Holiday let business costs & how you may reduce them

Changeover costs are one of the main ongoing expenses for holiday let owners. They can include cleaning, laundry, guest supplies and welcome packs, with costs varying depending on the size of the property and the level of service you provide. Below, we cover the main areas you may want to consider.

Holiday let changeover costs

Typical holiday let changeover costs are primarily those incurred during guest stays. Approximate costs can include:

• Cleaning equipment and materials: £100+ for setup costs and around £20 in ongoing monthly costs.

• Hiring a cleaning service: around £25–£30 an hour, with one-off or specialist cleans potentially costing more.

• Guest supplies: from £10 to £100+ depending on the type of booking.

• Laundry: between £15–£150+ depending on how much laundry needs to be done.

• Welcome packs: between £10–£100+ depending on how luxurious you want them to be.

Cleaning costs

If you are intending to do the cleaning yourself, you will need to account for both setup and ongoing costs:

• Setup costs: hoovers can cost anywhere from around £80 at the budget end, with top-of-the-line models costing significantly more. You may also need equipment such as mops, dustpans, brushes and a duster. These additional items could cost around £50+ at the budget end.

• Ongoing costs: items such as cloths, scourers and cleaning fluids are likely to be regular expenses. Expect to pay around £20+ to replace these items, which may be monthly if you have regular guests.

You may also want to factor in replacement costs when certain items break down. If you do not have a lot of time, live further away or want cleaning done by a professional, a cleaning service may be a better option. It will, however, come at a considerably higher cost. For more tips about the cleaning process itself, check out our holiday let cleaning checklist guide.

Costs of hiring a cleaning service

The costs for hiring a cleaning service will vary according to factors such as:

• Property size: larger properties with more rooms will take longer to clean than smaller ones and cost more.

• Location: like many services, cleaning prices can vary across the country.

• Type of clean: a deep clean may be needed less often but will usually cost more than a regular clean.

• Laundry: a laundry service typically comes at an additional cost if provided. A larger property with more bedding to change is usually going to cost more than one with fewer rooms and beds.

The type of cleaner may also affect the price you pay. Regular domestic cleaning typically starts at around £25 an hour depending on location, with agencies and specialist cleaning services potentially charging more. To get an exact figure, compare prices in your area.

Guest supply costs

Depending on your accommodation, you may also need to factor in the cost of replacing regular guest supplies. These could include items such as:

• Toilet rolls.

• Washing-up liquid.

• Washing-up sponges and scourers.

• Soap.

• Shampoo.

• Shower gel.

At the budget end, you may be able to pay £10 or less per booking. Costs may increase if you decide to provide more luxury items for guests.

Welcome pack costs

Welcoming your guests with a pack containing useful information or gifts can be a good way to give them a positive first impression of your property. There is no one-size-fits-all approach when it comes to welcome packs, however. Potential items can include:

• Biscuits and treats.

• Drinks.

• Fruit.

• Thank-you cards.

• Local information.

• Property and safety information.

Tailor your welcome packs to the type of guests you are trying to attract. For example, a no-frills stay aimed at guests looking for a lower-cost booking may cost no more than £10–£20 if basics such as biscuits, coffee, tea and snacks are included. At the higher end, you could spend £100 or more if charging higher booking prices. Items such as alcoholic beverages, luxury soaps or bespoke snacks may appeal to guests but may also increase costs.

Holiday let agency costs

Getting a holiday let agent to manage your property will come at an extra cost, but it can also free up considerable time. Typical costs associated with holiday let agents may include:

• Startup and joining costs: this may typically cost anywhere from £100–£250 and is the initial fee for signing up with a holiday let agent, if they charge one. Costs may include taking photos of the property or setting up the initial listing.

• Commission fees: holiday let agents usually charge a percentage fee per booking. This can often range from approximately 15–25% per booking. Sometimes management fees may be bundled into the commission to cover extra services such as cleaning and support.

• Management fees: some agencies may charge a separate fee for additional services, with costs depending on how much help is required. A simple maintenance callout may cost a small fee, whereas cleaning or laundry services are likely to cost more on an ongoing basis.

• Annual costs: similar to a setup fee, some agencies charge an additional fee each year to cover ongoing tasks such as keeping your listing and photos up to date. This can typically cost in the region of £100–£250 per year.

The fees each agency charges will be different. Some may present fees as separate costs, whilst others may combine everything into one ongoing fee. Some may not charge annual fees and not all services provided will be the same. You may want to compare more than one agency when looking at prices and budget accordingly. VAT may also apply to some agency fees where relevant, so factor this into your budget.

