairs so people can dine alfresco in the summer.
What outgoing costs are there with holiday letting?
Presenter
And turning to you, Rachel - bearing in mind all of those things that Vanessa's said, and a lot of people will say, "Okay, yes, that's great - we've filled all of that criteria, we're there". Actually, no, you haven't even started yet. Because there's all of the other outgoings and the operational items that, maybe people don't consider, about; the mortgage, the council tax, the gas, the electric, house insurance, all of those legal requirements.
Rachel
Yeah, and I think, especially when you're buying a property, that is one of the first things that needs to come to mind, is, "How am I going to finance this?". We know, with a holiday let mortgage, you're looking around that 25-30% percent deposit that you're going to need to put down on that. So, are you going to secure the right mortgage for you?
If you're a cash buyer, then that's not something that you need to consider. So, of course, you've got the property mortgage potentially coming out as an outgoing.
Also looking at council taxes, and we alluded in the first podcast, holiday lets are classed as more of a business asset, it's a trading asset. So, you may be able to register that property as a business, which you may be able to switch to business rates, which, 9 times out of 10, work in an owner's favor - that's something that you would need to do some more research on and speak with local councils on that.
Other things, is the insurance for the property. So, you need a holiday let insurance, specific insurance with that minimum of £2 million public liability - and that's a really important thing, that you have that liability cover there, as well.
As well as doing risk assessments - a lot of these things can be done yourself, in terms of a fire risk assessment. However, the larger the property, or, if you have any unique factors in your property, as well, you may need to outsource that and get a professional to come in and do that for you. Even the likes of gas safety certificates, if you have a private water supply, looking at those as well.
And then, of course, the cleaning costs that could be incurred on your changeover days. So, it is a hard graft for each stay, and it is just knowing whether you are going to do that yourself. But again, your time is not free either - which, a lot of our owners think, "Oh, I'll do that myself, that's not a cost incurred". But, of course, there is a lot of equipment that's going to be needed there, a lot of supplies that's going to be needed there as well.
And then maintenance costs, so, there will be the odd breakage from time to time. It's making sure that you are picking crockery that you are going to be able to replace nice and easily, that you're not going to have to replace your whole set again, just because one one cup's broken - you don't want it to look mismatched.
And you may need to replace mattresses, or bedding, or anything like that from time to time. Then, the additional features, we know popular features such as hot tubs, swimming pools and the likes of open fires - they all come with a maintenance cost, as well as some specialist cleaning in there. So, it's all these things that you just need to consider along the way, to make sure that you've got all of those outgoings and you've crunched the numbers effectively to make sure it's a viable option for you.
Presenter
And, things like the annual painting and just upgrading of facilities in general, to keep on track and to make sure that the property is looking the best it can - this does cost quite a bit of money, doesn't it?
Rachel
That's right. A lot of our owners, when they look at their numbers, and it's very, very ballpark - but you're looking around 50% of that income that you're making, probably going on all of those costs that we've just talked about.
And it is important to keep the property well-maintained at all times, because that is what's going to drive additional bookings to your property. That's going to give you the all-important customer feedback, it's going to make those customers return.
So, it's something that you need to put that time and effort into, to make sure that, one, that it's safe, but two, that it's presented into the best light. So, when they arrive, it's ticked every box for that customer, and you've got that 'wow factor'.
How do you set up a holiday let?
Presenter
And Vanessa, how do you actually set up a holiday let? Because, you've got to get customers and persuade them to book with you - so you've got to look at the price and the market of the property, and the pros and cons of maybe doing it yourself or getting a third party involved.
Vanessa
Indeed, and these are all decisions that you should really make when you're in your research phase, because they're all very, very important for obvious reasons.
In my particular case, my holiday lets are all quite a distance from me, and I opt to have them fully managed, and that's worked well for me. However, if you live next door to your holiday let, then you may look to save costs. But, what I would say is that the setup costs for a holiday let are far more significant than a standard buy-to-let property, because you are buying high-quality fixtures and fittings and furnishings.
The other thing to take into account, is that you need three sets of all your bed linen. Typically, you'll have one on the bed, one in the cupboard, if there's an issue during the guest stay, and one in the wash. So, if you've got four bedrooms, multiply that by three. I recommend buying hotel-quality, thread count linen - it wears better, it feels more luxurious to the guests. Then, if you're supplying dressing gowns, which I think you should, you should have your three sets of dressing gowns, and so on.
So, the actual setup costs are quite significant. As we've mentioned, some of those can be offset against tax. And then, once it's up and running, I think the good thing is, as Rachel mentioned, you've got your mortgage if you have one, your council tax and your insurance and maybe standing utilities, but you only start to get the bills for the cleaning and the other bits and pieces if you've actually had a guest staying. So, holiday lets is one of those nice situations where, when the bills start to come in, you know that you're actually doing well.
