The biggest costs of running a holiday let

Updated 4th October 2024

Holiday homes can be a profitable venture. At the same time, there are several holiday let costs that can stack up. In this article, we’ll cover typical running costs for a holiday let business in the UK. We’ll also discuss hidden ones that may surprise you too.

Key holiday let changeover costs

Typical holiday let management costs

Cost of furnishing and decorating a holiday let

Holiday home advertising costs

Insurance costs

Key handover and guest check in costs

Utility costs

Subscription costs

Tax costs

Accountancy costs

Holiday home safety costs

Routine holiday let maintenance costs

Unexpected second home repair bills

Finance and mortgage costs

Holiday let costs: Key takeaways

Key holiday let changeover costs

Cleaning and preparing your holiday let is vital for an enjoyable guest stay. Depending on your level of involvement in this process, you may need to budget for the following.

Cleaning costs

If you’re intending to do the cleaning yourself, you’ll need to account for many different types of costs. These can range from:

• Equipment: Factor in the cost of obvious items such as hoovers and dustpans. Electrical equipment such as hoovers can vary quite a lot in price, but less doesn’t necessarily save you more in the long run. A fast and efficient hoover may allow you to clean quicker and focus on other activities that bring in money. You may also want to factor in the cost of equipment such as dusters for those hard to reach areas.
• Disposable items: Items such as cloths and sponges are a routine part of everyone’s cleaning arsenal, but their relative cheapness can add up over time. Estimating the likely average cost can help you budget for these types of items without slowly eating into your profit margins.
• Liquids: Common areas to keep in mind budget wise are cleaning liquids that cover floors and surfaces, but don’t forget difficult surfaces such as kitchen areas too. Liquids that can remove built up grease (e.g. ovens) will come in handy when needed.
• Laundry: Guests won’t be happy if they see dirty sheets. Having multiple linen and bed sheets can save on time, but you’ll need to factor in the costs of regularly cleaning these.

If you want to hire someone to clean for you then this will come at a higher cost. For an in-depth look at different areas of holiday let cleaning in general, check out our holiday let changeover cleaning checklist guide, and our cleaning checklist for hosts on Airbnb and other platforms.

Disposable items

Depending on your accommodation, you’ll also need to factor in the cost of replacing disposable items that your guest may take for granted. These could include items such as:

• Toilet rolls.
• Washing up liquid.
• Washing up sponges/scourers.
• Soap.
• Shampoo.
• Shower gel.
• Teas and coffees.

Welcome pack costs

Welcoming your guests with a pack containing useful information or even gifts are a great way to give them a good first impression of your property. There’s no one size fits all approach when it comes to welcome packs, however. Examples of potential welcome pack items can range from:

• Biscuits and treats.
• Drinks
• Fruit.
• Thank you cards.
• Local information.
• Property and safety information.

Tailor your welcome packs to the type of guests you’re trying to attract.

Typical holiday let management costs 

For a fee, a property manager or management company can take over several duties. These can range from key handovers and cleaning to full end to end management of the property. Not using an agent will certainly be cheaper in terms of outgoings, but you’ll still have to factor in the costs of running a holiday let yourself otherwise. Time saving could be a significant factor here, which could pay for the cost of hiring a property manager itself if you feel this is worth it. 

It’s worth bearing in mind that holiday let agents may provide fees for different services. What fees are charged will vary, but examples of potential fees you could expect include:

• Commissions for every booking.
• Annual fees (e.g. registration fees).
• Fees for more hands-on guest management (e.g. check ins and guest communication).
• Property maintenance and cleaning fees.

Shopping around with different property managers in your area may give you a better idea regarding which one provides better value.

Cost of furnishing and decorating a holiday let

Furnishing and decorating a holiday let can range from relatively cheap to very expensive depending on how much you want to put into it. For example, a budget way of setting up your home could include:

• Painting the property yourself. 
• Using your own furnishings or supplying the rest from second hand stores and charity shops.
• Buying low cost items for essential appliances such as kettles and toasters from budget stores.
• Using colourful pillows and rugs to give standout features to key areas. 

