On the face of things, letting your holiday home out seems like a grand idea. You’ll generate income on the property while you’re not using it, which could become profitable and a great second source of income.
That dream can certainly be a reality if you do things right, but you also need to be aware of the potential downsides. In this article, we’ll talk about how you can avoid them.
Letting to the wrong people
You only need to take a few minutes reading Airbnb owner horror stories online to know there are plenty of people you’re better off avoiding when it comes to letting out your holiday home.
Badly behaved guests can end up being incredibly costly. And if they cause significant financial damage to your property, it can be extremely difficult to recover those costs. But how to avoid such bookings?
You can start by having a proper contract in place with every booking. You can also try to dissuade the ‘wrong crowd’ by tailoring your letting listing to appeal to the ‘right’ one. Finally, have a look into holiday home insurance policies that could offer you an extra level of protection should the worst happen.
Last-minute cancellations
There’s not much you can do about a last-minute cancellation in the moment, but you can prepare for it beforehand. A late dropout means you probably won’t be able to find another booking to occupy the time slot, so asking for some level of payment or deposit upfront will help guard against major losses.
Include a clause in your contract that sets out clear rules around cancellation windows and the costs attached if guests want to pull out late.
Labour and time commitments
As much as a holiday home let can be a ‘passive’ source of income, in theory, it’s a relatively labour- and time-intensive job.
Holiday homes take a lot of work to maintain to the standard required to be satisfactory for your guests. Just like a hotel, you’ll need to keep your holiday home spotless, with fresh bedding, towels and toiletries provided every time guests stay.
Providing that service either requires time and labour from you or money spent on hiring a letting management company. One way or another, you need to understand that a holiday home let will eat into a part of your life – it’s up to you to decide which element is most worthwhile sacrificing.
Legal requirements
There are also legal requirements to consider. Tax implications and health and safety regulations are two of the main elements you’ll need to get your head around, which sometimes can be easier said than done.
You’ll need to account for tax paid on your earnings – although tax costs are more lenient on holiday lets than with buy-to-let properties. Establishing health and safety practices that are of a ‘professional’ standard may present a challenge initially but consider your investment in it a very worthwhile one to prevent anything from happening to your guests and property. Of course, don’t let the potentially negative side of holiday home letting put you off. Handle the risks appropriately and you’ll be able to make it into a profitable endeavour. As with any business venture, though, being aware of and preparing for the dangers of the project will give you the best possible chance of making it a long-term
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