Presenter
Thanks, Vanessa. That's good advice.
How do you price and market a holiday let?
Presenter
And on that subject, how do you price and market the property? How do you settle on a price?
Vanessa
Again, I think that's where a company, like Sykes Holiday Cottages, will come into their own. They're a huge resource for holiday lettors, and prospective holiday let landlords, they're there to guide you on pricing. I think that, pricing within the holiday market is quite sensitive, and guests are looking for good rates.
A lot of people use dynamic pricing, which is based on the demand, and it's very flexible, and the price will increase as the supply goes down. So, there's that option as well, to use dynamic pricing. But essentially, when you're starting out, I would really recommend going to a company like Sykes, who can actually advise you; what the competition is like in the area, the kind of rates that other cottages are achieving, and really help you set your pricing to be competitive within the marketplace.
And, one thing I would say is, for your first year, expect it to be a little bit patchy, while your cottage is getting traction in the marketplace. And, after that, one thing, if you get it right, that you will benefit from, is repeat bookings.
And they're obviously the most fantastic type of booking, because the guest just keeps coming back. And, certainly at my holiday lets, I have guests that come maybe two or three times a year for a long weekend, and they kind of regard it as their second, kind of, home away from home. So, when you can build up that repeat clientele, that really does help with your occupancy rates.
The pros and cons of using a holiday letting agent
Presenter
And Elaine, for some people, they may live very close to their holiday let, and they may purely want to do the private rental, and do it 'DIY'. But, for others, that might not be a case for them. So, using a third party to market and actually look after the property as well, what are the pros and cons of that?
Elaine
Yeah, most definitely. When when a property is for further away, I think, when people are first getting going, it can be a little bit of a worry. They start to think, "How am I going to actually handle this from a distance?", but to know that it is completely doable. And yes, there are two ways to go about it;
You can do what Vanessa does, which is completely hand-off everything to a company, which knows the area, they do the marketing, they do all the guest contact, and they will get the guest settled into the property, they'll do all the changeovers, and everything is essentially managed. And of course, there's a premium for that.
So, it's taken out of your hands, it's out of your head, and you really don't need to to worry about it - it's a set and forget, well, keep an eye on just every month, contact with the manager. But essentially, it's out of your hands and it's not a worry for you.
So, there is a cost that comes with that, and it really depends what it is that you're wanting to do with your portfolio. If this is going to be something that is an addition to your portfolio, to keep it separate, keep it all different, to make sure you've got a spread of different types of properties in that portfolio, then it may well be that it's not something you want to spend a lot of time learning about. And moving it off to a third party is a brilliant way of getting into the market, without having any of the the stress or the hassle or the additional things that you have to think about.
But, if you wanted to look after it yourself, again, it is still doable from a distance. And then, that comes down to your ability to find the right people to look after the property in the area. And, really the key to that is communication - so once you've found somebody to look after the property in your absence, it truly is down to communication, and making sure that they know that they are a valued member of the team. So, whether that's a company, or whether that's an individual, I have found that the most important thing is communication and appreciation.
Presenter
And, not forgetting to plan in that time for the maintenance and also the upkeep, but also for yourself. If you own the holiday let, you might want to spend some time there yourself - quite a few people might forget that.
Elaine
Yeah, absolutely. And, something that's quite easily forgotten, and people soon find out, is that the weeks they want to stay are actually the weeks that are going to bring in the most profit to the property. They're the highest weeks, the highest priced weeks at the time when everybody wants to go on holiday.
So, there is that to bear in mind, because, many times, people will take the property on and think, "Oh, fantastic, I've got this holiday to look forward to", but then, they also have this side that they want to get the most out of their investment. So, very often, they end up actually giving away their best weeks to make the best out of the investment, and, taking a week which maybe wouldn't be their ideal time of year.
And oftentimes, it's like a blurred line between a holiday and a business. Many people that I speak to, find that they end up staying at their holiday home, but they're actually doing jobs and maintenance themselves while they're there. They're checking it over, they're having the guest experience and they're checking that everything runs smoothly. So, they do end up kind of working on that holiday.
So, I think those are key things to bear in mind - if you purely want it as a holiday, you need to set up your boundaries and decide what it is that you are doing, and to try not to give away all of your best weeks. Still enjoy yourself if that's what you originally went into it for.
Holiday letting is a continuous learning process
Presenter
And I suppose, Vanessa, no matter how much you've planned and how much you've maybe put the third party in, and everything looks great - you're still learning as you go along, and you can still pick up tips from research, from what other people are doing, there's plenty of case studies and blogs online - you never stop learning as you go along.
