UK Holiday let profit calculator

If you're looking to work out how much income you could earn as a holiday let owner in the UK, Pikl's holiday let profit calculator can provide a visual overview.

The tools and information in this guide are to be used for illustrative purposes only. For financial advice on the suitability of owning a holiday let, speak to a qualified specialist.

Calculating how much you could earn as a holiday let owner

Average revenues for holiday lets vary across the country. Whilst there are websites that can provide estimated incomes based on area averages, your actual revenue will depend on different factors such as:

• Location: cities, holiday areas or locations close to popular amenities and attractions may naturally be more popular and allow you to command more income.

• Operating costs: ongoing costs such as holiday let insurance, platform fees and maintenance may affect how much profit you make.

• Occupancy: how often your listing gets booked over the course of a year is another vital factor determining how much you can earn. Think about how many bookings you'll realistically anticipate, but also consider other factors such as seasonal demand and whether there are holiday let regulations in your area that restrict how often you can rent the property out.

• Property type and features: whole properties can command a higher premium than single rooms. Larger houses or properties with unusual or attractive features may also command a higher rental price. Special features of a house such as a hot tub or a swimming pool may be popular, and listings that have these may be able to charge higher prices than those that don't.

• Status: some booking platforms are more popular than others and may make it easier to achieve a higher occupancy rate. Within the platforms themselves, holiday let owners with more positive guest reviews may attract more bookings and income than owners with fewer reviews.

To get a realistic idea of how much you could earn, take these factors into consideration and look for similar listings in your chosen area on popular booking websites. How much actual profit you could make after potential revenue and costs are taken into account may depend on other factors, however. That's where our calculator can help.

Holiday let profit calculator tool

Click on the link to use our holiday let profit calculator.

Tips on how to price your holiday let

Once you've worked out your potential revenue, you can decide how much to price your property per night. You may want to price your listing differently to the average income in your area for several reasons. Here are the top issues to take into consideration.

• Your budget: when starting out and applying for finance, you may benefit from creating a plan. Once you've worked out all of your costs, this may dictate how much you charge. Our guide on how to start a holiday let business covers this topic and much more.

• Seasonality: you may decide to charge more when your listing is in demand and offer cheaper rates when times are quiet.

• Competition: if there is lots of competition in your area, you may want to price your listing differently in order to stand out.

• Guests: depending on who you're trying to attract, you may choose to raise or lower your listing price.

• Listing features: listings with unique and attractive features may prove to be popular with guests. If you have a standout feature of your property and you feature this prominently in the promotion of your listing, this may allow you to charge more.

Key operating costs to consider

To get an accurate gauge of potential profits gained from running a holiday let, you'll need to account for costs. It may be difficult to get the full picture when starting out, so here's an overview of running costs you may want to consider:

• Taxes for holiday lets.

• A holiday let mortgage.

• Insurance.

• Property management fees.

• Cleaning costs.

• Platform service fees.

• Maintenance costs, for example boiler services.

• Utility bills.

• Repairs and replacements.

Check out our holiday let running costs guide to explore this topic further, and our checklist guide for holiday let cleaning to see what's involved in the changeover process.

How do I calculate a holiday let rental yield?

The purpose of our holiday let calculator is to work as an approximate guide regarding potential monthly income after deductions. A holiday let rental yield also factors in the cost of your property and can help you assess its long-term profitability. This can be calculated using the following formula:

(Annual rental income / value of the house) x 100

Say the value of your house is £300,000 and your annual income is £20,000. Your rental yield can be calculated as follows:

(£20,000 / £300,000) x 100 = rental yield of 6.66%.

Using this formula, you can understand your property's gross rental yield. To work out a net rental yield, subtract your holiday let costs, such as tax, insurance and maintenance, from your annual rent first.

Can I make a living from holiday lets?

It's certainly possible to make a living from holiday lets. However, it's also important to be realistic about how achievable this is. Even once you've set up your holiday let business, you may not make enough money to earn a living straight away. Factors that can affect this include:

• Your monthly household outgoings.

• Holiday let costs.

• Occupancy rate.

• Pricing.

• Legal restrictions for holiday lets.

• Existing savings.

For example, if you owned a holiday let in the London area, you may need planning permission if your property is used for short-term letting for more than 90 nights in a calendar year. This could affect how much income you are able to earn from a single property, unless you have the relevant permission in place.

When working out whether you can make a living, you'll need to consider factors such as this to work out how far away you are from achieving your goal. Depending on your objectives, you might need more than one property or higher savings in order for this to be feasible. For other people, making a living from holiday lets may be more achievable. Each person's circumstances are different, so you'll need to make a plan to work out if you can achieve yours.

Why insurance is important

An property insurance policy may cover claims and unexpected problems. Not having suitable cover for what you require may result in issues such as:

• Liability issues: if a guest is injured or alleges that your property caused them loss or injury, liability cover may help protect you against legal costs or compensation claims.

• Unexpected costs: underinsuring your property could result in you having to pay more towards a claim yourself. Make sure that your property's rebuild cost and the total sum of contents are accurate.

• Cover differences: insurance cover varies across providers and policies. Always check that your insurer knows the property is being used as a holiday let and what specific exclusions they may have.

Pikl Insurance is a specialist insurance provider covering short-term rentals and holiday lets. If you have any queries related to insurance, get in touch with a member of the Pikl customer services team.