The Costs of Running a Holiday Let

Are you thinking be becoming a property owner and want to know more about the costs of running a holiday let?

Starting a new venture in holiday home rental there are many considerations to be made, so to help you we have created a list of the most important costs you will encounter as soon as you begin.

Read on to find out more…

Skip to a specific section:

• Initial Set-Up Costs
• Ongoing Costs
• Running Costs
• Agency Costs

Initial Set-Up Costs

The initial expenses of operating a holiday rental are typically the largest part of the process. Once the primary expenses have been covered, things tend to settle into more manageable payments. Here’s an overview of the initial costs involved.

Mortgage / Buying Costs

If you’re planning to buy a holiday home, whether you’re paying in cash or taking out a mortgage, it’s going to be a significant expense. Therefore, it is essential to set a budget for yourself and stick to it when viewing properties. Although it’s easy to get carried away while looking for your dream holiday home, it’s crucial to keep in mind how much it will cost you. According to Zoopla, the average selling price of a property in Northumberland in the last 12 months is £225,757 as of December 2023. If you’re planning to take out a mortgage, there are many building societies that offer holiday let mortgages. We also recommend consulting with Holiday Cottage Mortgages, who specialise in holiday lets. Additionally, local estate agents have a wealth of knowledge and experience, and they can also guide you through this initial stage.

Planning Permission Fees

If you plan to extend, develop, or build additional structures around your holiday rental, you may need to obtain planning permission, which is an extra cost to consider. Besides the expenses for the actual renovation work, you also have to factor in the cost of applying for planning permission. Keep in mind that Northumberland has a National Park, and many houses in the county are listed, so getting approval for any planning application may take some time.

Furnishing & Decorating

After the sale of your holiday home is complete, it’s time to make it look exactly how you want it. The cost of this process can vary depending on how much work your property requires. If your holiday home needs new carpets, bathroom suites, and kitchen units, the cost will be higher. However, if all it needs is a fresh coat of paint, the cost will be significantly less, particularly if you’re able to do the decorating yourself.

Elm Cottage Ref 1125224

When furnishing your space, it’s important to keep in mind the quality of the furniture you choose. Investing a bit more money in high-quality furniture can save you from having to replace it frequently due to wear and tear caused by guests. Opting for cheaper furniture may seem like a cost-effective option initially, but it usually results in more breakages and ultimately, higher expenses.

You might also want to consider putting a few luxuries in to improve your guests stay. Ideas could range from a coffee machine or a spare fridge/freezer to a hot tub on the patio.

Take a look on our blog for some ideas on how to make your holiday home stand out.

Ongoing Costs

The ongoing costs of running a holiday let range from property insurance through to basic utility bills. Some of these are essential costs of running of a holiday let, but others such as broadband and TV subscriptions, are optional.

Council Tax

The amount you need to pay for council tax is determined by a couple of things – the location of your property and the tax band it falls into. All domestic properties in Northumberland have been valued by the Valuation Office Agency, list shown on the website www.voa.gov.uk.  Then, you can research which local council your property belongs to in order to find out the cost.

The council has set the council tax for the year commencing 1 April 2023 (minus parish precepts) as shown below:

While you will pay council tax for your home, if your holiday property in England was available to let for short periods totalling 140 days or more in the last year (20 weeks), and was actually let for 70 days or more, it will be classed, for tax purposes, as a self-catering property and you’ll have to pay business rates rather than council tax. For more information on council tax, business rates and small business rates relief see here

Insurance

The required level of cover for a holiday home will not be covered by the standard house insurance. Instead, you will need to look at Holiday Let Insurance and Public Liability Insurance (minimum cover of 2 million) – you can read more about insuring a holiday let here. In general, standard building and contents insurance can cost as little as £150 per year, but if you include public liability insurance for commercial holiday rentals, it can cost more than £500 per year.  Sykes Cottages Ltd is an Introducer Appointed Representative of Pikl Insurance Service Limited Registered Number 10449346 who are authorised and regulated by the Financial Conduct Authority firm number 773457. Registered Office: Suite B, 2nd Floor, The Atrium, St Georges Street, Norwich, England, NR3 1AB. Pikl Holiday Let Insurance .  Click here for tips from Pikl

Broadband

There are now a wide range of telecommunications providers across the country, which can be adapted to any budget. If you want the best deals, look for comparison websites like Moneysupermarket.com or Confused.com. These sites allow you to specify a property’s postcode and then see which services are available in the area, as well as what they have on offer.

On average, broadband can cost between £27-£46 per month, but some will do a cheaper deal for new customers so it’s best to shop around. Although it’s not necessary to provide WiFi in your holiday let, we highly recommend it. Properties that offer WiFi can receive up to 20% more income than properties that don’t, however as some areas of Northumberland are remote so there may be no or limited service, something to bear in mind.

TV Licence & Subscriptions

If you have a TV in your accommodation and guests can watch or stream live TV on it, you’ll need a TV licence. For holiday lets, you’ll need a special type called a Hotel and Mobile Units Television Licence (hotel licence). Currently, a single TV licence costing £159 will cover up to 15 accommodation units on a single site – so if you have holiday cottages in different locations, you’ll need a separate licence for each location. The TV Licensing website tells you more.

You will also need a licence if you provide a DVD film library for your guests, as providing films to paying guests without a licence is an infringement of copyright law (the Copyright, Designs and Patents Act 1988). Two main organisations issue licences to businesses; Filmbank Media and MPLC. Prices will depend on the size of your accommodation and the length of the licence. If you don’t provide DVDs and guests bring their own, you won’t need a licence.

