Getting Started in Holiday Rental

GETTING STARTED IN HOLIDAY RENTALS Chapter 1a

The Luxury BnB E-Book for those looking to set up their own hospitality business.

By Abbey Warne and Dominic Johnson

If you are looking to set up your own rental property but are not sure how to get started then look no further, because we have got you covered with our brand new ebook, which will provide you with everything you need to know to get started!

This chapter (1a) will introduce you to the different types of holiday rental properties, outcomes and objectives that you may need to consider, how to choose the right location, the different types and sizes of properties available, the skills required and any legal implications which may arise.

TYPES OF HOSPITALITY PROPERTIES

There are a variety of different rental prop erties on the market that may spark your interest, and this section will give an outline of what each property offers in terms of ser vices, facilities, sizes and rooms. This will help you to decide which one suits you and your guests the most.

The different types of properties available:

BED AND BREAKFAST (B&B)

• A relatively small lodging establishment offering overnight accommodation and

breakfast.

• It is often a private home which typical ly has between 4 and 11 rooms, with 6 being the average.

• Guests will pay for the room and break fast the following morning.

HOTEL

• An establishment providing accommo dation, meals and other services for travellers and guests.

• They vary in size, but are larger than B&Bs.

• Can often have conference/meeting rooms for hire, restaurants and enter tainment services.

GUEST HOUSE

• A private house offering accommoda tion to paying guests.

• The owner usually lives in a completely separate area within the property.

• It can be an ‘annex’ or another, smaller house on the grounds of the owner's private home.

INN

• A pub that also offers accommodation.

• Provides food, drink, and accommoda tion.

• Usually has a pub and restaurant, li censed bar.

HOLIDAY COTTAGE/LET

• Private renting.

• The owners live off-site.

• Have the whole property to yourself.

DO YOU HAVE A LOCATION IN MIND AND HOW FLEXIBLE ARE YOU WITH THIS?

It can be quite tricky when deciding on a particular location and how flexible you want to be with this, so this section outlines a few brief points to consider, in order to help you pick out that perfect spot which your guests will no doubt love.

• You might have a particular area in mind or a vague county.

• You might need to tweak the location or pick a property that is more marketable.

• Have a look around and check there is a rental market to see what works and what doesn’t.

Locations may include:

• A rural destination such as somewhere in the countryside

• By the seaside, near a beach and other attractions

• A particular tourist hotspot or people travelling on business - you can charge more if you are closer rather than further away.

Helpful URL:

www.hermesthemes.com/how-to-start-run-bed-breakfast

What are your desires, outcomes and objectives?

This section will provide you with an insight into the different desires / outcomes and objectives you should consider when it comes to rental properties in a Q&A format, and will introduce you to the difference between Holiday Rentals and Single Longer Term Lets.

Questions:

Holiday rental vs single tenant?

“A friend of mine wants to get into holiday rental in Devon - 3 hours drive from her home. Due to her current commitments she has purchased a property and has started a long term rental. The aim is to move to holiday rental in a few years when she has more time.”

You would have put your heart and soul into this property and how do you feel about letting strangers into your house / bed week on week?

“One of the downsides of holiday rental I’m afraid is that people do mess up your house.”

• Consider how available to guests you want it to be

HOLIDAY RENTALS vs. SINGLE LONGER TERM LETS

HOLIDAY RENTAL

• You do get to use the house when not rented out

• Higher yields but generally irregular

• Less control over who the guests are and how they behave.

• Must be fully furnished and equipped

• Management of the property is generally more

• Some tax incentives - you can claim tax relief against any loans (repayment part only).

• Can be shut down due to a pandemic!

• Higher start up costs and possible ramp to get to revenue

SINGLE LONGER TERM LET

• No access to the house, it’s someone's home

• Single regular payment.

• More control: credit checks, interview and references

• Can rent out unfurnished

• Less work to manage the property

• You are generally more connected to a tenant and their problems.

• Since lead times are longer, you can generally market whilst renovating and so will start receiving revenue at an earlier stage.

What type/size of property are you looking for?

Thinking about the type and size of property is an im portant part of the process when you are looking to run your own, so this section will outline the different kinds of properties and their key features.

