to wonder if you can make lots more money from a holiday cottage.

[yonfarcountryblows]

We're thinking of buying a second home (we're cash buyers) and are toying with the idea of buying something nice that could be rented out as a holiday cottage. We live in a village very popular with tourists and lots to do in the area. We would use an agent to market it and do the booking/admin stuff.
So we've crunched the numbers and yes on paper we would make more money than a straight forward rent it out on a short hold tenancy agreement but actually not that much maybe a 1/3 more after paying all the bills council tax building contents insurance, utilities etc, furnishing it maintaining it and getting in cleaners washing sheets towels etc so I'm not convinced that the extra money is worth all the extra effort versus renting it out commercially and significantly less hassle.
Any views?

The maths on holiday homes are pretty brutal when you really dig into it. Friends of mine have them and the only way to even break even is to run it all yourself through eg Airbnb. If you use a holiday home company, the figures really fall apart. They’ve also noticed that there’s been a substantial change in how people treat holiday homes. People used to leave them clean, but now it’s a real gamble (not just lockdown, before that was already on slide.) Plus not fab for the community quite often - endless holiday homes. This year, you’re likely to fill it easily but there can be voids in off peak periods, even in popular areas. Also - talk to a holiday company before you buy, as def quirks on what people want in a rental.

If you’re not going to use it yourselves, then likely best to do short hold tenancy. Holiday rental is good if you’re going to use it or the property is attached to yours/on your hand and you’d be doing admin etc. Paying external admin really cuts into your profit margin (plus the cleaners, additional wear/tear with holiday let)

I had one. By the sea in a tourist area. But 20 weeks was the max amount of weeks it was let - no one wanted to come in winter, and short winter lets never happened.
The agent fees and cleaning etc were a lot and when a friend said they wanted it full time the money was better - year round plus they paid the council tax etc.
I have friends who own one but it only works because they do the changeovers. If you don't mind cleaning up other people's mess, and can get an almost year round let, it might be worth it. Look at let's in your area, have a frank talk with agents and then ask yourself if you can tie yourself to doing the changeover every week and dealing with any issues people have.

I have a friend who has 6 lets. In the summer season she can easily make £1000 a week from each one. Very high spec, stunning location, but shes an experienced business woman so works hard at it.

We looked into this last year. With a realistic number of weeks rented out, and managed by a local company, we reckoned we'd about break even. The 'profit' would be that we could have several very cheap holidays there every year when it wasn't rented out. A friend has a cottage she rents out as a holiday let, and when I asked her about this, she said that it was pretty much correct. They barely ever make any money out of it, but they get to go on several (almost) free holidays a year to a place they love.

An advantage of doing holiday lets is that you'll not be stuck with non-paying tenants that then take months to get rid of.

Presumably the value of the property goes up while it's rented out

We ended up with a flat in a holiday resort (long story, I didn’t want it! It has been a millstone round our necks. Peak weeks it brings in a lot of money, then (because of the nature of the resort it is in) it stands empty for months on end, and the peaks don’t fill the loss made in the troughs. People email to ask endless random questions before committing to rent, such as ‘what can you see out of each of the bedroom windows,’ ‘can you hire me a maid for the week,’ etc. We aim the property at the bargain end of the market but people always want more luxury for less money. They don’t look after the place, we end up with ripped sheets, all the batteries taken out of smoke detectors and tv remote controls. They lose the keys and then call you at midnight on the way home from the bar to ask you to give them another set. They turn the heating/air con on full blast then open the windows and go out burning through our electricity bills. We try and equip it nicely but people have complained we haven’t provided unusual cooking utensils and equipment - one woman complained that there were not enough plates and pans in our 5-person flat to hold a dinner party for 12 people!

For the last couple of years we have rented it out for the duration of the holiday season to a seasonal worker. Although the income is much lower, it just about covers our costs and they look after it much better as it is their home. We don’t get hassled on a weekly basis. We could have got an agency to manage it for us but the fees they charge wipe out any small profits We had just about got my relative we own it with to agree to sell it when Covid struck and it is in a place that has been very badly hit by Covid lockdowns.

If you gave me the choice I would not buy a holiday property as a means of making money. It’s been a lovely place to take the children to when they were small, we went often and it was nice to have the familiarity and they still think of it as ‘our other house’ even though they have not been for a few years. But I’ll be pleased to see the back of it!

Interesting and echo much of my thoughts. Obviously the free holiday thing wouldn't apply as we were thinking of buying somewhere local, we live in a very nice area, when we rent a holiday cottage we look for something that's a total contrast to where we live in terms of location, things to do scenery etc and we do go away regularly but like to go to a different place every time. We both work full time and couldn't do the cleaning etc although we'd be on hand for our holiday tenants.

