Holiday cottage figures just don’t seem to add up for us at all.

[flowergirl24]

We bought a small 2 bed holiday cottage three years ago.

It needed doing up but is in a beautiful area. I originally planned to manage it and clean it myself. Fast forward three years, the renovation is finally complete and I’m working full time with young children. I’m struggling to manage my workload as it is, but I’m in a decent position work wise, so it’s worth me working right now rather than stepping down to clean the cottage.

Today I had a meeting with a (lovely) housekeeper who told me her going rate which is £174 per changeover. It’s similar to the other competitors in the area. It’s a short term late place to visit, so I’d be looking at paying this twice a week in the main-high season. It is a year round area, although it is quieter in winter.

So:
Mortgage 750
Changeovers, linen etc 1392
Council tax 190
Gas and Electricity 50
Internet 37
TV licence 33

Total costs come to 2452pcm

I just don’t think it’s going to be financially viable for us, which is a real shame.
Add to that an agent who will do all the work but take 24% on bookings and I don’t think we’ll even break even. We’ve been told that we could expect anything between 25-35K gross from the agent.

We’d need to factor in 10% for wear and tear costs for a high occupancy house.

The mortgage is up for renewal in 18 months and it won’t be as cheap as it is now.

We are too far away to be able to manage it ourselves and too busy working full time to manage bookings ourselves.

Should I just sell? Even if I switch to doing a AST (normal tenancy), it is going to cost me quite a lot as I would have to change the mortgage (specialist holiday cottage mortgage on it right now at a decent rate). Not only would I lose that rate, but I would also have to pay for the cost of a new/ switching mortgage.

Does anyone have any advice please?

That changeover cleaning quote is insane, I can't believe you've had multiple quotes the same

It’s not just a load of laundry. It’ll be a minimum of 3 loads probably 4 you need to consider towels/ tea towels as well etc. Which need dried and ironed. I used to rent out a 3 bed cottage took me about 5 hours to clean and the same amount of time to do all the laundry. Even if you took it to a laundrette it’ll cost loads 50p to iron pillowcases times 8 type stuff.

I’ve sold mine.

Ironic, since farming out the work and wanting passive income is exactly what the OP wants to do. Everyone wants the money, no one wats to do the actual labour.

<mumbles about Marxism and owning the means of production>

Ah, I was going to say if it breaks even at least you are still paying off the mortgage!

If you include your initial purchase costs/stamp duty, renovation costs, furnishing etc it will take a long time to break even. Then consider the alternative investment of your funds in comparison to high mortgage rates.

Bad investment decision and you're already in a hole. Sell it, take it as a lesson and cut your losses.

Whereabouts is it

My family have 2 bed holiday caravans. Ok they aren’t high luxury and a cottage would probably be longer, but they take on average about 2 hours to clean, obviously it depends on how they’ve been left, I know because I often clean them. Then add on some time for laundry. That equates to about £60 maximum for a turnover. This is the going rate where we live, although we do a lot ourselves to help reduce costs. £174 seems insane to me, but I guess it’s area dependent!

If you don’t live locally and don’t manage it yourself and have a mortagage on it, then no I doubt it’ll actually make much, if any profit.

And yes there are many times we have had to take phone calls and go out at all times. That’s the business. We’re lucky my DH is handy, otherwise we’d potentially be paying extortionate call out charges from tradesmen as of course these issues always seem to happen on weekends and holidays!

what has radically changed in the figures in the 3 years since buying?

Also Op it’s unlikely you will pay council tax - business rates instead.

Presumably if you were planning to clean it, it can't be far from where you live?

You could put it on Airbnb and booking.com so your fees aren't as high as with an agent, collect and do the laundry yourself in the evenings or at weekends, or pay a laundry service, and pay a cleaner a normal amount (£20/hour or so) to do a three hour clean.

However, if you've bought cheap, renovated and it's now worth more, selling is probably a better option if you can more than cover your costs.

If you can't do either of these options and make a profit then why on earth did you buy it?!

Alongside renting out my own cottage I used to clean holiday cottages for other people. I don’t think people realise how much work goes into cleaning a house from top to bottom, decobwebbing the windows all the time. An average cottage you can do one a day, it takes 4-5 hours.

It’s actually hard work if you are doing it right. The idea that you should be paid min wage is a bit ridiculous. You have to consider NI, holiday, pension.

Expenses, rural holiday cottages do need a vehicle with business insurance, indemnity insurance, pay for any consumables/ equipment. Travel time/ mileage.

Honestly I used to charge £20-£22 an hour depending on travel time and I didn’t do laundry but would drop/ collect at the laundrette ( they’d charge £60+) but bill the mileage.

Im better off earning £12.70 ph for the local LA.

If you are eligable for business rates you get small business rate relief which means you pay nothing. Unless you already get SBRR for another business

I think you really should be asking yourselves why it took you 3 years to come to the conclusion you weren't going to be able to generate income for this project? Non of these figures are secret, you must have put some sort of buissness plan together??

It's a terrible time to be starting a holiday let. The market is saturated, meeting the fire regulations is prohibitively expensive for many and the tax rules are changing in April.2025.

