With Suffolk’s Tourism industry worth an estimated £2 billion, there is a huge opportunity to generate an income from the self-catering holiday let market.
As with any investment, the key for your client is to do their homework.
This advice for those new to the holiday letting industry comes from 16 years of accumulated knowledge by Best of Suffolk, a leading agency in the area. It sets out how to make sure a holiday let purchase results in maximum return on investment, points out potential pitfalls and rookie mistakes to avoid.
Is the property suitable for holiday letting?
It is surprising how wide the range of potentially successful holiday properties is, they certainly do not have to be on the coast or have magnificent views, but do need to offer future guests a memorable stay. However, away from the Suffolk ‘hotspots’ of Aldeburgh and Southwold, a property may have to work a little harder to attract guests, with strong theming, interior design and features enabling the property to be the ‘destination’, as well as the ‘accommodation’
If in a rural area consider the USP (unique selling point) of the property? What’s the “Wow-Factor”? Often these can be added during the all-important furnishing and fit-out phase.
The next consideration is then assessing what facilities can’t necessarily be added post-purchase, such as parking, outdoor space and sea views. These amenities can add significant value to the weekly figure your client can achieve for holiday letting, as well as enhancing desirability.
Know your market
What kind of market does the property appeal to? Family friendly? Romantic getaway? Luxury? Dog friendly? Once your client has identified the key market for their property, a proper budget should be drawn up to ensure the property is finished with that market in mind. For example, dog friendly will mean hard-wearing floor coverings. Luxury may need designer kitchen appliances, recognised brands or hot tubs. Finishing the property according to the needs of the market will ensure bookings are maximized.
Is your client unsure what suits the property best? That’s when they could consider enlisting a local holiday letting agency specialist. They will ensure your client secures the maximum return on investment for the property, as well as identifying the target market and suggested rental incomes.
It’s also worth checking the competition. How many other properties are similar? How many properties have availability in peak season and out of season? A saturated market will mean increased competition, and potentially periods where the property will be unoccupied, affecting rental income.
Making sure the figures stack up
Once your client has agreed costs of purchase, restoration or updating and to fully equip the property in accordance with industry regulations, they will need to ensure the figure that can realistically be achieved over a 12 month period will cover all costs.
In addition to deciding low, mid and high season prices, your client should get an idea of average occupancy rates for the type of property in each period to generate an annual income figure. Given the seasonality of the industry, it is likely that income secured for the peak weeks will need to cover out of season periods when occupancy will be lower.
Ongoing costs to bear in mind
In addition to ongoing maintenance costs (broken toilet seats, gardening costs, window cleaning etc) your client will need to budget for a house keeper and laundry fees for washing and ironing of linens.
Your client’s holiday letting duties
There are a number of regulations that a holiday lettings investor must legally comply with. These range from fire safety and associated tests needed, to correct insurance and minimum equipment required. Whilst this can be researched on the gov.uk website, a specialist letting agency can arrange all of this on your client’s behalf, including coordinating the tests and annual re-testing.
How will the property be marketed and managed?
Great news – your client has followed this advice to the letter and the property is now ready to be let. So what happens now? Managing a holiday let is time consuming and doing a poor job can have catastrophic effects on your client’s business. Responsiveness to enquiries is key in this highly competitive industry, and negative reviews can lead to the property having a bad reputation. Your client will need to decide if property management is something they can realistically achieve.
What’s more, selecting the right platform or agency to market the property is key. Some online travel agents allow bookings to be managed by the owner, which can keep commission costs down. Something to bear in mind at this point is that cheapest is not always best. Which agency will secure the optimum number of bookings over a 12 month period (not just the peak weeks) for the highest return?
After significant investment, management, marketing and bookings are essential to maximize return. Whilst this might seem overwhelming, the potential return is worth the research, time and due diligence needed to produce a product that will sell well. But fear not, there is a wealth of expertise out there to help guide your clients' every step to becoming a successful holiday let landlord!
Guest post supplied by Best of Suffolk
For more information on our holiday let products, please give us a call on 0330 123 1073 or visit our product page.