Alternatively, a more expensive option (but one that may allow for more standout features) could include:

• Extending the property or installing unique features such as hot tubs or pools. 
• Utilising the skills of experts by employing tradespeople to decorate.
• Purchasing new furnishings such as chairs, tables and sofas. These may give a more premium look and feel versus second hand items. 

There are no hard rules where it relates to the costs of furnishing or decorating your property. To get a rough guide, consider:

• Competition. How are competitor listings in your area furnished and decorated?
• Guests. If you’re attracting high end guests then they may not be expecting something that looks cheap and worn down. Likewise, a listing designed to attract families will appreciate items such as cots. Your target audience will inform your required budget in this area to some degree.
• Trade services. When hiring tradespeople to decorate or reconfigure your property, many factors such as location, the work required and inflation could affect how much you pay.
• Materials. Some building materials may be cheaper than others when reconfiguring your property. Balance this against what your insurer covers, however.
• Maintenance. There are also some furnishings that will be higher maintenance than others and potentially cost you more money over time. An oak table may look nice, for example, but is easy to scratch. Pick your choice of furnishings carefully and consider the amount of guest contact it may encounter.

Holiday home advertising costs

Holiday let owners that delegate responsibility to a property manager or only list on large sites such as Airbnb and VRBO may not need to worry about advertising costs. There are reasons to consider promoting your listing yourself, however:

• No commission fees: By cutting out the middle person, you avoid having to pay extra fees typically charged by booking platforms and letting agents. 
• Increased reach: Having an additional way of promoting your listing allows you to reach people that may not have noticed your listing otherwise.
• Bespoke deals: Not having to pay a commission gives you more money to play with. One benefit of this is that it allows you to offer unique deals for guests that book directly on your site. 

In terms of advertising costs, there are several ways of promoting your listing. Some of the most popular include:

• Paid digital ads: Platforms such as Google and Facebook Ads allow you to quickly reach large numbers of people interested in booking a holiday let. Whilst very effective, this is by far the most expensive way of promoting your property. 
• Social media: Some Facebook and other social media groups allow you to promote your business to its followers for free.
• Recurring visitors: Finding ways of encouraging guests to become repeat visitors is a cheap and effective way to increase bookings without having to pay any costs. Enclosing a leaflet with exclusive deals for future bookings (e.g. if booking through your website) could be an effective way of doing this. 

Advertising can range from cheap to very costly, so consider what is appropriate relative to the size of your business and income. Check out our holiday let advertising article for further tips on promoting your property.

Insurance costs

There are a few insurance costs to consider when it comes to covering your holiday home. Generally speaking, an insurance policy is typically broken down into three parts:

• Buildings insurance to cover the physical structure, fixtures and fittings.
• Contents insurance to protect the items inside of it.
• Optional extras that provide additional cover if needed.

Reducing the level of cover (e.g. such as only taking out contents insurance) will bring your costs down. However, doing this also increases the risk of incurring potentially bigger costs in the future. If an accident or injury occurred at the property and you didn’t have cover, you could face:

• Repair bills. If the accident caused significant damage, you could end up losing time and money putting this right. 
• Lost income. Whilst you try to fix your damaged property, you could miss out on income from bookings.
• Public liability claims. Public liability claims can be significant, sometimes resulting in £10,000s in damages. Without adequate public liability cover, you could be liable to pay a significant sum.

It’s important to make sure that the insurance cover you purchase for your property is adequate to your needs. Making sure you have the right level of cover rather than cost cutting will protect your property better and allow you to focus on other areas.

In terms of factors that can influence an insurance premium, there are many different areas. Each insurer and individual is different, but some of the general factors that can influence an insurance premium include:

• Location.
• Activity (e.g. how often you have guests at the property).
• Previous claims history.
• Property type and features.
• Level of cover.
• How the insurer assesses risk.

For a more detailed breakdown of this topic, head over to our holiday let insurance page for more details.