Vanessa
Well, you don't. And, it's important that you do continue to learn, and think about how you can improve your proposition. On Property Tribes, for instance, we have a Holiday Let Tribe, which is powered by Sykes Holiday Cottages, and that is just total discussions about; sourcing, managing, marketing, maintaining a holiday let - so, there's a huge resource right there. And, I've mentioned the many different resources that Sykes themselves have, as well. So, you are learning on the job, and you should want to improve your game as you go along. I do think that's that's very important.
Presenter
Rachel, you would agree with that as well?
Rachel
Definitely, and I think the best place to learn from is your customer feedback. It's the people who are staying there, at your property, who may have other suggestions, or there may be something that you've missed that you can then change for the next time. So, I certainly think that no feedback is bad feedback - it's all constructive, as long as we take it positively, and we can change that the next time around.
When it comes researching, it's really looking at your booking levels, and making sure that they are hitting the expectations - something that with an agency, they might be able to do that for you, particularly with Sykes. We actually have a team, which all of our new owners sit with, typically for three months - I like to call them a little nursery for new owners as they first come on board with us, and that is comparing their performance to other properties in the area.
And, we will give suggestions if we think that their performance isn't hitting the required expectations. If they're booking too quickly or too slowly, we'll look at those factors, because it could be price, it could be a different feature, that potentially a competing property nearby is offering that you're not. So, if you are with an agency, it's asking that agency to help you with that. But, also, if you're doing it yourself, it's keeping on top of what else is in the area.
Presenter
Buying a property is, for a lot of people, the most expensive thing that they will ever do. If you're going to go into the holiday letting market, as well, you have to commit to the project, don't you, Elaine? Full on, 100%
Elaine
Absolutely. And, if you have invested, whatever it is you've invested in, but particularly in a holiday let - once you are in, you really have to keep the ball rolling. Once you've gone through the setup, once you've gone through filling it up with the supplies that you need, you've decided on your linen and towels, you've set up your housekeeping, you've decided what stock you're going to have in place, when you've decided how you're managing it, how guests are going to get in there, you've got your photographs done - I mean, at this stage, there's still many more things to do.
You've got to think of your rental agreement, your photos, your listing copy. Are you going to have a website? How are you going to market it? How are you going to handle guests? Is it going to be you? And, you can see, there's that many decisions that need to be made, you really are all-in with a holiday let, unless, as the ladies have said, it is going to be handled by a third party.
Even if it is handled by a third party, you still have to ensure that this truly is looked after to a really, really high degree, and you've constantly got the guest experience in mind. And so, yes, once you are in, you really do need to ensure that you're learning; you're learning from mistakes, you're learning from feedback that's been fantastic, so you can do more of that.
And, really listening to the suggestions, implementing things that guests have maybe suggested, something that might be missing for the property. Just really listening, being completely open to learning and being absolutely committed to excellence for the guests. So, yes, most definitely.
Who can help with holiday letting?
Presenter
Vanessa, there's a lot to think about when you when you start out. But I suppose, one of the key things to remind people is, you're not alone, there is help out there.
Vanessa
There most definitely is, we've mentioned some of the sources of help. Google is your friend, there's loads of resources out there. I myself have written a very extensive guide of how to source a holiday let, how to set it up, how to market it, find a suitable agent for it, how to to manage it - the kind of things that you will find along the way.
Because, most people have bought their own home - they understand how to do that, a lot of people in the UK have one or two buy-to-let properties - they understand how to do that, but I think, with holiday lets, the attention-to-detail is far, far greater than just standard buy-to-let.
As we said before, we, as holiday let owners, have a responsibility to provide a fantastic experience for our guests. I regard that as a privilege, actually, that I can do that, and some of the things that we can do just to really go the extra mile. And, we know that it's not very crowded along that extra mile. Some of the things that I do is, I put in a welcome pack with all local produce from the local area, if there's a pet coming, I put in a little set of pet treats to welcome the pet as well.
And just thinking about what the guest needs, I have a folder with a list of all the local restaurants, all the local takeaways, all the contact numbers that they might need when they're in the area. Maybe you can provide things like a list of walks in the area, a list of local attractions, so that everything is literally at their fingertips to build their holiday as they want it.
Everybody is probably familiar with with Coast magazine, and they do a lovely feature every month where they do a weekend away in '.....'. And then, the person arrives on Friday night, and they check into their accommodation, and then they go out for dinner, and then they do something Saturday morning and afternoon, and Sunday morning and afternoon - that kind of thing. And, you can provide that resource for your your guests when they arrive.
There's a very interesting phenomenon which scientists have discovered in the last few years, and it's called 'anticipation happiness'. And, scientists have found that people are actually happier anticipating something than they are actually doing that activity.
I think this really plays into holiday lets' marketing, because you can really tap into that anticipation happiness. Help them - before they even arrive at the property, send them an email saying "These are all the local attractions", "These are our favorite pubs in the area", and so on and so forth. Really help them build the anticipation of arriving at the property and having a wonderful time.
