Short-term holiday lets can be an attractive option if you own a property somewhere scenic and/or popular with tourists. In fact, holiday lets can be amazingly profitable, as landlords are able to charge higher rents for short-term holiday lets when a property is in a highly desirable location.
But renting out a property as a holiday let has some unique differences to renting out domestic property. In this post we’re delving into everything you need to know about running holiday lets.
- What is a Holiday Let?
- Preparing Your Property for Holiday Letting
- Rules, Regulations and Compliance for Holiday Lets
- Advertising Your Holiday Let and Attracting Customers
- Managing a Holiday Let
- Financial Considerations for Holiday Letting
What is a Holiday Let?
A holiday let is a property that is used for holiday stays but the term also encompasses any short let situation such as corporate travel and other temporary accommodation.
Holiday lets are rented out over a short time period, usually ranging form a few days to 2/3 weeks. Holiday lets are often decorated to a high standard and contain everything needed for a stay away from home.
Customers are able to rent out the property for a short period of time in order to stay there on holiday, or as a means of staying in an area for a short amount of time. Usually holiday lets are located in tourist areas or close to areas of interest that people are keen to stay in. Recently though, there has been interest in holiday lets in city centres or holiday lets that are located close to the site of major festivals.
In this guide, we are going to explore all there is to know about holiday lets, including how to let your property as a holiday let, setting up a holiday let and the rules and regulations around holiday lets that you might need to be aware of.
Preparing Your Property for Holiday Letting
If you’re considering entering into the holiday let market there are a lot of considerations. To make holiday letting a viable strategy for your property business you need to find the right property, in the right location and you need to make sure it looks the part. Failure to do this can result in low bookings. If you get these essentials right, then it’s a case of advertising the property, keeping it maintained and providing such excellent service that word of mouth does half the work for you. To begin with though, let’s look at how best to find the right property or to prepare your existing property to become a holiday let.
Location Matters for Holiday Lets
Holiday lets live or die based on their location. Most people will pay over the odds to rent a cute cottage adjacent to a blue flag beach but would be reluctant to pay to stay in a standard terrace in the middle of a residential estate.
It’s unlikely you’ll make any money advertising your property as a holiday let unless it’s in a desirable area or there’s something interesting close by that people want to visit. Anywhere close to the sea, in an area of outstanding natural beauty, or near an attraction popular with tourists is a winner. Even properties close to major sporting venues can earn good money, especially when there is a major event taking place, such as Wimbledon. Overall, location is an important consideration when renting out a holiday home.
Good Looking Properties Perform Better as Short-term Lets
How a property looks is just as important as its location. Quirky, historic, or luxurious properties tend to be more popular among people looking for holiday lets. If you live in an ordinary, modern, three-bed semi, it stands to reason you want to rent somewhere a bit different for your holiday.
Log cabins, pretty seaside cottages, ultra-modern five-star houses, and anything a bit out of the ordinary stands out and attracts attention when renting out a holiday home. As long as you price it right, you are sure to attract a steady stream of visitors.
Even if your property is fairly generic, don’t lose heart. The right location can make a huge difference for a holiday let, as people don’t mind ordinary if it’s right next to a beautiful beach or a few minutes’ walk from a major attraction.
Preparing Your Holiday Let for Visitors
As your guests will be staying in the property as a holiday you will need to ensure that you provide everything they might need to make their stay comfortable. You will want the property to feel welcoming and so you should put effort into the look and feel of the property.
The property should be clean and tidy. You should provide clean fresh beds and towels and you will need to provide toilet roll, soap etc.
It’s a nice touch if you leave a few basics for your guests, such as milk, bread, etc. Small touches like this cost very little but really make a difference. Nothing beats a small basket of goodies, such as locally made fudge, jams, and shortbread. Go the extra mile for your guests – it encourages them to leave positive feedback, which in turn, helps with new and repeat bookings.
Remember, some guests will have travelled a long way, so they will likely be tired when they arrive. By making them feel welcome, their holiday starts off on the right foot.