The different types of rental properties available (infor mation from Roofstock and Mashvisor):

LUXURY HOMES

• These homes are aimed at more high-end renters.

• Include new, up-to-date appliances and technolo gies.

• Expensive to invest in.

• They tend to have less frequent guests due to higher prices.

HOLIDAY HOMES

• In locations which attract frequent visitors such as the seaside or countryside.

• Can be seasonal.

• Can be seen on websites such as Airbnb.

CONDOMINIUMS AND COOPERATIVES

• Run by a ‘Home Owners Association.’

• Privately owned.

• Part of larger complex - apartments, villas etc.

• Consider HOA fees you will have to pay.

Helpful URLs: learn.roofstock.com/blog/types-of-rental-properties mashvisor.com/blog/types-of-rental-properties-investing

Front End and Back End Skills

There are various skills required when running your own rental property, but fear not, because this sec tion will cover the different skills you need and how you can achieve them in a few simple ways. These include ‘front-end’ and ‘back-end’ skills which will be covered in this section.

Don’t forget that running a holiday let is like running any other type of business!

The steps you should take to meet the skills required:

• You need to know you can cover all the bases.

• Take a look at your team and match up the skills you have with what you’ll need.

• Then make a list of what you have now, would be willing to learn and what you’ll need to buy in.

Examples of front-end and back-end skills:

BACK END SKILLS

• Maintenance

• Marketing

• Accounting

• Website Design

• Social Media

FRONT END SKILLS

• Interior Design

• Garden Design

• Meet and Greet

• Cooking • Cleaning

LEGAL IMPLICATIONS (PARKING PERMITS, EXTENSIONS, BUILDING WORK) (LEGAL EXPERT)

There are legal implications to consider when you want to run your own rental property, so you can make sure that you don’t run into any troubles down the line.

• There are less likely to be issues if there are other holiday let properties nearby.

• Very local so a good source of this information is the local holiday let agencies.

SUMMARY OF CHAPTER 1A

This brings chapter 1a of our e-book to a close, and we hope this has given you a better idea of the type of proper ty you are looking for, the location, the skills that owning it may require, as well as any legal implications involved.

Make sure that you keep a look out for the next part of the ebook (chapter 1b) which will introduce you to more com plicated stuff, but don’t worry, we will guide you through it step-by-step.

The sections in chapter 1b include insurance advice, tax implications and more, so make sure you keep your eyes peeled for our next issue, because you don’t want to miss out.

GETTING

STARTED IN HOLIDAY RENTALS

Chapter 1b

In this chapter (1b) we will cover insurance, tax implications, business rates, research and profit tips. Getting these sorted might initially seem like quite a daunting and complex process, but don’t worry - we’ve got you covered with expert advice to help give you a head start.

INSURANCE

INFORMATION FROM GARY HODGSON AT HODGSON INSURANCE

Insurance cover for your B&B, guest house or holiday home is a vital cog in the safe running of your business and for peace of mind should the worse happen. Here we give you some of our knowledge and tips when searching for insurance:

1) START WITH THE RIGHT POLICY

• Make sure your business is insured on a specialist guest house package policy.

• We see quite often customers have taken out a standard home policy via an online comparison site, and believe the public liability cover will cover them for taking in guests because they put down they’re B&B owners.

• A standard home insurance policy will not give you the correct liability cover to safeguard you against guests staying.

• Don’t try and obtain a public liability policy for guests separate to your main home insurance, thinking you’ll keep prices down.

• Always look for a single package policy that will include the correct liabilities and combine other main covers like buildings and contents.

2) WHERE TO OBTAIN THE RIGHT POLICY?

• We would always recommend speaking to an insurance broker.

• A broker should have access to a panel of specialist guest house schemes.

3) MAIN COVERS TO INCLUDE

• BUILDINGS: If you own the property then include the buildings, this must represent the full rebuilding cost of the property, should for example, it completely burn down.

• CONTENTS: Most guest houses are owner occupied, if that’s the case make sure the policy includes not just business con tents, but also includes cover for your personal contents. Some policies include this altogether, but some insurers it can be included as an optional extra

• PORTABLE CONTENTS: In addition if you wish to include port able contents outside the home like jewellery, mobile phones etc, then again this an optional extra that only a few insurance companies provide.

