Renting out a holiday home has the potential to bring in higher potential profits than other types of rentals. This makes them an attractive income generator, but only if you’re willing to do the additional work associated with letting. These tasks and associated challenges are why many property investors may hesitate to run holiday property. With that in mind, we’ve provided a guide that prioritises flexibility and reduces complexity. Read on to find out how to run a successful holiday let.
Can I rent my home as a holiday let?
How to start a holiday let business in the UK
How to operate your holiday let business effectively
Cover yourself and your guests
Can I rent my home as a holiday let?
Before you go any further, make sure you’re aware of the basic rules behind holiday lets. Check where you stand with issues such as the terms of your mortgage, tax status and regional laws. If you aren’t sure, seek permission from the relevant organisation before renting out your property. In our holiday let rules and regulations guide, we discuss the main topics you need to be aware of.
How do you intend to use your property?
A holiday let is typically considered to be a property used specifically for renting out to paying guests. If the home you rent out is your main residence, this typically wouldn’t fall under the same category. You may not generate as much income either.
When aiming for profit, the best route is to operate a holiday let separate from your main residence. If you don’t have access to a second property and want to let your spare room, you can still make a profit. However, you’ll need to check with your mortgage provider before doing so. Consider using a platform like Airbnb and specialist cover from our Airbnb insurance team to keep you safe.
Determine whether your property will be classed as ‘furnished’
If your property is furnished and available for at least 210 days in the year as a holiday let, you may be able to claim certain tax advantages. Should you qualify, you can claim capital allowances for tax-deductible items used to improve your let, such as furniture. You can also deduct mortgage interest from profits. This can give you another avenue to access savings that are usually reserved solely for business premises.
Whether you meet the relevant tax criteria or not, you should get as much information as you can about tax and how it’ll impact your earnings. Take a look at our guide to Airbnb taxes for hosts to learn more.
Ensure you have the right insurance
Property is a valuable asset, which is why mortgages usually demand some form of buildings and contents insurance. Typical home insurance doesn’t usually cover this type of property, however.
At Pikl, we provide extensive cover for owners who want to provide holiday lets to guests. Whether you rent out your property occasionally or all year round, we can offer robust, dependable cover. Visit our holiday home insurance page to learn more.
How to start a holiday let business in the UK
Like other profit making enterprises, you need to follow roughly the same process as any other business. The first place to start is to map out your goals.
Step one: create your business plan
Start by creating a basic business plan for your holiday let, which incorporates the following sections:
- Competitor analysis: What are competitors in the area you intend to let doing with their listings? What types of property are available, what facilities do they offer? What pricing and availability is there?
- Market analysis: Consider the wider holiday let area to determine what trends are occurring and how they may impact you. Recently, post-pandemic ‘staycations’ featuring hot tubs are growing in popularity.
- Customer analysis: What sort of guest information can you gather to inform your business decisions? Does the area you intend to let in favour a particular type of guest? Are there local events/festivals/dates that attract particular customers?
- Marketing plan: How do you intend to advertise your holiday let and grow it? Will you invest in social media marketing, print advertising, Google ads, etc?
Part of any business plan should also include financial projections and estimates. Work with a professional or accountant to help and take their advice on what type of business you should register. Each type of business has specific tax considerations and what suits you depends on your circumstances and income sources.
Step two: Get your property ready
Whether you already own a property or you’re buying one, you’ll need to adjust it to make it suitable for guests. If you’ve just bought or already converted the property but you’re still asking “Can I rent out my home as a holiday let?” you should consider the following:
- Safety: Has the property been made safe to the best of your ability? Does it meet fire regulations? Have any electrical and gas inspections been carried out? Are there any trip/slip/fall hazards you can protect guests from? You’ll need a gas safety certificate, a documented assessment by an electrical engineer and evidence of fire safety assessments for all guest furniture.
- Facilities: Properties let to guests should always provide access to basic facilities, even if you’re living in the home and letting a spare room. The level of facilities required is dependent, of course, on the type of property you’re letting: a glamping pod may not require the same equipment as a family home. Ensure at least basic facilities are available to your guests.
- Furnishings: If you intend to qualify your holiday let as a furnished for tax purposes, you need to do this adequately. This isn’t a fully defined term – but use your intuition when assessing what a guest would class as adequate. Failing that, look at competitor listings and mimic their furnishings.