Holiday home furniture and decor costs

Furnishing and decorating a holiday let can range from relatively inexpensive to very costly depending on how much you want to invest:

• Painting: the cost of painting yourself could be around £50–£100 a room excluding equipment, with larger rooms or more expensive items potentially costing more. If you hire a professional, costs may vary according to the work and location.

• Furnishings: the cost may be minimal if you use furniture you already own or source suitable second-hand items. Buying everything new can be significantly more expensive.

• Appliances: smaller appliances such as toasters and kettles can be relatively inexpensive, while larger appliances and higher-specification products will cost more.

• Colour features: inexpensive accessories such as cushions and rugs can brighten up a room without a large investment. Suitable items may also be available more cheaply second-hand.

• Standout features: features such as hot tubs, log burners and swimming pools can add significant costs. An acrylic hot tub can typically cost around £2,500–£15,000 before installation and running costs. A professionally installed outdoor swimming pool can cost considerably more, with standard installations potentially ranging from around £60,000–£150,000.

Insurance costs

A holiday let insurance policy with buildings and contents included could cost you between £300–£600 a year. However, prices are not fixed, differ between insurers and will depend on your own circumstances. You could end up paying more or less than this figure.

Factors that can affect your insurance premium include:

• Location.

• Inflation.

• Claims history.

• Building type.

• What the property is used for.

• How often it is rented out.

• The rebuild cost.

• How much cover you need.

• The method of payment. Monthly premiums may cost more than lump-sum payments.

Each insurer will have its own pricing criteria and these may change when your policy comes up for renewal. In general, the price of an insurance quote may only be guaranteed for a set period.

It may be tempting to reduce cover to get a cheaper price, but this could cost you significantly more if you later needed to claim and did not have enough cover. Budgeting for annual insurance costs may therefore be an important consideration.

If you want to find out more about this topic, visit Pikl's holiday let insurance page for more information.

Utility and subscription costs

Like a regular home, you may need to factor in ongoing utility and subscription costs such as:

• Energy: factors such as the type of energy used, insulation, property size and guest usage can all affect your bills.

• Water: charges will depend on your location and how much water the property uses. Features such as swimming pools, hot tubs or large gardens may increase consumption and therefore raise costs.

• Wi-Fi: guests may expect reliable Wi-Fi, particularly where several devices could be used at the same time. Faster packages may cost more.

• Streaming and TV: subscription costs will depend on the services you provide. A TV Licence may also be required if guests can watch or record live TV or use BBC iPlayer.

• Waste collection: you may need to budget for additional or private waste collections depending on the property, guest turnover and services provided by your local authority.

• Parking permits: some holiday lets may require parking permits, with fees and rules set by the local authority.

Booking platform fees

Booking platforms such as Airbnb, Vrbo and Booking.com usually charge hosts or listing owners a fee for each booking. The amount and structure of these charges can vary depending on the platform, property and how the listing is managed, so make sure they are factored into your overall budget.

Marketing and advertising costs

Marketing may be included if you use the services of a property management agency. However, promoting your property directly can also be a useful way to increase bookings or reduce reliance on booking platforms. Options include:

• Create your own website: a website listed on a business card or promoted on social media can be a simple way for potential guests to find your property. Website builders can help you create a site using a pre-built template, with some plans costing from around £10–£15+ a month. If you want guests to book directly, you may also need booking software, which comes at an additional cost.

• Business cards: a card in a guest welcome pack offering a discount for repeat bookings can be one way to encourage returning visitors. Local businesses may also allow you to leave promotional materials at their premises.

• Tourist board memberships: paying a membership fee to join a local tourist board can be another way to promote your property, as some will allow members to advertise accommodation on their website.

Home maintenance costs

Regular upkeep of the property will be needed. Key general areas to consider include:

• Gardening: maintaining a garden can involve a significant amount of work. If you do not want to do this yourself, a gardener may cost around £15–£45 an hour. Measures such as installing weed membranes, introducing gravel and using low-maintenance plants may reduce the amount of work needed.

• Window cleaning: costs will depend on factors such as the size and type of property and the number of windows that need cleaning.

• Gutters: clogged gutters can lead to structural issues or pest infestation. Hiring a professional could cost around £50–£300 per clean, depending on factors such as the size and accessibility of the property.