• PUBLIC LIABILITY: A specialist B&B or guest house policy will au tomatically include Public Liability cover for your guests should they get injured or maybe food poisoned whilst staying. The limits will generally be £2 or £5 million.

• EMPLOYERS LIABILITY: If you intend on employing staff, even temporary staff, then you legally have to include Employers Liability cover. This will protect you should an employee injury themselves whilst working for you. Not always automatically in cluded, so if you have staff make sure this is included. Employ ers Liability cover limits should always be £10 million.

• BUSINESS INTERRUPTION: If, for example, a burst water pipe causing flooding in bedrooms, you may not be able to rent those rooms out for a number of weeks or months.Business in terruption covers you for loss of income due to an insured peril like escape of water or a fire. A vital part of a business insur ance policy, some smaller B&B policies may not offer this cover or only offer as extra.

Other not so vital covers will either be included or you can pay extra for, but the above are main areas you must look at.

VAT

What are the rules if the property is sold without VAT?

• Advantage of VAT - Maximum rule.

• Need to charge 20% more

INFORMATION FROM MATT BRYANT AT OCL Accountants

When running a guest house, B&B or any other kind of hospitality business, there are many important factors to consider, and one of the most important things to think about is tax, particularly VAT.

• Many small businesses are unsure whether or not they actually need to register for VAT.

• If your earnings from the property are over £85k then you must be VAT registered.

• To check the current threshold you can either ask your accountant or go to https://www.gov.uk/vat-registration

From your effective date of registration, you must:

• Charge the right amount of VAT

• Pay any VAT due to HMRC

• Submit VAT Returns

• Keep VAT records and a VAT account

Most VAT registered businesses that earn over £85,000 must also follow the rules for ‘Making Tax Digital for VAT'. Your account ant should be able to assist with VAT, from finding out whether you have to register, deciding on a suitable VAT scheme and preparing the VAT returns.

INSURANCE

INFORMATION FROM MATT BRYANT AT OCL ACCOUNTANTS

In running a bed and breakfast you will need comprehensive insur ance to protect you, your customers, and your reputation.You are responsible for the welfare of your customers, suppliers, and any staff you employ.

• It’s important that your insurance includes public liability and employers' liability insurance in case somebody falls ill or is injured as a result of being on your premises.

• This is on top of the normal building cover in case of theft, ac cidental damage, fire or storm damage, and you also require cover for all your fixtures, fittings, and contents.

• Not to mention your guests’ belongings too.

• Additionally, you should have product liability cover as a safe guard against potential food poisoning, business interrup tion in case you are unable to trade for a period of time, an example of this is Covid-19, and financial cover for any money held on your premises.

The level of cover will need to be reviewed regularly as your busi ness grows to ensure you have the correct level of cover.

THE ADVANTAGES AND DISADVANTAGES OF BEING

VAT REGISTERED

ADVANTAGES OF VAT

• You can claim back the VAT on purchases - this can be a huge cost saving of 20% on all purchases.

• Many agents or OTAs charge VAT and so you can claim this back - e.g. one of the agents I use charge me 22% + VAT = 26.4%.

• So if you plan to use these providers extensively this needs to be considered.

• Google and Facebook do not charge VAT on their ad spend in the UK.

DISADVANTAGES OF VAT

• You need to charge VAT on all rental income.

• Since the majority of your guests (assuming this is the case) will not claim back VAT (individuals not businesses) then your fees will be increased by 20%.

• You will need to do a VAT return every month but this is very simple with most accounting bookkeeping systems.

EXTRA VAT INFORMATION

Can I register for VAT if my revenue is below £85k? Yes, it is still possible to register yourself for VAT even if your revenue is below £85k.

NEW BUILDS AND VAT

If you have a new build you might be able to recoup the VAT even if you are not registered - this is the case when people buy new homes. You can also claim back up.

PROPERTY AND NOT BUSINESS

The £85k is related to the property and not your business.

So if you own 10 properties charging less than < £85k rev per year, you do not need to be VAT registered.