I have 2 holiday lets in my garden and if I didn't do all the work myself it would be pointless. It did make me laugh when someone earlier said a changeover must take over an hour!!! It takes 3 hours to do a one bed.

Cleaners are very difficult to find where I am, but I think your quote is slightly high. 4 hours at £25 an hour cleaning plus £20 per bedroom towels and bedding would be about right.

I've been doing this for 7 years and this is by far the worst year for bookings. I'm in a honeypot coastal area. Sony people have done what you did and there are just too many properties now.

You've got a full on job and small children. You don't have time for this project.

Added to which the finances don't add up to a profit.

Save yourself the uncertainty and extra work. Sell and invest any profit you've made into a good savings account.

Relatives of ours have a holiday cottage they rent out. They do a minimum of 2 night stays and they manage the websites and bookings themselves. Their cottage is something that they converted on their own land so no mortgage to contend with. Since they got older and don't want to do the cleaning and washing themselves any more they outsource this. A clean is around £30 (1 bed small cottage) and laundry is another £8. What with all the bills, insurance, rates etc. single night stays are not profitable. One night is about £110 I seem to remember.

Even though that seems to leave £60 or so profit a night, it is not suitable as a sole income. A replacement boiler last year reduced the profits to a few k, still a nice addition but it would not be tenable with a mortgage or management fees. They will close down the business once management becomes too much for them to do themselves.

@Sceptic1234 to be clear: Yes, I did the figures right at the start and they made sense. I wrote business plans, saw an IFA, saw tax advisors and did all my due diligence. But that was on the basis that I was managing the cottage fully myself and doing the changeovers etc.

Now, 3 years later, I’m in a totally different position! I have a full time job that is over 60 hours a week and well paid. There is no time to manage the cottage myself now. That is why the figures have changed.

I don’t understand why it doesn’t occur to you that people’s life patterns and choices change sometimes. I have already explained all of this. Thank you to those who have given sensible and helpful advice.

One of the most important parts of any "due diligence" exercise is to compile a register of risks to the enterprise, and then think seriously about what you would do if these risks came to pass.

"My circumstance change in a way that affects my capacity to run the buissness" is an absolutely standard risk to any proposed buissness.

It might be worth selling it if it’s really nicely renovated, I’ve renovated three cottages in the last 10years as I’ve worked my way the housing ladder and two out of three are now holiday lets. But the type of cottage that is bought as a holiday let often doesn’t appeal to local young people.
The housekeeper is charging too much £20 an hour is the going rate in north Yorks and a clean is £60-80 depending on size. A cottage is turned round in 2-4 hours. Have you asked round locally? Advertised for someone on local Facebook pages. I know quite a few school mums who clean cottages as it fits with school hours.
Is there a local laundry that will take the bedding or is there someone locally who does ironing who will take the laundry on.

There is a demand for longer short term lets. When people are moving house and need somewhere for two weeks- two months to bridge a gap in the chain. You wouldn’t be able to charge as much as a holiday let but won’t have the change overs. Giving your details to local estate agents is probably the best way.

If it is immaculate keep it that way and sell it when mortgage rates start dropping and people start coming back to the market in droves.

I'm surprised nobody has mentioned capital gains tax. You're better off with that kind of money in your pension and/ or stock market ISAs. IMO.

You do know that at the end of the day you own the cottage right? So if you don't break even and lose £100 a month for £1200 a year you will own the cottage forever? That is the profit - you get it in 25years when the mortgage is paid off 😂

She has said its an interest only mortgage. Most holiday let mortgages are.

Can you increase the cost of the rental to cover the changeover cleaning, which I agree is extortionate.

Can you also offer weekly rentals to reduce the number of changeovers needed?

Longer lets with no cleaning?

A small point but your internet is more than it needs to be (you could get it for around £25 pm if you're constantly on a deal) and TV licence is about half what you have said, not that you necessarily need one.

Just tell people there is no TV licence but if guests want to watch live TV or use iplayer, they can use it on their own TV licence - all they have to do is watch it on a device that's not plugged in. If they don't have a TV licence, it's unlikely they'll want to watch services that require it while staying in your cottage.

Just had a quick google .... wow this is complicated. A cottage I have been staying in for 1 / 2 weeks a year has a small library of DVDs. Many left by previous occupants.

Never thought about it, but apparently, if you provide DVDs for your guests to watch, this is commercial use and beyond the standard copywrite licence on a shop bought DVD. You need a separate license. I suspect that rule is frequently broken!

Need to comply with ever changing rules around access for people with disability, on top of gas / electricity safety and 3rd party liability insurance.

Buissness rates and not council tax. No idea what that means in practise.

If occupancy falls below a certain no of days per year, you lose buissness status and it becomes a 2nd home. No tax relief on anything, council tax plus second home supplement and much higher capital gains tax bill when you finally sell.

To be fair, the cleaners will be local and need to charge that much as they live in an expensive tourist destination which makes their housing more expensive :)

£170+ changeover 🤣🤣🤣

£174? I’m definitely in the wrong job.