Create a welcome pack for guests. This should include essential details, such as your contact number in case of problems/emergencies, the Wi-Fi password, details of local pubs, restaurants, etc., instructions on how to work the central heating, TV, and appliances, and anything else guests need to know. The more information you provide, the more comfortable your guests will be and the less queries you will receive.
Give your guests detailed information on how to find the property. The harder it is to find, the more specific you need to be, which includes listing key landmarks nearby and anything else that might help them find the property. Remember, not everyone has a sat-nav and not all sat-navs have accurate maps.
Be clear about when the property will be ready for guests. You don’t want new guests turning up at 10 AM when you’re still cleaning or the previous occupants haven’t left yet. Be clear about when guests need to vacate, too, for much the same reasons.
Tell your guests where to collect the key, either from you or a neighbour. Another option is to have a secure key drop box somewhere on the property. All you need to do is let guests have the access code, so they can retrieve the key when they arrive. Have at least two keys cut for guests, as people do like to go their separate ways and one person might need their own key.
Fixtures and Fittings for Short-term Lets
In most instances a short term let won’t be your home, so be careful not to personalise it too much. By all means have a “theme”, such as seaside shabby chic, but steer clear of anything that might be too niche or you will reduce your potential pool of visitors looking for a holiday let. Very busy decoration, ‘loud’ colours and unpopular décor are all examples of this.
Your best bet is to go for neutral colours and simple but comfortable furniture. Since sofas and beds may suffer more wear and tear than a longer term let, be prepared to replace every 3-5 years. Avoid light coloured sofas and furniture as they are more likely to need regular cleaning to stay looking good.
Furniture should be fire-rated, sturdy, and in keeping with the style of the décor. The overall décor should provoke a positive response and look great in photo listings. Dress the property with some tasteful paintings and ornaments. Invest in a few cheap paperbacks, local guidebooks, board games, jigsaws, etc.
Guests will expect all mod-cons when they go on holiday. The kitchen should be well fitted with a good selection of dinnerware, cookware, pots, pans, cutlery, glasses, etc. Dishwashers and other white goods are essential. Invest in an appliance repair policy, so if anything breaks down, you can have it fixed fast.
Broadband is a must-have these days. Many people won’t even look at a holiday let without internet access.
Guests will also expect a working TV. Ditch the old TV and buy a decent flat screen model. Consider adding SKY or Cable if you want to attract families to your holiday home let. The more entertainment options your property has, the more people it will appeal to.
Extras such as a wood burning stove and a high-end coffee machine can work wonders if you want to go the extra mile. We all appreciate the little extras when we go on holiday, and in the colder months, a toasty log burner is a definite plus.
Don’t neglect outdoor space either. People on holiday want a nice garden where they can relax and unwind on a warm summer’s evening. Add a garden table and chairs and make sure the area is nicely landscaped and well-maintained. A gas or charcoal BBQ is a useful additional extra but remember to keep it clean.
For seaside properties, consider providing beach toys, such as buckets and spades, sunbeds, beach umbrellas, etc. Optional extras include kayaks, dinghies, bodyboards, and snorkelling gear. In short, anything that might attract guests and set your property apart from others is a worthy investment when setting up a holiday let.
If this was or still is your home, lock away any valuables and personal items. Either store them in a secure area, such as a locked room/cupboard or put them into storage.
Rules, Regulations and Compliance for Holiday Lets
All kinds of property letting in the UK have some level of compliance to contend with and holiday-lets are no different. In this section we’ll look at whether you need planning permission, health and safety issues and any legislation you need to be aware of if you want to get into holiday letting.
Do you Need Planning Permission for Holiday Lets?
In most cases, no, planning permission is not required to let out a property for holiday use. However, it is wise to check whether there are any covenants in the deeds of the property, or in the terms of the leasehold if you don’t own the lease. Occasionally covenants exist that prohibit the property from being used as a holiday let. Older properties often have weird and wonderful restrictive covenants written into the deeds. Examples include not being allowed to turn your property into an ale tavern, tannery, or house of ill repute.