FLAT RATE SCHEME

There is a flat rate scheme where you charge 20% but only need to send the government less than 20% (for hotels it's normally 8.5%).

At the moment this is all changed due to covid - check the government website for further information: https://www. gov.uk/vat-flat-rate-scheme/how-much-you-pay

Use

Every B&B owner operates differently, you may just let bedrooms to holiday guests, but if you allow guests access to the kitchen cook ing facilities, you maybe take in DSS/council referrals or you have a self-catering annexe this can completely change the type of policy you need to be on. Make sure you give your broker a full description on how you intend to run your business.

Check the small print

There isn’t a standard guest house policy. Every policy has very different policy terms, conditions and claim excess’s. Make sure you always check the finer points of any quote. An insurance broker worth their weight should help and point out any significant policy con ditions or exclusions.

How much will you pay

It’s impossible to say what you will pay for your insurance as all guest houses have dif ferent requirements, sums insured and differ ent postcodes. An example cost of a recent guest house policy we’ve set up…

• A 5 bed guest house in Gwynedd LL30, with buildings insured for £462,000 and contents at £85,000.

• Annual Premium: £628 with optional Legal Expenses £36.

• The policy had just a £150 claim excess, no security conditions and full theft by guests cover included.

Using a broker

Claim Excess

All policies will have a standard policy excess - this is the amount you will need to pay towards any claims costs. A standard excess should range from £100-£250. We don’t recommend going any higher than this unless you’re getting a significant saving by doing so. Look closely in policy conditions as sometimes higher excess’s can be added for example a flood risk area, flat roof excess’s, subsidence and similar.

Thefts

Most guest house policies will include theft caused by violent or for cible entry only. Some, more comprehensive policies, include full theft by guests, whether it’s a break in or if a guest just walks away with a tv. Check you’re happy with the level of theft cover.

Security

Some policies have no security conditions which makes it easier not having to worry if you have the correct locks, especially a hospitality business where guests are coming in and out all the time. Many policies do however have minimum security requirements, if so then make sure you can adhere to them.

Yes, we’re possibly being biased but we’d always recommend using an independent insurance broker, possibly a broker who spe cialises in hospitality trades. A broker should help find the correct policy for your needs, will be able to make any changes during the year, help with claims advice and be able to search the market again at renewal time. Also brokers don’t all have access to the same providers and schemes, so it’s recom mended to try 2 to 3 brokers so you get a good spread of quotations.

How much should you insure your buildings for?

The buildings should represent the full re building cost of the property including debris removal, architect and associated fees. If you have a mortgage they’ll often insist on you insuring for a certain amount. A free website you can login to and get an estimate of the rebuild is the BCIS website here: https://cal culator.bcis.co.uk/ A more accurate way is paying for a chartered building surveyor, but will often be £500+ for this type of report.

MORE INSURANCE INFORMATION FROM GARY HODGSON AT HODGSON INSURANCE

Credit: Flickr

RESEARCH

This section will take you through the research you need to do step-by-step prior to setting up your holiday rental property.

IDENTIFYING THE MARKET

• With your place in mind - location, room size, types of guest.

• Start by searching for properties closest to your new place in the overall proposition.

• Find out where they market their properties and who to.

• Find their booking form and create a spreadsheet of total possible income.

Income

• It can be quite tricky to find this informa tion and you’ll need to have a good poke around.

• Where possible, under estimate.

Key Issues

• Many holiday lets say a property is not avail able when the owners are using it.

• Sometimes it's hard to get a full year's bookings.

• Profile at least 3 properties where possible. The purpose of this is more about seeing where the busy times are and also get a rough idea of revenue.

• Create a rough price plan.

Outgoings

• At this stage look at all the possible outgo ing and estimate the costs.

• You can then divide this by 12 to get a monthly outgoing.

• Compare this month on month to your esti mated pricing to get a break-even point.

• Compare this to the above and see if it is realistic and you are comfortable with the risk.

• Consider again your personal situation and work out if you can afford the risk.

• Where possible, overestimate the outgoing line and underestimate the income.

Holiday rental in the UK is often peaky and so you’ll need to manage cash throughout the year. Is this to be considered?