• Pool maintenance: swimming pools require regular cleaning, chemical treatment and maintenance. Costs can vary significantly depending on the size and type of pool, how often it is used and whether you carry out some of the work yourself.

• Chimneys and fireplaces: chimney sweeping costs will depend on factors such as the chimney, property and location.

• Repairs and emergencies: the cost of repairs not relating to an insurance claim will depend on what needs to be fixed. It can be useful to have money set aside so that you can take action when needed. A blocked pipe, for example, may not be a regular running cost but could result in a cancelled booking if it is not fixed in time for the next guest.

Safety checks and servicing costs

Depending on your property and where it is located, you may need to budget for safety checks and servicing, as well as any work required as a result.

• Risk assessments and safety measures: requirements such as fire risk assessments may apply, and you may choose to use a professional assessor. You should also budget for any safety equipment or remedial work that is needed.

• Gas safety: where gas safety law applies, gas appliances and flues provided for guests generally need an annual gas safety check by a Gas Safe registered engineer. Ongoing maintenance may also be required.

• Electrical safety: requirements vary across the UK. In Scotland, short-term let licensing requires electrical safety inspections at least every five years, or more frequently if directed by the competent person, as well as the relevant EICR and PAT documentation. See our section on holiday let electrical regulations for more information.

• Private water supplies: properties using a private water supply may need testing, monitoring or other measures to make sure the water is safe.

The cost of these measures will depend on your property, location and the work required.

Tax and accountancy costs

Tax costs will depend on your circumstances and how your holiday let is operated.

If your VAT-taxable turnover exceeds the relevant threshold, you may need to register for VAT.

Holiday lets may also be liable for business rates where the relevant criteria are met. If a property does not meet the criteria for business rates, council tax may apply instead. Business rates relief is a separate consideration and may be available in some circumstances. Rules and qualifying criteria vary across the UK.

Council tax costs may also be higher for second homes, as some local authorities can apply additional premiums.

You may also want to budget for an accountant to help with areas such as tax returns, expenses and financial records. Tax rules can change, so speak to a qualified specialist if you need advice based on your circumstances.

Tips for assessing potential holiday let costs

You might be wondering how to calculate how much you will need to pay in costs. The following steps may help:

• Write down your essentials list: some costs will be unavoidable, such as changeover, cleaning and insurance costs. Get quotes for these and budget for the minimum amount you expect to pay each month.

• Think about your ideal guests: the type of guests you are trying to attract will affect your costs to some degree. For higher-net-worth guests, providing luxury welcome packs or premium furnishings may be attractive but will cost more.

• Evaluate your time resource: how much time you are willing to put into managing your business directly can be a big factor. Delegating day-to-day management to a company can free up time but cost more. Managing more tasks directly may be more cost-effective but also more time-intensive.

• Assess your listing price: to make a profit, you will need to set a high enough listing price. Make sure your costs are balanced against your listing price so that you do not end up losing money.

• Set a budget: as we discuss in our guide on how to start a holiday let business, setting a budget is a useful first step that can help you plan costs. Our holiday let profit calculator can also help bring this to life.

Ultimately, the costs of running a holiday let will be unique to each property and owner. Thorough planning can help make it easier to assess how much you may need to spend.

How can I bring down holiday let costs?

Bringing down your average running costs may be possible with some simple steps:

• Track monthly spend: once you've set up your budget, a simple spreadsheet tracker can help you see whether you are sticking to your plan. If your current costs are too high, you may need to reassess.

• Shop around for the best deal: prices such as insurance premiums and service costs can change, so comparing providers can help you identify potential savings.

• Consider resource-saving alternatives: features that reduce energy or resource consumption can help lower utility bills. Smart taps, smart thermostats, energy-saving light bulbs and improved insulation are examples of measures that may reduce usage.

• Buy budget or used: buying budget items or sourcing them second-hand can be significantly cheaper. Make sure that anything you use in your holiday let is appropriate for the type of guest you are trying to attract.

• Get hands-on: carrying out more tasks such as cleaning yourself can reduce costs. Before doing this, consider the potential benefits of paying for some services. Hiring an agency to manage your property may cost more than doing everything yourself, but it may also save time and provide access to additional marketing or management support.

Key takeaways

There are a lot of factors to consider when it comes to holiday let costs, including the size of your property, the services you provide and how much work you want to manage yourself. Balancing these expenses against your budget and expected income can help you plan more effectively.

If you have any questions about insurance, feel free to get in touch with a member of the Pikl team.