Airbnb/holiday let costs

Kate489130

Thinking of investing in small holiday let air bnb property in my town. It’s not a tourist hotspot but is a really good location to explore central Scotland and is well connected for train line, motorway and lots of new housing/businesses nearby. I could fit around my current part time job and would be a way of topping up income but won’t be our only income.

Trying to find out as much as possible re costs before deciding if worthwhile going ahead. So far I’ve got:

1. Tax on income
2. Bills-council tax, internet, energy, insurance 
3. Fees for listing
4. Possibly business rates or business water charges (not sure if this is applies to holiday let though)?

I’ll be able to do cleaning and handovers myself.

Also need to take into account opportunity cost-not losing out on income but we could invest the £35k deposit we will likely need elsewhere.

Anyone who has experience with holiday lets-have I missed anything major? Did you do it and regret it and if so why?

canaldumidi

Which books and/or websites are you using as sources for your research?

Slithery

Does your local council allow holiday lets or have any registration fees?
Can you get a holiday let mortgage (not the same thing as a BTL mortgage)?
Have you accounted for the additional 4% LBTT if this isn't your only property?

Probably lots more that I haven't thought of as well...

comeandgo

We have a holiday let in our housing estate and they have to pay a company to pick up their bins, council don’t do it.

Kate489130

Slithery said:

Does your local council allow holiday lets or have any registration fees?
Can you get a holiday let mortgage (not the same thing as a BTL mortgage)?
Have you accounted for the additional 4% LBTT if this isn't your only property?

Probably lots more that I haven't thought of as well...

Thanks for this reply-really helpful. I hadn’t factored in the 4% LBTT! A big upfront cost which we’d need to be sure we could absorb.

Kate489130

comeandgo said:

We have a holiday let in our housing estate and they have to pay a company to pick up their bins, council don’t do it.

Yeah I think if it’s registered as a business, you can’t benefit from public services like bin collection. Not sure how that would work in communal bin are though!

theoretica

Would you need to pay commercial energy rates too?

diystarter7

Insurance will be higher as well

Easy ready a lot of info

https://www.gov.uk/government/publications/furnished-holiday-lettings-hs253-self-assessment-helpsheet/hs253-furnished-holiday-lettings-2020

p00hsticks

Kate489130 said:

comeandgo said:

We have a holiday let in our housing estate and they have to pay a company to pick up their bins, council don’t do it.

Yeah I think if it’s registered as a business, you can’t benefit from public services like bin collection. Not sure how that would work in communal bin are though!

I can only speak for England, Scotland may be different, but currently.... 

If the property is registered as a business, you are liable for business rates, rather than council tax, but if there is a single property you are likely to qualify for small business rates relief which mean you wouldn't pay anything. As Kate489130 says, as a business you'd need to pay for a commercial rubbish collection if needed.

I live in a tourist hotspot, and this issue does cause a lot of discontent among the permanent residents if and when they become aware of it. I believe our local council, along with others is a similar position, has been campaigning parliament for some time to get the position changed so that holiday home owners will pay something towards the local costs.

Flugelhorn

1. Tax on income
2. Bills-council tax, internet, energy, insurance
 3. Fees for listing
4. Possibly business rates or business water charges (not sure if this is applies to holiday let though)?


 .. also costs of redecorating more often than you might normally do, .
.. costs of quickly getting things replaced (local holiday letting company can get appliances replaced and fitted in 2-3 hours - at a cost !)
 ... also cost of call outs for when things have gone wrong eg getting a plumber etc

 Also - the handovers and cleaning / washing can be a lot tougher than you think, local company has group of employees who look after properties but will also go help others if they find that a particular property needs more attention in the few hours that they have for a handover.
 You either have to wash all the bedding / towels yourself or send it out to a laundry

Kate489130

Thanks so much for your replies everyone. These other costs definitely all need to be factored into my costs vs benefits calculation!