• If you are entering the holiday let market to finance a house you want to use, you might need to make compromises here.

• What is often perfect for a holiday home is often not workable for a house you live in.

• For example, storage. You need very little storage space for a holiday let.

TAX IMPLICATIONS

Capital Allowances: A Much-Needed Cash-Injection for B&B Owners

2020 will always be known as the year of staycations, with many families avoiding holidays abroad in favor of staying in the UK. Al though the Bed & Breakfast industry in some areas of the country has enjoyed a market boost, others have faced significant cash flow challenges due to the ever-changing COVID-19 restrictions. Here, Clare Mckee from specialist tax relief firm, Catax, explains how a cash-injection in the form of capital allowances can be a lifeline for many businesses, and what to consider if you’re looking to buy a B&B property.

What are capital allowances?

“Capital allowances are a type of tax relief that offsets the hidden expenditure in commercial property, including B&Bs. This comprises elements such as air conditioning, heating and light ing – essentially everything that would remain in the building if you tipped it upside down! It can be claimed by anyone that owns their commercial building and is a UK taxpayer. However, if you let out a residential building, it must qualify as a furnished holiday lettings business to be eligible - it has to be available for holiday letting for at least 210 days of the year and let out for 105 days or more. Contrary to misconceptions, claiming for capital allowances will not impact the value of the property or capital gains tax.”

Do capital allowances have to be claimed on recent property purchases, or can it be processed for older sales too?

“Capital allowances can be claimed at any time, as long as you still own the building. We routinely process applications for expenditure that incurred 10 years ago or even longer! However, we would highly encourage owners to make a claim when they purchase the property or at the earliest opportunity, in order to benefit from the tax relief available. Should the building be sold at a later date then the balance of the claim can be retained or passed to the new owner. In addition to purchases, capital al lowances can also be applied for on property refurbishments and extensions or new builds.”

What if the property was built by the owner many years ago and they have no records of the build costs, how can it be identified which costs can be claimed on capital allowances?

“It is not essential to provide records/invoices relating to the con struction expenditure. Accounts and tax computations from the period of construction can often provide the necessary informa tion, together with a conversation with the accountant that acted at the time. The land registry is often able to provide evidence of the price paid for land and this provides a basis from which to calculate the construction costs.”

INFORMATION FROM CATAX AND 123 GRANTS

If a B&B business doesn’t have sufficient taxable profits to benefit from capital allowances, could they still be eligible?

“Yes, it is definitely worthwhile to still identify qualifying capital allowances, especially if you expect your business to make taxable profits in the near future. Sometimes, capital allowances do not equate to an instant return, however they can be used to offset capital gains tax liabilities, passed to new owners and more. Ultimately, each set of circumstances is different, and I’d recommend carrying out an appraisal and seeking expert advice.”

Is this something that accountants usually deal with?

“Most accountants provide some form of capital allowances advice. However, as capital allowances claims are extremely complex, they are ideally suited to being dealt with on a standalone basis separately to other tax matters. Capital al lowances specialists possess a specific skill set with a more detailed and up-to-date understanding of what is included in capital allowances than most advisors who deal with this area of taxation less frequently. This ensures that property owners get the largest cash injection possible; for example, at Catax, our average client benefit for a Capital Allowanc es claim is £53,000.”

So, what is the process?

“The first stage of the process is to collect all the informa tion for the Capital Allowances claim, including information on the property purchase, as well as details of any refur bishment expenditure. A specialist will then assess your claim and undertake any technical analysis. Generally, a surveyor will then conduct a site survey of your building to see if there’s anything further that could be included within the claim. It is then up to the capital allowances specialist to maximise the value of your claim and produce a report, which is submitted by the HMRC via your accountant. Once the claim is processed and completed, you will receive your refund!”

To find out more information about Catax and its Capital Allowances service, contact Clare Mckee, Catax hospitality specialist clare.mckee@catax.com or call Clare on 0121 293 1197 | www.catax.com.