Key handover and guest check-in costs

Guests checking in and out of your property will be a regular occurrence if you own a holiday let with bookings. Not everyone has the time to manage this process themselves, however. Here are some potential paid options to consider:

• Hiring a property manager. As discussed in our section on holiday let management costs, letting agents can take on key handovers and other services at an additional cost. 
• Using a key handover service. If you don’t want to hire an agent to manage your entire property, some companies may provide a service for guests picking up and handing over keys. 
• Hiring a co-host. If you prefer a more hands on and personal touch but one where the responsibility is still delegated, hiring a co-host is a great way to conveniently handle responsibilities such as key handovers. Costs may vary depending on what extent of services you require from them.

Utility costs 

As a holiday let owner, you’ll inevitably have to account for certain utility bills at a minimum. Where it comes to energy and water costs, you may be concerned about overpaying where certain guests rack up a high energy bill. Guests may not appreciate overly strict rules around utility use, however. There are smarter ways of encouraging less guest consumption of these resources, such as:

• Loft insulation: A warm home will reduce the amount of central heating required to keep levels at a comfortable temperature. Whilst the upfront cost can be expensive, adequate loft insulation will save you money in the long run by making your energy use more efficient. The government has more information regarding loft insulation on their website.
• Double or triple glazing: Installing newer windows with double or triple glazing can ensure that your property retains more heat and reduces heating bills.
• Smart devices: These allow you to do all kinds of things from monitoring your home’s energy use remotely, to devices that control unnecessary light bulb usage. If you’re concerned about water usage, a water leak detector could prove useful. 
• Ground rules: Whilst guests may not appreciate you being overly strict around the use of utilities, there’s no harm in creating friendly reminders around fair energy use and providing your contact details in the event of issues such as water leaks. 
• Install a heat pump: According to the Energy Saving Trust, heat pumps are more efficient than other energy systems. Currently, the Government is offering grants towards the cost of installing a heat pump if your home is suitable for an upgrade.
• Identifying high consumption items: Devices such as fridges and tumble dryers take up a lot of energy and replacing them with more efficient ones may result in less energy consumption. Unique items such as hot tubs may be eye catching and bring in more bookings. They also take up a lot of energy, however. Identify which items are likely to be consuming more energy in your home and account for this accordingly.

Subscription costs

In addition to basic utility costs, you may want to consider providing other services such as:

• Streaming and TV subscriptions: You’ll need to pay a TV licence if you have a television or computer device that streams videos at the property. Services such as Netflix and Now TV may provide an enhanced experience for you guests. They’ll also come at an additional cost. 
• Waste collection: If you have a regular turnover of guests, you may want to consider paying for more frequent bin collections. In addition, if you maintain a garden then you may have to pay the council for an additional bin to throw away garden waste. 
• Internet: Having a stable internet connection is essential and will be assumed by many guests to be included as standard. 

Tax costs

Tax is a complex subject. For advice, we recommend that you speak to a tax specialist. Below is a brief summary of some potential costs you could pay:

• Council tax: Depending on your circumstances, you may have to pay council tax. This pays towards the cost of services in your local area, including services such as bin collections. Speak to your local authority if you aren’t sure regarding this topic. 
• Business rates: Some holiday lets pay business rates, which may entitle owners to rate relief. You can find out more by looking at the Government’s advice on business rates. 
• VAT: You may also be required to account for VAT. There are some scenarios where VAT could be exempted, however. Check out the Government’s website for more information.

We cover the topic of taxes in our guide on furnished holiday let tax rules.

Accountancy costs

Hiring an accountant could prove to be beneficial and is a cost you may want to consider. Potential benefits of hiring one include:

• Saving money.
• Organising your finances.
• Business advice. 
• Time saved from doing financial work.
• Helping with tax investigations.

The decision to hire an accountant is entirely personal, but consider any potential value they might bring. Costs such as helping with tax investigations could be covered by insurance if related to holiday let income. 

Holiday home safety costs

As discussed in our guide on holiday let regulations, there are mandatory checks that you’ll be required to undertake by law. There may also be territory differences, please check with your local governing authority for more guidance. 

