The ongoing cost-of-living crisis is prompting holiday let owners in the UK to explore cost-saving measures to manage their properties more efficiently. To support this effort, we’ve compiled a comprehensive guide with top money-saving tips for second homeowners.
The good news is that the UK’s staycation market remains healthy, with 77% of Brits having said they would holiday in the UK in 2024, and a 6% increase in Summer bookings compared to 2023. According to the Office for National Statistics, inflation is now down to 2.2%, but there are still ways to cut your holiday let’s running costs!
Read our complete blog for plenty of money-saving tips; you’ll be amazed at how making several small changes can add to big annual savings.
For more useful tips on running a holiday let, request a free owner pack.
Our tips for cutting holiday let costs
Use the quick links below to read a specific topic, or read on for a comprehensive list of cost-cutting tips for holiday lets.
1) Capitalise on holiday let tax advantages
Paying tax on the income your holiday let generates can be a costly and complex process to understand. Not all owners realise that as a furnished holiday let, there are certain tax advantages that you can benefit from.
Below are a few ways to capitalise on these and reduce your holiday let tax bill.
Holiday let deductible expenses
An advantage of letting as a furnished holiday let is that the government considers you a commercial trading business. This means, for tax purposes, you can claim some expenses relating to your holiday let.
Furnished holiday let capital allowances – A sure way to save money and reduce your holiday let’s tax bill is by claiming capital allowances. This allows you to deduct some or all of the value of certain items from your profits before you pay tax. Capital allowances can cover items like furniture, equipment, and fixtures that are used to improve your property.
Allowable expenses for holiday lets – Another way to cut your tax bill is by offsetting your allowable expenses against your rental income. These can range from utility bills to maintenance and cleaning costs. For more information, read our blog on holiday let tax.
Making tax-advantaged pension contributions
Another great money-saving tip is that any profits you earn from letting your holiday property can be used to make contributions towards your pension. If you decide to do this, your earnings will be lower, meaning you’ll pay less income tax.
Capital Gains Tax relief when selling your holiday let
If you own a property that you’ve let out as a business, you’ll be liable to pay Capital Gains Tax on the amount that it’s increased in value. Fortunately, there are various forms of relief available that will save you money:
Business Asset Disposal Relief – formerly Entrepreneurs’ Relief, allows you to reduce the amount of Capital Gains Tax to 10% rather than a higher rate.
Business Asset rollover – If you use the proceeds of the sale of your property to buy a new holiday let, you may qualify to delay paying any Capital Gains Tax until you sell the new asset.
Gift Hold-Over Relief – Gift Hold-Over Relief means you don’t have to pay tax if you give away or sell your holiday let for less than it’s worth.
Save on Council Tax for your holiday let
If your property is classed as a furnished holiday let by HMRC, you won’t need to pay council tax. Instead, you’ll be subject to business rates for holiday lets. Some properties are eligible for discounts from the local council. Check with your local council to find out if any discount applies to you.
You may also be able to claim Small Business Rate Relief, which will reduce the amount of tax you pay.
Holiday let mortgage interest rate relief
Another way to save on your holiday letting costs is through holiday let mortgage interest rate relief. This tax benefit allows you to offset the interest you pay against your holiday let’s profits if you borrowed money to fund the purchase of it.
For more information, read our blog on holiday home mortgage advice.
Is the Furnished Holiday Let scheme ending?
On 6th March 2024, the Spring 2024 Budget included an announcement that the Furnished Holiday Let tax regime would be removed from 1st April 2025. There will likely be a period of transition from that date.
Technical guidance is due to be released shortly, which we’ll scrutinise alongside the legislation changes, and will update our information as soon as possible. As of September 2024, the tax regime mentioned in this blog is still in existence.
How to qualify as a furnished holiday let
It is important to note that in order to qualify as a furnished holiday let, the property must meet the following criteria:
- It must be available to let commercially to the public for at least 210 days a year.
- It must be let as a self-catering rental for 105 days a year.
- It must not be in the same occupation for more than 31 days in more than 155 days of the year.
For an in-depth look at whether you qualify as a furnished holiday let business and subsequently for money-saving tax advantages, read our guide on holiday homes, tax and all things in between. The government also provides dedicated guidance for furnished holiday lets.
2) Reduce your holiday let’s energy costs
One of the major overheads when running a holiday let is your energy bill. Reducing the amount of energy guests use is not only a great way to lower your holiday let costs, but it also helps maintain a low carbon footprint – a key booking consideration for many customers.