Leasehold properties may contain a clause banning sub-letting. This is more likely if the property is in a block of apartments, as sub-letting can be disruptive to other tenants. The exception to the planning consent rule is when you opt to turn your property into a B&B. This constitutes a change of use, so planning permission must be sought and granted before you accept guests. Speak to your local council’s planning department if you are in any doubt as to whether you need planning permission if you’re just getting started with holiday lets.
Some Mortgage Lenders Won’t Permit Short-term Lettings
If you have a standard residential mortgage you will find that it is against the terms of your mortgage to begin letting the property or using it for business purposes. This also applies to short-term lettings. If you are planning to let out your home as a short-term let or holiday let and you have a mortgage you will need to speak to your lender about switching to a product that allows for this kind of use. Research carried out by the Telegraph in 2017 found only two lenders that allowed short-term lettings. Lloyds and Metro Bank both said “yes” to short-term lets on residential mortgages but only for up to 90 days. So, if you have a residential mortgage on your property, speak to your lender before you go down the holiday lettings route, even if you’re only letting out a room in your own home. You may need to switch to a specialist commercial lender when renting out a holiday home.
Lenders that do allow short-term lettings usually require that the borrower asks for permission before they list the property. So if you have a mortgage that allows short-term lettings you should still make your lender aware. Don’t make the mistake of going behind the lender’s back. If the lender finds out you’ve breached their mortgage terms & conditions, they could withdraw funding.
Health and Safety in Holiday Lets
Health and safety is still an important consideration in short-term lets. Here are just a few of the considerations you should be making from a health and safety perspective:
- Carry out a fire risk assessment and resolve any issues you find.
- Like any landlord, you must ensure appliances are well maintained and serviced annually.
- There must be smoke alarms fitted in the property and if you have any solid-fuel appliances, fit a CO detector.
- Fit a fire blanket in the kitchen.
- Chimneys should be swept once a year (if applicable).
- Hot tubs and swimming pools must be cleaned and maintained. If the property has a swimming pool (unlikely if it’s in the UK!), be very aware of safety with regard to young children. Where possible, erect a fence around the pool, to prevent tragic accidents.
- Provide torches if guests are at risk of tripping over steps or other obstacles at night.
Advertising Your Holiday Let and Attracting Customers
Marketing your holiday let is the key to success with this kind of strategy. As there is a high level of turnover in holiday lets advertising and getting a stream of steady customers is more essential than it would be for say a buy to let strategy. In this section we’ll cover best practices for advertising your holiday let, including some of the best places for doing so and also tips on how to create compelling photos and descriptions of your holiday properties.
Advertising Your Holiday Let
Once your property is ready to let to the general public, the next step is to create a listing and get your property out there. The more you shout about your holiday let the more chance you’ll have of keeping a steady stream of visitors coming.
Photographing Your Holiday Let
Remember, photos sell a holiday let, so your photos need to be top-quality. Dress the property to impress. Imagine you are trying to sell the place, so stage it to suit your ideal guest.
Beds should be made up with attractive linens, the dining table set up for a dinner party. Place a bottle of wine and two glasses in the kitchen, add flowers to vases, etc.
Choose a nice sunny day to take photos, so the property is presented in the most flattering way. If you want to emphasise any special features, such as a log burner or open fire, take photos at the most appropriate time (i.e. in the evening when the fire looks cosy and inviting).
If you aren’t good at taking photos and all your pictures make the property look small or dark, invest in a professional photographer. The photos are one of the most important ways to attract visitors to your holiday let.
Writing Your Holiday Let Advert
Write some suitably persuasive advert copy to accompany your photos. The aim is to let guests know what to expect, paint a picture of an idyllic getaway where they can forget all about the stresses and strains of modern life. Use bullet point lists to highlight the property’s best features, such as sea views, ample parking, a garden, a log burner, and whether you accept pets whilst renting out a holiday home.
