Spread sheet for planning our first holiday let

If you are planning to buy a rental home, or you're thinking about what to do with one you have just acquired, this is the place for any questions about starting out in the rentals business.
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greenbarn
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Re: Thanks for the advice and corrections!

Post by greenbarn »

Jo222 wrote:
Fire Officer Fees - It's a fire inspection. I must have gotten that advice from an estate agent in a town that requires them! Good to know they're not universal.
You must have a Fire Risk Assessment carried out, which may be what was being referred to, but there is no one official body or “Fire Officer" that you have to use to do it. That may indicate that you need some spending on alarms, exit arrangements etc - in fact it’s pretty much guaranteed as the requirements for a holiday let are more stringent than for a dwelling or tenancy let.

You’ll also need to check if any property you look at has restrictions that prevent it being used as an FHL, and also whether the local council require you to have Planning Approval for change of use.
Drax
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Re: Thanks for the advice and corrections!

Post by Drax »

[quote="Jo222"]Drax, zebedee and CarolineJ,


I'll have to check on whether the Holiday Let Insurance overlaps with Public Use Insurance. Got them from an advice page. I think Public Use is liability and Holiday Let is contents. Does anyone know?

Jo,
The insurance policy for my holiday home inludes contents, buildings and public liabilty. The public liability cover is up to five million pounds.
Thus I believe you can delete the bill for 'Public Use Insurance' from your expense sheet.
Keep your powder dry.
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greenbarn
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Post by greenbarn »

As Drax says, Public Liability Insurance is either an add on or more usually built in to a specialist FHL insurance. Shop around for brokers who know the business.

A couple of other items at a quick glance: you’ll need a full test of the electrical installation, which has to be repeated every 5 (or 10?) years. Best to get this done as part of the initial survey when you buy - which is fairly common anyway - as if it needs work you can use that as part of price negotiations.

Another ongoing expense is safety checks on electrical items; there’s been a lot of discussion about this, but realistically if you’re remote you’ll need to pay for it (PAT testing) to be carried out annually, as well as making sure your housekeeper/local manager keeps an eye out for anything obvious such as cracked plugs and frayed leads.
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Jo222
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Deleted public use ins.

Post by Jo222 »

Drax and Greenbarn,
I deleted Public Use Insurance, but left the fee on it at $2400--can that drop down to the £540 I had for FHL ins. before, do you think?
I added PAT, along with annual checks at the made-up figure of £150. Thanks.
Drax
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Re: Deleted public use ins.

Post by Drax »

Jo222 wrote:Drax and Greenbarn,
I deleted Public Use Insurance, but left the fee on it at $2400--can that drop down to the £540 I had for FHL ins. before, do you think?
I added PAT, along with annual checks at the made-up figure of £150. Thanks.
Jo,
Yes you can delete the £2400 for Public Use Insurance from your expense sheet. Your holiday home insurance should cover public liabilities as well as contents and buildings but check with the insurance policy to ensure that these are included.
As for the cost of this insurance you have stated £540, I cannot comment on that figure I suppose it depends on how large your intended house will be, value of contents, excess to pay in the event of a claim, flood risk etc. My insurance policy is less than that at £300 but my holiday home is only a relatively small 2 bedroomed bungalow.
Keep your powder dry.
ianh100
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Post by ianh100 »

@Greenbarn

My understanding was that for most FHL we can do the risk assessment ourselves, that is certainly my reading of the regulations. http://www.ukguests.co.uk/files/Fire%20 ... Guests.pdf

We have 2 separate properties that are only let as a full property. We provide fire extinguishers and a blanket, we check the smoke alarms regularly.

I can see that if the property had multiple separate rooms with shared access then the requirements and a proper fire alarm and marked emergency exits would probably be required.
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greenbarn
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Post by greenbarn »

ianh100 wrote:@Greenbarn

My understanding was that for most FHL we can do the risk assessment ourselves, that is certainly my reading of the regulations. http://www.ukguests.co.uk/files/Fire%20 ... Guests.pdf
ianh100 - that’s always been my understanding as well, but it can be a contentious topic... As well as the initial assessment to include the construction and layout of the building, unimpeded exit, siting of alarms, emergency lighting etc etc, the RA then has to be kept up to date to reflect any changes to furnishings etc - not a big deal, but something else to consider for a remote owner.
Giraffe
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Post by Giraffe »

Jo, if you intend to let as proposed, then you should consider opting for business rates. Depending on the number of weeks both available and rented, you may then be able to claim the small business rate reduction. In my case I have a 100% discount on business rates. This could save you up to £2300 per year.