I help a friend look after some holiday lets and the majority of them are booked out all year round, we look after them all year. We are in a nice part of the countryside with lots of outdoorsy things to do and they’re all equipped with wood burners etc to be nice and cosy in winter. Probably just depends where you are really.

Dh and I looked into buying one ourselves last year. Turns out a buy to let mortgage for a holiday let usually requires a 30% deposit which was just a bit too much sadly. I’d have quite enjoyed having one.

We had a horrendous time doing this. We had a Norfolk seaside cottage. It was at the more budget end of the market but as a pp said, people always want luxury, even though they are not prepared to pay for it. The worst thing is nasty online reviews - some of them absurd - eg we bumped our head on your mind your head sign, or muddy path to front door. The holiday letting companies are useless. I would never do this again. Constant moaning from people, no matter how hard you try to accommodate them.

Remember you'll pay business rates for water gas electric etc so will be more expensive

Have a look at the tax situ. I believe it's much more beneficial to do a holiday let than a long term rentsl from a tax perspective.

Saying that, we considered doing it but our IFA told us that it was a bad idea unless we wanted to use it ourselves. Lots of eggs in one basket and better returns to be made long term on the stock market. (He does take a % of our stock investment tho!!)

The property we looked at would be at the more luxury end of the market but I guess if people at the budget end want luxury then people at the luxury end would want total perfection.
We regularly stay in luxury hotels and the ridiculous comments people make amaze me. One was right in the middle of the rain forrest and people complained on trip advisor about insects buzzing around at night and animal noises keeping them awake, and the lack of alternative local restaurants, this is in the area that was a conservation area and the number of buildings and tourists numbers were very strictly controlled. Oh and of course no wifi! Another hotel world famous for its swimming pool the main complaint: there were other people in the pool, the place 2500 rooms and an 85% occupancy rate of course there will be other people in the pool you only stay in it to go in the pool!

"Lots of eggs in one basket"
Luckily this doesn't apply to us buying, a property is part of spreading out our investments.
"Have a look at the tax situ. I believe it's much more beneficial to do a holiday let than a long term rents l from a tax perspective."
We have and it is.
So the general view is that if (and its a big if) you're going to do it you're better doing it yourself than using an agent, interesting we would have to recrunch the numbers and you need to be in an area thats very attractive year round. Lots to think about .My gut feeling is buy to let is a better idea.

Bumping for day time traffic.
Anyone got any positive experiences of renting out a holiday cottage?
We're definitely not wanting it as a "free holiday bolt hole". We do live in a village which for a variety of reasons including location and famous local historic interest attract visitors year round although obviously more in the spring/summer/autumn. I'm always amazed by the number of visitors sitting inside and even outside the local pub on a rainy week day in November eating lunch .

I have two local to me, I clean one and get the local cleaning company to do the other. I book about 40 weeks a year for each. If you factor time at minimum wage into it along with all the extra expenses of running a holiday let, there's only a slight difference in profitability. Remember also it may cost you a substantial amount to kit it out - for our most recent one, a 3-bed cottage, the bill for furniture, kitchen equipment and three sets of bed linen and towels (one on, one ready, one in the wash) came to over £20,000.

If you let for the appropriate days each year you will go onto business rates, with full business rates relief, and not council tax, so no cost there, just trade waste, which is £140/year in my area.

Mine is at the luxury end of the market and usually getS 40 weeks a year. Enough to pay the mortgage and have a few breaks there ourselves, with an appreciating asset.

I let through an agency, but still spend a lot of time on admin, ensuring guests are happy, but results in lots of positive feedback.

Thank you.
I factored in kitting it out, its a two bed and I thought about £15K to make it really nice.
@PersilOrAriel how much are you agency charging you? What admin do you do and do you have another job as well? Would you recommend them? What do you look for in an agency? We've had the details from two so far obviously both say they do a great job!

As part of my divorce settlement I ended up with a hideous house in a holiday area. Spent last year renovating it and it is now running as a holiday let. It has six bedrooms, sea views, walking distance of a lovely beach, and has a hot tub, all very high end and I’ve had great reviews.

