So you’re entertaining the idea of turning your holiday home into a letting machine? Smart move, but let’s be clear: it’s not just about the nightly rate and chasing bookings. There are plenty of costs to consider behind the scenes. Let’s break them down so you’re going into.
If you are already operating a short term let, or any property type for that matter, you can find some great tips on staying on top of your operating costs in our blog post here – https://clarkandersonproperties.co.uk/how-to-reduce-property-overheads-without-cutting-corners/
Licensing & Fees
- In Scotland, short-term lets (STLs) are subject to regulation. Your local council will require a licence If you wish to operate your property as a short term let. There are instances where a license is not required, you can find the list of exclusions here, List of Exclusions. If you do require a license to operate, you’ll need to factor in:
- The licence application fee (varies by council)
- Any annual renewal fees
- Compliance costs (e.g., safety checks, local inspections, certifications such as PAT, EICR, Gas Safety & Legionella etc.)
Skipping this is not an option — the costs of non-compliance can hurt.
- Up to a £2,500 fine.
- A potential one-year ban on applying for a license in the future.
- Local councils can and may take enforcement measures to shut down non-compliant operations. Meaning you are left cancelling on guests who have booked your property in good faith (not a nice thing to do to people).
Management / Agency Fees
If you’re partnering with a letting or management agent (and many owners do), you’ll have a fee for their services: listing, guest management, check-in/out, maybe cleaning and maintenance.
It is common for agencies to provide their services for a commission of each reservation they secure. In Scotland you’ll commonly see something in the 15–25% of rental income range. Now whilst this may seem high (especially if you come from a buy-to-let background, where fees are between 10-15%), it is actually quite conservative when you consider what a management company provides.
- Access to their property management software (PMS), which typically provides you with owner access (Owner’s Portal), where you have one space to view all reservations for your property(ies).
- An on the ground operations team, managing all aspects of your ‘mini-hotel’.
- Round the clock support to your guests.
- Guest communication which include not only enquiries but negotiation of bookings, securing bookings, general messages, area recommendations, messages during their stay, post-stay follow ups, responding to reviews!
- Most agencies utilise some sort of pricing software like PriceLabs or BeyondPricing (or perhaps their PMS offer built in Dynamic Pricing software). Companies like Clark Anderson combine this with a Revenue Manager. Side note, a Revenue Manager is an expert in understanding and interpreting market data & how to decide on the best nightly rate, length of stay rules, promotions, margins on OTA’s and much more! Ours is essentially Neo from the Matrix, seeing numbers like ‘The One’.
Commission based models are also a commitment from your Agency because, if they don’t secure bookings i.e. generate you revenue, they also do not achieve income.
If you’re doing things yourself to keep costs low, you’ll trade off your time, which might not be the ideal scenario. Luckily, Clark Anderson have Scotland’s first ‘flat-fee’ property management package. You look after your own housekeeping & maintenance teams, allowing you to keep a close eye on your operating expenses and keep relationships with your contractors. Whilst we provide everything above for a monthly fee of only £195 + VAT per month.
To learn more about our Flex Management Package or our All Inclusive Management Package, click the package name and have a look at our blog posts.
Tip: Always check exactly what’s included. The cheapest rate isn’t always the best value if you end up paying for add-ons.
Changeover Costs – Cleaning & Laundry
Each time a guest leaves, you’ve got a changeover. Cleaning, laundry, re-stocking consumables & getting ready to welcome your next guest.
- Cleaning companies typically charge between £18-£30 per hour, depending on services they provide.
- Cleaning the property, changing your bedding and linen and putting out stock & amenities should all be included in a housekeeping service as standard.
- Will the business test your smoke alarms and inspect fire safety equipment as part of their service? These are now mandatory checks which must be signed off, as part of the license regulations.
- Are they also laundering for you or willing to pick up and drop off from the laundrette you are using?
- Linen & towels: either sourcing replacements yourself or hiring supplier/contractor.
Consumables can vary & are often subjective. We believe, at the very least, you should provide toilet roll, kitchen roll, some cleaning supplies, hand soap & body wash / shampoo. Many of Clark Anderson’s properties offer welcome packs; ranging from £10-£15 a pack (biscuits, crisps, milk etc.) to £50 a welcome pack for high calibre properties which often have premium nightly rates. These can often include wine or beers, well known brand items, a welcome gift such as a candle or scottish throw to take home. We always recommend doing a little research on what you believe you can achieve per night and what your minimum length of stay will be, then work backwards on your costs & what you think you can offer, if you wish to do this.
For example, £90 per night x 3 nights, booked direct (no commission to an agency) with a £60 cleaning fee = £330 gross revenue.
- You aim to earn £200 per booking.
- £60 for the clean and laundry.
- 10% for back end expenses (utilities, broadband, water, mortgage, insurance, consumables)
- Leaves £210 = £10 for welcome basket.
Utilities, WiFi & Sibscriptions
Your guests expect a “home away from home”: good WiFi, heating, lighting, maybe smart tech.
You’ll need to budget for:
- Electricity, gas (perhaps a heat pump or oil).
- Broadband / streaming services.