If you are going for "high end" your initial furnishing costs look low to me. You don't say what size of property you are seeking, so it's difficult to be more specific.

As an overseas owner you may need to leave a float of money with your manager for sorting out emergencies.
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newtimber
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Post by newtimber »

Giraffe wrote:Jo, if you intend to let as proposed, then you should consider opting for business rates. Depending on the number of weeks both available and rented, you may then be able to claim the small business rate reduction. In my case I have a 100% discount on business rates. This could save you up to £2300 per year.
But this should not be taken into account in your business plan. There is no guarantee that this will continue for ever - it is only referred to as transitional/temporary. Indeed as the government is trying to create permanent housing of which there is a dire need, I would expect the holiday let sector to be with higher taxes in the future so that those who have converted permanent houses into Airbnb's will be encouraged to revert them back to their original use.
zebedee
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Post by zebedee »

I would also agree that your furnishings estimate is rather low for high end property, but if current carpets etc are ok then together with those allowances and that for curtains you might scape by.

Don’t forget you will need at least 3complete sets of bedding and towels to allow for changeovers (1 set in use, 1 spare and 1 being cleaned). This can all add up when you are setting out. Including all your kitchen equipment, glassware etc etc. Don’t skimp in your kitchen or you won’t get good feedback.

Wi-fi/phone/ cable at £1,200 is very high. You can get unlimited Wi-fi and a phone line for about £50 a month but would need to shop around frequently. What are your plans re a phone? You don’t want guests ringing long lost relatives on the other side of the world.

What is a £240 WiFi maintenance service???? Never heard of this.

Life insurance for your mortgage??? Essential on your main home, but if this property is an investment why can’t it just be sold if the worst happens to you.

Repairs and maintenance allowance is generous and will allow you to redecorate frequently.
I think you will need to allow more for logs, not that much though.
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Jo222
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Post by Jo222 »

Giraffe and Newtimber,
Interesting insights on taxes, thanks!

Zebedee,
Once again, I appreciate your very thoughtful comments.

It looks like I'm priced completely out of this market.

That said, I'll try to incorporate your suggestions in the spreadsheet post above, so that it can help others.
I would also agree that your furnishings estimate is rather low for high end property, but if current carpets etc are ok then together with those allowances and that for curtains you might scape by.
Yes, I lowered this cost item as well as expected revenues in order to switch to a middle market.
Don’t forget you will need at least 3complete sets of bedding and towels to allow for changeovers (1 set in use, 1 spare and 1 being cleaned).
I factored in the cost of a laundry service.
Wi-fi/phone/ cable at £1,200 is very high. You can get unlimited Wi-fi and a phone line for about £50 a month but would need to shop around frequently.
OK, will adjust that one.
What are your plans re a phone? You don’t want guests ringing long lost relatives on the other side of the world.
Ideally, let them rely on their mobiles, if there's decent reception.
What is a £240 WiFi maintenance service???? Never heard of this.
Something I ran across in Cornwall listings that sounds very handy if the PM doesn't take care of it, since it's critical for most guests now.
Life insurance for your mortgage??? Essential on your main home, but if this property is an investment why can’t it just be sold if the worst happens to you.
Some banks demand it, especially for expats like me.:cry: Maybe it helps them hedge against sudden market crashes.
Repairs and maintenance allowance is generous and will allow you to redecorate frequently. I think you will need to allow more for logs, not that much though.
Will add in your recommendations. Thank you!
zebedee
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Post by zebedee »

Please don’t be put off.
Most new businesses don’t make a profit on the first year. Perhaps look at a spreadsheet for years 2&3?? They should look more promising.

The other thing to consider is how you can gradually upgrade and improve the facilities or furnishings eg a good master bedroom but second bedroom more basic until you can afford to upgrade.
You will find good suggestions on the forum for purchases.

You will be able to carry over losses, but sadly can no longer off set them against any other income.
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