Personalise the ad. Write how much you love staying there, what the area has to offer, and why guests will enjoy your home as much as you do. Personalised copy tends to resonate much more with visitors than generic platitudes that could apply to any property in any area.
If your writing skills leave a lot to be desired, pay someone to write the copy for you. It could make the difference between regular bookings and significant void periods. There are many places to find copywriters. Take a look at popular freelance websites like Fiverr, Upwork and People Per Hour to find a reasonably priced freelancer.
Where to Advertise Your Holiday Let
Advertising is necessary if you want a steady stream of guests. The following are your main options.
- Word of mouth – this is the cheapest way to advertise your holiday let. Encourage your friends and family to spread the word about your wonderful cottage/beach house/log cabin. If you’re lucky, this will lead to quite a few bookings.
- Social media – Create a Facebook page for your holiday home and encourage people to share the page with their friends and family. Keep your page updated and add photos, links to local attractions, good reviews from other visitors and anything else that’s relevant. It’s also a useful place to deal with questions and enquiries from guests. Feel free to build a presence on other social media sites too. Instagram is perfect for photos. If you live locally, you can post images of the local views around your holiday let.
- Bespoke website – Not everyone wants the hassle of managing a website but setting one up is easier than you think. All you need is a domain name and a hosting package. Install a content management system like WordPress, pick a theme, and you have a bespoke website. To set up an online booking system requires some specialist knowledge and is beyond the scope of this article, but as long as you add contact details and update the online availability calendar as soon as you receive a verified booking, you don’t need to offer online bookings.
Remember to optimise your website for SEO. There are many ways to do this, but one of the most important is to add suitable keywords to the copy. For example, a holiday cottage in Devon or a log cabin in the Lake District are the kind of things people will search for when they want to find a holiday rental. Again you can use freelance web developers to help you with this or use popular web builders like Wix and Squarespace to build nice and fully functioning sites with no coding knowledge.
- Holiday let websites – there are dozens of them out there, many of them linked to specific geographic locations, such as “holiday cottages in Northumberland”. Do a search based on keywords you are targeting and see which sites appear first in the rankings; these are the ones to try. Try a range of keywords. Start with the most competitive and then move on to more specific ones, such as “dog friendly cottage in Ambleside”. The bigger sites such as Airbnb and booking.com will likely dominate the listings, but it’s worth trying smaller, niche sites too.
As always, read the T&Cs before you commit to placing a listing on any site. Find out what fee the site charges, what service they offer, and how much work they actually do for the money. Smaller sites usually charge an annual subscription fee whereas it’s free to list on the larger sites; they make their money from a 3-15% commission on each booking made via the site.
- Local press – Ads in local community magazines and newspapers can sometimes pay dividends. These tend to be more effective if your ideal short term tenants are of an older generation, as they are more likely to look in this type of publication.
- Shop windows – Put a postcard in your local shop window, along with a photo. You never know, it might yield a few bookings.
Managing a Holiday Let
Managing holiday lets is a little more time intensive than managing more standard property types. The high turnover in guests means that more time is required for check in and check out. The property needs to be cleaned and maintained between guests and things like vetting procedures aren’t as straightforward. In this section we’re going to take a look at some tips and tools for managing your holiday lets.
Self Management Versus Property Management of Holiday Lets
Guest changeover day tends to be the busiest day for holiday let landlords. This is when one party vacates and another one arrives. You’ll have to clean the property and prepare for new guests. The rest of the time, apart from dealing with admin, bookings, and being available to answer questions, you won’t have too much to do.
If you don’t have a full-time job, there is no reason why you can’t manage your own holiday letting business, especially if you live nearby or on-site. Guests often prefer a hands-on landlord who doesn’t mind answering their questions or is happy to recommend local attractions and amenities. The more personable and friendly you are, the better. But if you have other time commitments or don’t live in the local area, it’s wise to hire a manager to take care of the everyday property maintenance, admin, and meet and greet.