Here are some tips on how you can make your property more energy-efficient.
Choose energy efficient appliances for your holiday let
Guests now expect holiday properties to be well-equipped and comfortable, offering the usual home amenities and more. However, running appliances like tumble dryers, washing machines, and dishwashers can be very expensive.
The energy rating of an appliance indicates how much energy it uses, and how that compares to similar models. When choosing your holiday home’s appliances, an A++ rating will save you the most money in the long run.
Install an energy-saving smart thermostat
Heating is the biggest energy consumer in a holiday property. By introducing energy-saving smart thermostats, you can prevent soaring bills whilst still providing guests with a warm and cosy property.
Smart thermostats that control hot water and radiators make a big impact. Features vary by product but can include multi-room control, hot water control and geofencing to track when guests leave and enter your property.
Having a smart thermostat fitted in your holiday let allows you to control the heating from your mobile device remotely. No more worrying about guests leaving the heating on when they depart.
Switch to LED light bulbs
Where possible, replace traditional and halogen lightbulbs with energy-efficient light bulbs.
LED bulbs use up to 90% less energy than conventional halogen bulbs, providing the best value lighting solution, saving power and dramatically reducing your bills. LED bulbs tend to last longer too, meaning you’ll spend less on replacing them.
Draught-proof and insulate your holiday let to save energy
Draught-proofing is one of the cheapest and most effective ways to save energy. It will also cut costs and keep your holiday let warm for guests.
Draught-proofing your home is relatively easy. Follow these steps to make your property more energy-efficient:
- Fix or close any unwanted gaps that could let cold air in and warm air out. Anything from draught excluders and foam strips to rugs and brush strips.
- Insulate your hot water cylinder and pipes. Read our blog on how to stop your pipes from freezing for more info.
- Add insulation to your loft or attic if there isn’t any there already. Take a look at the Energy Saving Trust for more info on how to do this.
Keep an eye on your energy bills
Utility bills for holiday lets are often more expensive so it pays to keep an eye on them. When your bills are up for renewal, it’s always best to have a look around to see if another provider can give you a better deal.
Alternatively, making a few small changes will help you save money too, these can include:
- Choosing to go paperless and manage your account online. Some companies charge extra for paper bills.
- Paying by direct debit. This is generally cheaper than waiting until you receive a bill. It’s also worth sending regular meter readings to keep your bill accurate.
- Ensuring that you question any direct debit increase by your provider that seems too high.
Hot tub energy saving tips
Providing luxury amenities such as a hot tub can increase your earning potential and drive bookings to your holiday property. While a hot tub can be a costly item to run, there are many easy ways to reduce your hot tub running costs. These include:
- Looking for the most energy-efficient brands. There are plenty of energy-efficient hot tubs that heat up faster, maintain temperatures and keep the heat in better than others.
- Purchasing a thermal cover. This reduces heat loss and helps to heat the water quicker, minimising the energy needed to maintain a specific temperature.
- Keeping a close eye on the temperature. Keep the temperature between 36°C and 38°C during winter, and 26°C to 35°C in summer.
- Make sure your hot tub has enough insulation.
- Invest in an energy-saving air source heat pump. According to Outdoor Living Hot Tubs, investing in one of these pumps could save you up to 50% a year on your energy bills.
3) Reduce water waste in your holiday let
Dual flush toilets
A dual-flush toilet is specifically designed to conserve water by offering a choice of different flush volumes. A dual flush means you only use the water you need.
Get a low-flow shower head and tap aerators
Conserve water by installing a flow restrictor on your shower. A water-efficient shower head can reduce water use by up to 40%. The less water your guests are using during a shower means the less electricity needed to heat it and the less energy you’ll be paying for.
Tap aerators separate the flowing water into tiny streams separated by air gaps. The mix of water and air means your guests won’t notice a reduction in water pressure, but the amount of water used is significantly reduced.
Install a water butt
Water butts give you a ready supply of water for all your property’s gardening needs without having to rely on your main water supply.
They are relatively inexpensive to buy and easy to install. You can even go to Get Water Fit to see if you’re eligible for a free water butt. Water butts are a simple way to harvest rainwater that would normally go to waste, reducing your consumption and water bills.
4) Generate renewable energy for your holiday let
While the easiest way to reduce energy bills and cut costs is by reducing energy consumption, there are other alternatives. Utilising natural resources such as sun, wind and water to generate renewable energy will not only reduce your need for power, but potentially remove your reliance on the national grid.