When we opened the door to out first serviced apartment in Dundee, 2017, we took the approach of “the more we offer, the better our property will operate”. We continued this for the next 3 properties. But on much reflection, this isn’t necessarily the case. We did not receive a single review that mentioned the Sky packages we provided, but we have seen reviews where we had a FireStick running iPlayer apps, rather than simple FreeView, and the reviews were not good! So whilst this is another subjective point, our recommendation is not to splurge on the all signing – all dancing 24 month Sky Package, but instead offer FreeView (our guests often refer to this as ‘normally telly’, which might be a Scottish thing…) and offer a property login for Netflix. Yes, we know, guests probably have their own Netflix and will sign in with it, but for a low cost, especially in comparison to Sky for example, it’s a nice thing to provide. Just our opinion!
Tip: Always, always make sure you know when your contracts are coming to an end, and make sure you start looking around for the best deal. If not, you will roll into a higher rate. We linked it above, but here is our blog post on recommendations for keeping costs lean – Blog Post.
Maintenance, Safety & Compliance
Running a holiday let means staying ahead of wear-and-tear.
- Annual safety inspections: gas certificate, electrical checks, PAT for appliances.
- Emergency call-outs / out-of-hours support.
- Replacement of furnishings/fittings: sofas, beds, décor, will wear out faster in a high-turnover property.
Best message: budget an annual “refresh” fund so surprises don’t hit your profit.
Insurance & Rates – Council Tax vs. Business Rates
Your standard home insurance won’t cut it. You’ll need a policy covering: guest liability, accidental damage, commercial-use scenarios.
In Scotland you’ll also need to consider whether you’re paying council tax (if treating it as a second home) or business rates (if you’re operating as a holiday let business). MyGov Scotland Accounting/tax costs should also be factored in.
Tip: When you apply for business rates, you will continue to pay council tax until your minimum requries are met and you can evidence this as such (140 days available to guests, 70 nights booked by paying guests). Once you do evidence this however, you will recieve a rebate of the paid council tax during that time period.
Furnishing, Presentation & Guest Experience
Your property needs to stand out. That means good décor, comfortable furniture, meaningful extras (local guidebooks, quality kitchenware).
Guest expectations are high, a little investment here goes a long way. Over time, a refresh budget is wise.
Let’s be honest: guests remember more than the view they remember comfort, convenience, cleanliness.
Tip: Every property should have some style of guidebook, whether you like a more traditional approach and opt for a printed, tangible guide or like us, have moved to a digital guide. We have experienced both & now use digital guides exclusively. What we love about them, is they are quickly adaptable, don’t require heavy formatting in order to include pictures etc., you can provide videos & also attach pdf’s / manuals if you wanted. The best thing is you can make changes to them instantly. New restaurant you want to tell your guests about? Don’t worry about opening that word doc. retyping it in, printing, getting to the property and switching it out. Just log in, update and save!
Marketing, Listing Optimisation & Booking Platforms
Whether you’re self-managing or working with an agent, every successful holiday let needs strong marketing and well optimised listings. This is one of the biggest drivers of both occupancy and revenue, and it’s often the area owners underestimate.
High quality photos, polished listing copy and an accurate, attractive description of your space are essential. Your presence across the major booking platforms (Airbnb, Booking.com, VRBO and more) also matters, because each platform reaches a slightly different audience. Even with a management company, you’re effectively paying, directly or indirectly, for the marketing work that goes into getting your property in front of guests.
If you’re handling these tasks yourself, plan for a bit of a learning curve and potentially some extra tools. Dynamic pricing software, a Property Management System (PMS) and communication tools can all help you stay competitive and responsive. They’re not strictly necessary, but they become extremely valuable once you start juggling multiple platforms or multiple properties, peak-season pricing shifts and guest enquiries at speed.
The good news is that investing time (or the right support) into marketing and optimisation pays off quickly. A well crafted listing and smart pricing strategy can genuinely transform your annual income, reduce gaps in your calendar and help your property stand out in an increasingly competitive market.
Financial Planning: What Does It Look Like?
Once you pull everything together, you start to get a much clearer picture of what a holiday let actually delivers. The headline booking income is only one part of the story. What matters most is your net return, the figure left once the essential running costs are covered.
Start by estimating your annual gross income based on likely occupancy and pricing for your area. Then subtract the unavoidable essentials: platform fees, cleaning and laundry, utilities, insurance, licensing and compliance costs, maintenance and repairs, plus marketing and listing management. What’s left is the number you should use to judge whether your property is genuinely performing well.
Industry guides across the UK suggest that annual running costs can sit anywhere between £7,000 and £11,000+, depending on property size, guest turnover and location. For Scottish properties (especially rural or remote ones) it’s wise to budget at the higher end or build in a healthy contingency. None of this is unusual; it’s simply part of running a successful holiday let.
The positive news? When you understand your numbers and choose the right support model, a holiday let can be both profitable and low-stress. At Clark Anderson, we offer two management options designed around exactly that. Whether you want full, hands-off support or prefer a more flexible approach where you stay in control of operations while we handle the guest-facing work.
However you choose to run your property, a solid financial plan and the right partnership will make all the difference, and that’s where we’re always happy to help.