But the costs.....
Over £100 to clean; it takes between 6 and 10 hours and because it’s large I need to employ cleaners (who are excellent, everyone always comments on how clean it is).
£100 for laundry; I normally do it myself, but with short lets, weekends/midweek/weekend I don’t have the capacity.
£50/week electricity even more if they charge their frigging Teslas (trying to work out a strategy to forbid this)
££££ no doubt for the LPG heating, which so far hasn’t been an issue, but when using it last Christmas it was mega expensive, gives printer ink a run for its money £/ml
At the moment my council tax is +50% as a second home, though should be able to go onto business rates once I can prove enough lettings.
The agency take 20% + vat so effectively 25%. And are impossible to get hold of, though do get the bookings.
Every booking breaks at least one glass.

Having said that, I was only thinking yesterday it’s a great way to work as everyone enjoys themselves and they do take care of the house. It will be interesting to see what my accounts look like at the end of the year, it certainly won’t be the cash cow I was hoping but hopefully will be ok.

I have holiday cottages. The person who says you pay more for utilities in incorrect. Also, if you mainly rent it out you pay busines rates, but currently you get small business rates relief so you pay nothing.

As you are cash buyers, the return you will get will be way higher than you could get anywhere at the moment. The stock market- where you can get good returns- is too risky at the moment in my opinion.

The most profitable are cottages for couples. Our one bed was full for 48 weeks last year.

We have a 3 bed as well. The returns are much less on that, as although you get a lot in school holidays it doesn't get November,January and February unless we discount to what we would get for the one bed.

You shouldn't get an agency to manage it. They charge a bomb! Get a local person who will do the cleaning and laundry for you.

You get more money using Air BnB we have found. The admin from your end is very easy and straightforward. Lots of people only look there these days, so it is the volume of bookings that gets you the profit. We do short breaks year ound on our one bed, full week only for the 3 bed.

If you approach a small local agency- or even a big one like Classic Cottages- they will give you a projection of earnings for a cottage you are looking at.

Our 3 bed makes around £6.5k a year profit after all expenses, if we didn't have a mortgage on it it would be £12.5 k. That includes paying a cleaner £95 per changeover for cleaning and laundry.

The one bed made £21k last year - no mortgage. If we used a cleaner we would pay £95 per changeover and we did 60 changeovers. This one is marketed as luxury. I spent maybe £3k more than I would have on fixtures and fittings.

Also, the tax breaks are way better on holiday let's than long term. You can claim capital allowances for any work you do and capital gains tax is lower when you sell. You can also offset mortgage interest payments.

Our cottages are my job, so it is slightly different and I live next door. I did used to run them remotely before I moved here and had a trusted team of tradespeople I could call on, all found by word of mouth.

At the end of the day it's location, location location. If you are in a tourist hot spot with year round trade then it is a good idea.

@VeryLittleOwl I understand some or all of the cost of kitting it out can be off set against tax?
There are bigger tax implications on a buy to let, DH is a higher rate tax payer.
What makes place "luxury"?
We're thinking really furniture/furnishing, appliances, coffee machine, bed linen, up market sound system/TV, towels, lovely toiletries etc a welcome pack. The place were looking at is an apartment, 400 years old listed quite unique in terms of layout/interior style we would part decorate curtains etc to reflect local famous historic interest (very popular with UK and overseas visitors). Husband works in very high end interior design industry so lots of off cuts bits of unusual furniture lying around!

No agency is perfect, and lockdown highlighted that.

In general, the agency I use charge between 15% - 20% plus VAT, depending on how many weeks a year you want to use it yourself, this is where you need good negotiating skills to get a good rate.

My cleaner runs a fantastic service, I genuinely couldn’t be without her and her team and look after her well. She charges ~£100 to clean and launder everything to a high standard.

I spend £20 on stuff to go in the welcome pack, which is always well received and have high-end everything, it costs more, but you can charge more.

Feel free to have a look at my listing and feedback.

I do have a job, but I don’t work Fridays, which is changeover day. Even although I live remotely, I use that day to contact next week’s guests and answer any questions, ensure arriving guests are happy, liaise with the cleaning team about problems and breakages, sort out plumbers, electricians, locksmiths, carpet cleaners, etc for the inevitable maintenance.

I can’t believe that if you live in the area you would be selfish enough to get a holiday let

They destroy rural communities. Suddenly the place you live us no longer the place you love. The shop closes as they all order Ocado, then the post office , the pub struggles as they are all on a budget and cater at home and finally the school as no children left in any of the affordable housing

They avoid rates and do contribute nothing putting a greater burden for local services onto residents and other businesses

But hey you make a few quid.

Forgot the link www.sykescottages.co.uk/cottage/Devon-Ilfracombe/No-6-Arlington-Villas-962657.html#duration=7&calendar=2020-11&changeover=5