Depending on the size and type of your holiday let, you may also need a copyright licence to play music on a device, as the Copyright, Designs and Patents Act 1988 states “any use of copyrighted music in public is possible only with the permission of the person who holds the copyright to the music being played”. So, you may need something called TheMusicLicence (which covers both copyright licences which are known as the PPL licence and the PRS for Music licence) in order to avoid this.

You can obtain more information, including about any discretion in relation to small self-catering properties, by contacting the PPL PRS Customer Service Centre on 0800 0720 808.

Utility Bills

The bills for water, electricity, gas and heating are included. The best way to find out which providers are offering the best price for your property is, of course, to seek advice from various suppliers. Remember to factor in the cost of providing a fire starter pack for your guests if you have an open flame or wood stove. Some firelighters, matches, and a small supply of logs are typically included in this.

Running Costs

Apart from the ongoing costs of insurance and expenses, there are also day to day running costs for holiday lettings. From the very beginning, you will appreciate our hands on and down to earth approach. From finding a cleaner for your property, property maintenance, feedback monitoring, and periodical property inspections, your property is in great hands with our team of local experts.

Cleaning & Laundry

Your holiday home needs to be cleaned thoroughly and the linen washed for every new guest. We know that many owners who are in the initial stages of letting find an approximate guide to the cost of their changeover to be useful. To give you an idea, cleaning costs can range from £75 for a one bedroom property, to £247 or more for larger properties with 5+ bedrooms. These costs are estimated and include our linen hire, towels and a welcome pack for guests to use.  A bespoke quote will be undertaken for every property once it’s been inspected as properties can vary hugely dependent on number of levels, floor space, bathrooms and layouts.

Property Maintenance

From time to time, your holiday let will require some maintenance. For example, tidying up the garden area, re-painting the walls, or a deep clean of the carpets. There may also be cases where something goes wrong, such as a burst pipe or leaking roof. The cost of this type of maintenance work may seem large at the time (depending on the scale of the problem), but these cases should be few & far between.  Northumbria Coast & Country Cottages provide our owners with a fully managed service, this is paid monthly approx £72 +VAT this gives owners peace of mind we are there to help throughout the year. That service includes several property checks to your property. We also provide a daily maintenance service which covers emergency call outs, the cost ranges from £35+Vat per hour, and after office hours the charge is £52+Vat per hour.  (Please note: as certain jobs can differ, we offer bespoke quotes too) 

Welcome Packs

Most guests nowadays like to arrive at their holiday cottage to a small welcome pack of tea, coffee and biscuits. Although it’s not essential, we do highly recommend providing a welcome pack to your guests to enhance their experience.  We also can provide a kitchen pack for guests too. If you opt in to our fully managed service we can help with will organise a welcome pack on your behalf. Call our local team on 01665 830783 to find out more about the costs involved.

Glencoe House, Wooler (Ref. 1132521)

Agency Costs

When you let your holiday home through Northumbria Coast & Country Cottages there will be a few charges to consider. We understand that the overall costs of running a holiday let can be daunting to begin with. For this reason, we like to keep our costs simple to make sure you get great value for money along with excellent service!

Commission levels & fees

Northumbria Coast & Country Cottages offer very competitive commission rates, which can be tailored to suit your personal circumstances. Please contact the local team in Alnmouth or Seahouses for more in-depth information or speak to one of our Holiday Let Advisors (contact details below)

Marketing Services

Enlisting the help of a professional agency such as Northumbria Coast & Country Cottages to manage your holiday let will make your life easier. Benefit from years of expertise, local contacts, as well as national and regional marketing. When looking after your own holiday let, additional extras sometimes aren’t considered. Taking photos, creating marketing material, website hosting costs etc. can begin to add up and can be time consuming.  We also provide an exterior wall plaque for properties, this is included in our marketing fee.

So when letting with Northumbria Coast & Country Cottages, our small annual fee of £60 + Vat contributes towards continuing innovation in marketing. (This is charged monthly, £6).

As we are part of the Sykes Cottages family we have a multi-million pound marketing budget so we can promote your property to the highest level, promoting your property to the right people & securing you bookings. We work with over 700 partner websites, as well as featuring all properties on the Northumbria Coast & Country Cottages & Sykes Cottages websites. This level of marketing would cost into the thousands of pounds if it was arranged individually, this is an added benefit when you let with us!

High Sea View, Beadnell Ref. 1122179

Are you still looking for some more information about the costs of running a holiday let? Our friendly, local teams based in Alnmouth & Seahouses are always happy to answer your questions. Call us on 01665 830783 or email newowners@nccc-ltd.co.uk and start your holiday letting journey today.

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.”

The information contained in this article was accurate at the time of writing, based on our research. Rules, criteria and regulations change all the time, so please contact our prospective new owner team if you’d like to hear how. Nothing in this article constitutes the giving of financial, tax or legal advice to you; please consult your own professional advisor (accountant, lawyer etc). in this regard. If we have referred within the article to a third-party provider of unregulated holiday let mortgages, this is due to the fact that such mortgages aren’t currently regulated by the FCA. 

As a helpful reminder, your home may be repossessed if you do not keep up repayments on a mortgage, so again anything you decide to do in this particular area this is one on which you should take your own professional advice on too, as we aren’t providing and can’t provide you with this.