Customer Service is Important in Holiday Lets
Holiday letting is a customer-focussed business. Reviews and feedback can have a considerable effect on your trade. If you treat customers poorly, they are very likely to leave a negative review, which is not going to encourage future guests to holiday at your property.
Make it a priority to provide good customer service. Respond to booking enquiries promptly. Deal with questions and problems politely and professionally. Make sure the property listing matches up exactly with what guests get when they arrive. For example, if you claim the beach is a five-minute walk away but neglect to mention there’s a busy dual carriageway with no crossing points between the property and the beach, people will be understandably upset.
Try to be as helpful as possible, even if it means going the extra mile. It’s the small acts of kindness that guests will remember when they head home. Your aim should always be to encourage happy guests to make a booking for the following year. Some people are happy to return year after year when they find a place they truly love as a holiday home.
Be mindful that if your customer ratings are low or you upset your guests repeatedly, you could end up being banned from property listing sites like Airbnb.
Make sure to respond to reviews when they are left. If you receive a negative review respond to it with respect. How you deal with negative reviews can end up encouraging people to stay with you. Responding to positive reviews with a thank you shows that you are a responsive holiday let landlord.
Vetting Holiday Guests
While most holiday guests are perfectly nice people just looking for a relaxing getaway things may occasionally go wrong.
Vet all guests thoroughly and check their ratings (if applicable) before you accept their booking. Be mindful about accepting large groups who want to hold stag and hen parties as these represent a higher risk.
Respond quickly to reports of issues from the neighbours. Some people like to arrange holidays to hold parties with groups of friends, while this may be perfectly fine in a more remote cottage it might not work out so well if your holiday let is in a more built up area.
Should You Allow Pets in Holiday Lets?
Whether you allow pets or not is a personal decision. If you say no to pets, you are reducing your pool of potential guests. After all, we are a nation of animal lovers and many of us can’t bear to go on holiday without our beloved pets in tow.
However, if you do allow pets, expect extra wear and tear and factor in more time between holiday goers for cleaning. People who are allergic to animals likely won’t want to stay in a property where pets have been, so make sure you are clear in your advertisement whether your holiday let is pet friendly.
If you decide to welcome pets, be clear about how many pets are allowed, and if you have any restrictions on where they are allowed to roam, state this on the booking form.
Check your insurance policy to make sure it covers pet damage before you allow pets into your property. And if you are happy to welcome pets, feature it as a selling point.
Financial Considerations for Holiday Letting
As with any business enterprise there are financial considerations to be made. In this section we’re looking at the financial considerations of holiday letting including how much you should charge, common expenses, taxation and insurance.
Costs of Running a Holiday Let
Running a holiday let can be expensive, especially when you first get started. Here are some of the most common expenses you will encounter:
- Mortgage Costs – If your property is mortgaged you will need to factor in the mortgage repayments as an ongoing expense.
- Marketing – Unlike traditional lets that need to be advertised at the start or end of a tenancy, holiday lettings need to be almost permanently advertised to ensure a steady stream of guests.
- Turnaround – When your guests leave you need to clean the property and prepare for your next guests. The costs for this come down to what level of involvement you have. If you’re a hands on landlord it’s more likely to cost time than money, but if you employ a cleaner that’s going to be an ongoing expense. You should also factor in the costs of laundry for beds, towels etc. and any consumables that you keep in stock too, like milk, teabags etc.
- Welcome Gift – It is common to leave a welcome gift for new guests, this usually contains wine, chocolates and various small items to make the property seem a bit more friendly and welcoming.
- Utilities – Gas, electricity, water – the costs of utilities including solid fuel if applicable should be factored into your ongoing expenses.
- Subscriptions – Your guests will expect wifi at the very least, but holiday lets will often include subscriptions to Netflix, Amazon Prime etc. Include some way for your guests to watch their favourite TV shows and plan on purchasing a TV licence as well.
- Maintenance and Repairs – The property will need to be maintained and repaired as any property would, but there are also typically more fixtures and fittings in a holiday let. The furniture in a holiday let also typically experiences higher wear and tear. It is important to factor in these costs and to prepare a good sinking fund to cover them in the long run.