So, these are all the little tricks and hacks that you can do to really create a wonderful guest experience. And, as Elaine rightly said, we should all be striving for excellence in that regard.
Presenter
And even down, as you said there, to putting the treats out for the pet - that goes a really, really long way with the guest, and they will remember that.
Vanessa
Well, that's exactly why these little things are so good to do, because it makes people feel special. And, in any business, no matter what business you're in - and let's not beat around the bush, if you're running a holiday let, it is a business - you have liabilities as a business owner, you have compliance responsibilities to ensure the property is safe for your guests. Like any business, just go the extra mile, make people feel special. And that's how you build your customer base.
Research is key to owning a successful holiday let
Presenter
Rachel, we've been looking at the practical steps to get a holiday business up and running - can it be just put down into the three R's; Research, Research and Research, and then a bit more research after that?
Rachel
Most definitely. And I think, to start all of that, you really are thinking about what your motivations are for holiday letting, because that is going to start the basis for all of those answers that you're looking for - "Is this a pure investment, or, is this somewhere that I want to go on holiday as well?", and, chances are, that if you like something, somebody else out there is going to like it, too. So, you're best looking in those locations that you've had fantastic holidays, as locations that you really want to go back to.
And then, it is just thinking about the logistics - "Who is going to manage this property, is it going to be myself?", "I need to look in about an hour radius of where where I'm living, my main residence.
Or, if it's a third party, then I'm going to outsource that, then I can pretty much go anywhere in the UK, and then that's where I can knuckle down on where the sort of best returns are for my investment". Sometimes, you find with locations, the most popular locations aren't always that the ones where the house prices are the cheapest. So, you've got to really factor that in, and then it's all on price and setting your property up for success from the very, very beginning.
So, as Elaine said, it's those professional photographs, it's that beautifully written description, it is playing into all of those factors that Vanessa's just been talking about, of what you are going to be able to do at that property - all of the activities in the local and surrounding areas that you're going to be able to do.
And then, how are you going to get that out there? How are you going to get that traffic to your listing, to get those all-important customers coming through and having a look at those beautiful pictures and that description? And then, more importantly, booking your property?
Vanessa
I don't know what the other ladies on the podcast think, but I've been pondering this recently - if you equip your holiday let to a much, much higher standard, I don't think that impacts massively on what you can achieve rental-wise.
I think it probably can increase what you can achieve by maybe 10-15%. But, what it definitely will achieve is more bookings, because you've got that 'wow factor' that we've been talking about - I just wondered if the other ladies agreed.
Rachel
Yeah, I completely agree with that, that those factors don't always change your price points, and, it's important to remain competitive at all times. There are certain features that will add to your price points, such as hot tubs - the big ticket items that you're putting in your property.
Whereas, some of the other smart mod-cons; the Smart TVs, the Bluetooth speakers around the property - all of these things won't necessarily just increase your rates, but they certainly are going to add to that customer experience, the customer satisfaction, great reviews. And then, that's more bookings coming your way, which, of course, in turn is more revenue and income.
Elaine
Yes. And, I agree, most definitely. It's being that little bit different, it's being that little bit more luxurious. And, I think there comes an assumption with that, which is what people want when they're booking a holiday home, there's a level of trust.
If you have gone to the effort of beautifully decorating and equipping this property, there's an assumption that there's a level of care there that's maybe one step above. And, people do want to book something that they can completely trust in, and they can dream about, and they can look forward to, knowing that you're cared for when you get there.
And, I agree with what Vanessa said, in that there's going to be a cap to how much of a higher rate you can actually expect, but there will be a higher rate. And, as Rachel then said, it's standing out and being different, something quirky, something different - something that me and my husband have talked about, the different types of properties that are out there really do stand out and add that luxury in, and absolutely, you've got a bookings magnet.
Conclusion
In summary, there's lots to think about. Do your research, and then, do some more. Make sure you've committed to the project, and consider using a trusted third party to help you on your way, and to take away some of that hard, and also expensive, work as well.
In the next episode of Inside Holiday Letting with Sykes Holiday Cottages, we're going to look at how to maximise your holiday let income.
Need help with the next steps of your holiday letting journey?
If you're thinking of buying a holiday let or just need some advice, our property experts can help answer any queries you may have.
As a holiday letting owner you are responsible for compliance with health & safety laws, regulations and guidance, and for having suitable insurances in place (not Sykes Holiday Cottages or its brands (Sykes)). From time to time, Sykes shares information with you on the topic of health and safety and insurance. When it does so, it is not providing you with advice (legal, financial, tax or otherwise); please seek your own as you see fit. In addition, it is not making any representations or warranties about the information being complete or free from errors or inaccuracies. Sykes shall not be liable for any loss or damage arising under or in connection with your reliance on it.
Bernie Clarke, Holiday Let Content Writer