Producing your own energy means you’ll spend less on electricity and could receive money back for any additional energy you create. While initially the investment cost of generating renewable energy can be quite high, over time you’ll reap the financial reward.
The benefit of generating your own energy goes beyond just saving money. It is also environmentally sustainable and reduces your holiday let’s carbon footprint, adding to the eco-credentials of your property.
5) Conduct regular holiday let maintenance
Failing to keep on top of regular upkeep means issues can quickly escalate into more serious and costly problems. Keeping a close check on your property and conducting regular maintenance, for issues such as window draughts and leaky taps, reduces the risk of any long-term problems – all of which could turn into expensive repair or replacement costs.
6) Invest in quality products
Your property is likely to see a fair amount of wear and tear throughout the season, so it pays to invest in quality furnishings that will keep your property well-presented.
It might seem like a great way to save costs initially, but opting for cheap furniture and appliances can be a false economy. You’re likely to have to replace items more often than better quality items, which could end up being more costly in the long run.
Another cost-saving tip which could save you money in the long run is purchasing an extended warranty for appliances. Also, it’s usually easier and more cost-effective to replace rather than repair appliances. This will also prevent the need for callouts, repair costs and minimise disruption to your guests’ holiday – a key factor in encouraging positive property reviews.
7) Encourage guests to be energy-aware
Many of us are already in the habit of being energy-aware in our own homes, so encouraging guests to do the same in your holiday cottage could see small savings add up.
Use a holiday home guest information folder to provide a friendly suggestion on what they could do to help save energy.
- Suggest that guests use eco-mode on appliances such as dishwashers and washing machines. Using eco-mode means using less water and a lower temperature than most settings, and uses far less energy too.
- Ask guests to switch off appliances, aircon, heating and lights when they go out.
- Include a friendly reminder to guests to fill the kettle with only the required amount of water, which will save both energy and water.
8) Maximise your holiday let income to offset costs
Here are our top money earning features to include in a holiday property to help offset your running costs:
Add a hot tub
Adding a hot tub gives your property a distinguishing feature, which allows you to increase your rental rates, in turn boosting your income. According to the Sykes Holiday Letting Outlook Report, properties with hot tubs can earn 37%* in additional income, compared to those that don’t. Hot tubs are also the most searched property feature on our website.
Wi-Fi
Most holiday properties have Wi-Fi, but if yours doesn’t, it’s certainly worth considering. Wi-Fi is the second most searched property feature on our website, and can improve income potential by a whopping 55%!*
Allowing pets
dog-friendly cottages can earn an additional 15% in income.* There are just a few adjustments that you may need to make in order to accommodate pets including beds and bowls, waste bags, and dog treats as an extra special gift.
These small and relatively inexpensive items are often well received and can encourage positive reviews and repeat bookings. The cost of adding these to your holiday let will soon be covered by the additional income.
Accept short breaks
The days of week-long holidays, booked 12 months in advance, are long gone. Three or four night getaways have become the new normal, with 35% of Brits preferring to book multiple staycations instead of one summer holiday abroad.
Whilst there is a risk of taking a short break and then losing out on a week-long booking, a good agent will help you secure ample bookings to fill those gaps. And remember, whilst two bookings in place of a week-long stay may mean more work, it will invariably bring increased revenue also!
Enlist the help of a holiday let management company
Using the support and advice of a holiday let management company, like Helpful Holidays, can make all the difference to saving money and reducing your holiday let costs. It’s also particularly important if you don’t live within easy reach of your holiday let.
Our team of industry experts specialise in the South West self-catering holiday market. We’re on-hand and committed to providing owners with invaluable advice throughout their holiday letting journey, helping them to maximise their property’s earning potential and overall success.
We’re happy to answer any holiday letting queries you may have and provide a free, no-obligation income and booking proposal for your property. To find out more about letting with Helpful Holidays, visit our Let your Cottage page, or call our team of industry experts on 01647 403014.
For more top tips, here is a selection of our owner advice blogs:
*Part of the Sykes Holiday Cottages family, statistics used in this article have been sourced from the Sykes Staycation Index 2024 and Holiday Letting Outlook Report 2024.
At the time of writing (September 2024) Helpful Holidays has taken all reasonable care to ensure that the information contained in this article is accurate. However, no warranty or representation is given that the information is complete or free from errors or inaccuracies.