- Insurance – You will need buildings and contents insurance for your holiday let. You may also opt for extra coverage for emergencies or accidental damage and legal cover.
- Business Rates – Most non-domestic properties have to pay business rates and holiday lets fall into this category.
- Gardening / Cleaning – If you’re doing your own cleaning and gardening in between guests the costs for this will be lower and you will just need to account for tools and cleaning materials. If hiring a cleaner or gardener though the costs will be higher.
- Management fees – If you opt to self manage your property the costs will be lower and you may just want to factor in the costs of an accountant and any software you might use to help you manage the property. However, if you need to be more hands off then you will need to account for the costs of a letting agent or property manager.
How Much Rent Should you Charge for a Holiday Let?
Calculate your costs first, including advertising the property, cleaning, maintenance, insurance, and anything else that comes out of your pocket. Next, look to see what other properties similar to yours charge in renting out a holiday home.
Take into account the different seasons. It’s customary to charge more during high season and school holidays as demand for holiday accommodation is higher at this time. Be willing to charge mid-week stays and weekend lets as well as full weeks. So, you could have a pricing structure for Friday to Friday, Friday to Monday, and Monday to Friday. Mid-week and weekends are typically charged at 70-80% of the full rate. Shorter lets tend to be popular out of season and can boost your income.
Consider offering a discount for longer stays, such as two or more weeks.
Don’t be tempted to undercut everyone else in an attempt to attract more bookings. Charging too little is a bad idea for many reasons. It suggests there is a reason why your property is so cheap and may not attract your ideal holiday goer.
If you pitch your prices too low, you’ll dissuade happy guests from making repeat bookings when you do decide to hike your rates to a more reasonable level. Instead, start off high and offer discounts and special offers if you have fewer bookings than you would like.
As long as your property represents good value and has plenty to offer discerning guests, they will be happy to pay to stay there. Your aim should always be to offer a “quality product”. People want to feel pampered when they go on holiday, and if your property has an air of luxuriousness about it, you will find plenty of people who want to stay.
Factor in increased demand during special events, too. For example, property rental prices in Edinburgh usually spike during the annual Edinburgh Fringe Festival and over New Year.
Are Holiday Lets a Good Return on Investment?
In 2018 a report from Which indicated that a 10% rental yield was about average for holiday lettings in the UK and the yield was expected to rise to 14% in the intervening years until 2022. These figures may have changed of course given the pandemic. But, there is no denying that holiday lets have seen a significant boom.
Holiday lets can be very profitable, but like everything, how profitable and how much of a return on investment you see depends on how carefully you manage the property. If you choose a good property and have a steady stream of guests and manage your expenses carefully there is profit to be made.
The financial advantages of holiday lets are that you can generally charge more for use of the holiday property for a shorter period of time than you could for a buy to let property. Especially if the property is decorated to a high standard and has all mod cons. It also has a more favourable tax treatment than domestic property.
The financial disadvantages of holiday lets include that they experience more wear and tear than domestic properties, require more in the way of furnishing and can experience more frequent voids especially over the winter months.
Tax and Insurance on Holiday Lets
Any income you make from letting out a property as a holiday let is taxable. At the time of writing, you can earn up to £7,500 tax-free by letting a room in your own property, but this doesn’t apply to a second or subsequent property. Small scale holiday letting ventures do attract some tax relief, but it’s wise to consult an expert to find out what tax you are liable for and how best to mitigate your liability.
Insurance is not optional. Whilst sites like Airbnb do offer some insurance cover for landlords, it is not intended to replace landlord insurance. Look for a policy that protects you from property damage. Be aware that ordinary landlord insurance won’t cover short-term lets, so look for a specialist insurance policy designed for holiday lets.
Congratulations, you have now reached the end of our guide to holiday lets. We hope you found it useful and interesting!
As always, if you have any stories to pass on or would like to ask us a question about anything related to holiday lets or landlord life in general, feel free to get in touch. You can reach out on social media.
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