Consider your location and mortgage options
If you’re buying or converting a property to use as a holiday let, consider the area it’s located in. Holiday let properties can vary between homes, lodges and cottages, as well as quirkier conversions such as renovated farmhouses and luxury glamping pods.
The key to making the most profit is to find areas where certain types of property excel. The most in-demand tourist accommodation in busy cities tends to be apartments with good access to amenities and public transport. For rural breaks in national parks, people may favour cottages, caravans and glamping pods.
When you’ve selected the property, you’ll need to secure a mortgage. This usually requires a specialist lender willing to support holiday let usage. Residential mortgages tend to be based on income criteria, whereas holiday let mortgages may be based on income projections – making your business plan vital.
Step three: list your property
Managing your holiday let is all about attracting bookings. You’ll need to decide how you’ll allow guests to find and book your property. Many people use platforms like Airbnb and Booking.com. Others use more bespoke platforms. You can also promote your property independently via your own website or social media page. Some holiday let owners choose to work with property managers to maximise the attention their listings can achieve.
To generate the most interest, list your property in multiple places so you can market to as many guests as possible. A booking management system is absolutely critical if you list in multiple places. If you don’t, you may have guests double-booking dates.
Most property management companies, such as Sykes Cottages, will list you on multiple websites as well as their own. This means you can benefit from the increased booking potential of being listed on the likes or Airbnb, Booking.com and VRBO whilst utilising their own booking management system to avoid the risk of double-booking.
How to operate your holiday let business effectively
We work with many holiday let experts in the industry. Read our authoritative list of tips for running your let in the most profitable way. Follow these tips if you want to secure more bookings and achieve higher guest ratings.
Prepare your holiday let for guests
Safety and cleanliness are basic standards for holiday lets, but why stop there? When preparing your property, don’t just think about safety measures – consider how to delight guests as well.
Go above and beyond with little guest-focused touches such as including snacks and refreshments on arrival. Leaving local area information and tourism guides in the property could be well appreciated too. All of these little touches add up and lead to better experiences.
In terms of furnishings, remember that context matters. Guests booking a rural countryside walking break may have less exacting expectations compared to other property types. Furniture doesn’t have to be expensive. As long as your furnishings are clean, dependable and suits the property, they will be fine for guest use. If you’re struggling to equip your let, consider second-hand marketplaces like Facebook Marketplace, Gumtree and Vinted to find furniture at more affordable prices.
Think about guest check-ins and property security
In our Airbnb check-in guide, we talk extensively about the guest check-in process. Handing over your keys in person is safe and means you’re on site to check everything is ok. If you’d rather save some time, use safe remote options such as police approved key safes or secure smart locks.
CCTV is another security measure you should consider. This helps protect the property and heightens guest safety, but internal CCTV may be seen as obtrusive and invasive.
Outsource cleaning
While it’s possible to do the cleaning yourself, preparing your property to guest-ready standards can be demanding. Unless you’re an experienced cleaning professional, you may find that cleaning takes up too much of your time.
Hiring a good cleaning company takes this task off your hands. It could also lead to higher guest satisfaction. You can ensure each guest gets the best first impression and leaves a better review. Make sure your cleaners alert you to property damage as soon as the guest checks out. If you’re interested in doing all the cleaning yourself, consider looking at our Airbnb cleaning guide.
Determine a management system that suits you
Holiday lets can be run successfully either by the owner or by a specialist letting agency. Either option is valid, but one will cost you more in terms of financial outlay and the other will cost you more time and effort. Property management experts such as Sykes Cottages can manage things such as bookings, marketing, cleaning and guest check-ins. If you want a professional to handle these tasks for you, the price of doing this may be more than worth it. Handling everything yourself may mean you miss out on some of the benefits brought by the agency’s longer-term experience. On the other hand, managing everything gives you more control and may potentially save you more money.
Facilitate better guest relationships
Contact guests before their arrival to confirm their booking and invite them to ask questions. Once they’ve left, contact guests again to request a review and ask for any feedback. Make sure you also action relevant feedback rather than just focusing on good reviews. If something crops up multiple times, it’s worth fixing to improve your future ratings.
Cover yourself and your guests
You’ve now got an idea of everything you need to know for how to run a successful holiday let business. Once you’re operating, you can consider expanding by purchasing more property. Now that you know the steps involved, you can see why protecting your considerable investment is so important. Regardless of whether you decide to stick to a single property or want to expand, ensure you’re protected throughout the entire process by securing cover from Pikl. Click on the link below to get a quote today.
