Before deciding on the rent you will charge for use of your holiday home, you must do a thorough breakdown of the running costs that apply to your property. Simply choosing a rental value by matching it to that charged by similar properties nearby may not suffice; that property may use electricity for cooking and heating, powered by solar panels, while yours utilises gas, meaning your running costs are much higher. It is important you know exactly how much you need to cover so that you can calculate your rental income.
Starting with utilities, you can estimate the cost of gas and electricity – as well as water, if you’re on a meter – by looking at the amount used during your own stay in the property, but remember that guests are likely to be less concerned about careful usage than you would be as the bill payer, so anticipate slightly higher costs from tenants. Council tax is a fixed rate, but if your cottage is available for bookings for more than 140 days per year then you should be registered as a holiday let, meaning you pay rates rather than council tax. However, it is worth remembering that waste collection is not included in rates, so you will have to pay for this separately.
Other costs for the landlord include paying for the completion of a fire risk assessment, which is a legal requirement for rented properties, as well as obtaining a television licence and a telephone line – although you should consider barring outbound calls. Wi-Fi broadband access is increasingly becoming a must-have for holiday home tenants, so it is worth investing in a reliable service.
However, while landlords are unlikely to face prosecution for illegal activity from an IP address at a rented property, it is worth stipulating in the rental contract rules regarding illegal activities on the web and excessive downloading that may trigger charges from your service provider.
Landlord insurance is also a necessary cost, while you must also account for the cost of general repairs and maintenance. If you calculate how much you spend on essential maintenance for your primary residence – if it is of similar size – you should have a good idea of how much you should set aside.
Lastly, remember to factor in fees for your property manager. While you may be trying to keep costs down, a property manager can relieve a lot of the stresses of dealing directly with tenants, especially if you live some distance from the property you are letting.