Some of these regulations will also likely come with a cost for most owners that lack the qualifications and expertise to carry these checks out themselves. Legally required checks include:

• Health and safety assessments: You’ll need to conduct regular health and safety assessments to make sure your property is safe. It’s not required to have a professional conduct this for you, but you may wish to budget for this if you’d rather this was carried out by an expert.
• Gas safety checks: A certified professional will need to check and service your boiler or any gas appliances on an annual basis.
• Fire safety: As part of an initial fire assessment, you may need to pay for equipment and relevant signage. Check items such as fire extinguishers regularly and replace them if needed. 
• Water supply: If your water supply is privately owned, you’ll need to pay for a 5 yearly risk assessment if you’re not able to do this yourself. 
• Electricity checks: Holiday let owners are required to conduct regular checks and repair faults when required. Budget for the cost of a qualified professional to carry out this work if you don’t have the required qualifications yourself. 

Routine holiday let maintenance costs

Whilst not mandatory, it helps to think about routine maintenance costs that are likely to occur over the lifetime of running a holiday let. Examples potential costs to consider include:

• High contact areas: Locations or parts of your property likely to be in regular contact with guests are key focal points to consider when thinking about maintenance. Areas such as carpets, curtains and sofas will naturally degrade over time and may require regular cleaning or need to be replaced entirely.
• Furnishing material: Certain types of furnishings are more prone to wear and tear than others regular treatment. Regular upkeep avoids issues such as permanent stains or marks that may be off putting to guests.
• Cooking appliances and crockery: Over time, items such as cooking appliances, plates and cups will degrade or break entirely. Account for the cost of replacing these when the situation arises.
• Gardening maintenance: Focal areas such as grass or bedding areas can easily get overgrown without regular upkeep. Costs associated with watering gardens and usings tools/materials can also build up over time. Hiring a gardener comes with convenience but at an additional cost.

Unexpected second home repair bills

Whilst insurance can cover guest-related damages and liability claims, claiming may result in higher insurance premiums. Depending on your situation, there may be situations where you decide to pay for repairs out of your own pocket, such as:

• Smaller items: Items such as broken windows and televisions may cost a lot, but you may feel that the repair costs are low enough to warrant claiming and increasing your future insurance premiums.
• Items under your excess: Even if you want to claim, if the damage doesn’t cover the cost of your insurance excess, you’ll have to pay for this out of your own pocket. 
• Excluded items: Insurers typically have a list of exclusions for claims they don’t cover. You’ll have to pay out of your own pocket in those circumstances. For certain items of higher value, consider taking out an extended warranty if one is available. 

Budgeting for a certain amount of unexpected repair bills over an extended period of time means that you may not be caught out when something like this happens. 

Finance and mortgage costs 

Beyond the initial cost of financing a holiday let (Which we cover in our holiday let mortgage guide), there may be other finance considerations to take into account when it comes to running a holiday let. The below is a general outline of issues you may want to consider. Speak to a qualified specialist for specific advice.

• Renewing your mortgage deal: If your mortgage rate is set to expire, it’s worth considering that you may not be able to secure it again at the same rate.
• Sticking to your loan terms: Mortgage providers may stipulate specific terms such as having adequate insurance in place. Be sure to stick to the terms of your agreement or you could incur penalties.

Holiday let costs: Key takeaways

When it comes to costing your holiday let, it’s not difficult to find yourself overwhelmed. With so many different costs at the start, you may be wondering how to make a profit. Follow these simple principles to help you stay on the right track.

• Budgeting: In our guide on getting started with a holiday let, we cover the importance of budgeting. Think about what you can afford and plan accordingly. If you’re not yet sure about your earning potential, have a look at our holiday let calculator guide.
• The type of guests: Make your holiday let costs relative to the type of guest you’re attracting. Costs are likely to be passed onto your guests, so think about what your type of guest is likely to pay. 
• Time: The time you’re willing to put in is also likely to impact how much you pay in terms of costs. Running everything from key handovers to listing promotion can be time intensive and some people would prefer to pay and delegate these responsibilities.
• Insurance: Protecting your property with insurance such as the kind offered by Pikl can cover you against serious out-of pocket expenses and liability claims. 
• Regulations and laws: Many holiday let costs such as health and safety and insurance can be dictated by national or regional laws. Be sure to keep up to date in your area.