Make sure you read our essential guide to short-stay holiday let tax here - https://www.luxurybbmag.co.uk/airbnb-shortstay-holiday-let-tax-the-definitive-guide/

TAX

MORE INFORMATION ON TAX IMPLICATIONS FROM MATT BRYANT AT OCL ACCOUNTANTS

Capital Allowances for Commercial Properties

It is estimated that over half of all hospitality businesses in the UK haven't claimed their capital allowance entitlement, which could be worth hundreds of thousands of pounds. It is important to get your accountant’s early involvement to look at analysing historic expenditure to compile robust capital allowance claims. By identifying qualifying assets within the building which attract tax relief. In some cases, more than half the project expenditure will attract capital allowances, including professional fees.

New Developments

Where there has been constructed or undertaken the construction of a new building or an extension to an existing building you are able to analyse the costs incurred and to fully comprehend the construction processes involved and the documentation used to capture the costs, and hence maximise the level of allowances available. Early involvement in the construction planning phase can offer opportunities to proactively manage the tax relief process and often increase the level of allowances available.

Purchase of an existing property

A client may purchase an existing building, either for use in their business or as a commercial investment. In these cases, in order to claim capital allowances, the purchase price must be split down into the components of the building and the land. The changes to the rules for claiming capital allowances on second-hand plant and machinery fixtures, brought in by the Finance Act 2012, have a significant impact on property buyers. Whilst property sellers will not suffer directly from the new rules, there will be consequences for all businesses incurring expenditure on fixtures within commercial property and we offer a consultancy service to advise both buyers and sellers on the impact of these changes to them and the allowances within their properties. Timely advice can ensure that allowances remain available to purchasers and subsequent owners, which could otherwise be lost.

Refurbishment, alterations and fit-out works

Expenditure incurred on an existing building can be analysed in a similar way to the cost of a new building or extension, by a detailed review of actual invoiced costs. The value of relief available in connection with refurbishments, alterations or fit-out works is generally enhanced by capturing the cost of all incidental expenditure. Whilst the cost of the works may be capitalised, some costs may be capitalised repairs and attract 100% tax relief in the current year.

Capital Gains Tax for B&B Owners

Credit:

When you decide you want to sell your B&B you will have tax to pay.

• There are several factors which will impact your Capital Gains Tax position on the sale of a B&B, it is most certainly not a “work it out yourself” guide.

• It is advisable to get advice from your accountant before your sale.

There are potentially several tax reliefs available. Some of the current reliefs available in 2020 which can help reduce (or eliminate) Capital Gains Tax are:

• Principal Private Residence Relief

• Letting Relief

• Annual exemption

• Entrepreneurs’ Relief

Relief everybody gets Every person is entitled to a CGT exemption.

For the tax year 2020/21 the exemption is £12,300.

BUSINESS RATES

INFORMATION FROM MATT BRYANT AT OCL ACCOUNTANTS

Business rates generally apply to bed and breakfast establishments unless;

a) The business does not intend to offer short-stay ac commodation to more than six people simultaneously.

b) You occupy part of the property as your only or main home, and letting out the rooms is subsidiary to the use of the rest of the house as your home.

• Business rates apply to a self-catering establishment unless you offer short-term lets for fewer than 140 days a year.

• Only the part of the property used for business pur poses is subject to business rates.

• Your local authority will calculate the business rates for your property based on its 'rateable value'.

You will need to pay business rates if you are providing serviced or self-catering accommodation, unless you qualify for Small Business Rate Relief, OR for bed and breakfast if:

• You do not intend to offer short stay accommodation to more than six people simultaneously, and;

• You (the owner) occupy part of the property as your only or main home, and;

• Letting out the rooms is subsidiary to the use of the rest of the house as your home (‘subsidiary’ is based on factors such as the length of your season, the scale of modifications undertaken for guests and the pro portion of the house you occupy).

• For example, if you only let only two of six bedrooms in your property as a bed and breakfast, business rates are unlikely to apply. However, if you let four of your six bedrooms, you will probably have to pay business rates. Your local authority will be able to advise you.

Note: If you must pay business rates, but use your property for business and domestic purposes, it is only the part you use for business purposes that is subject to business rates.

COUNCIL TAX AND VALUATION OFFICERS

• The domestic accommodation is liable to council tax.

• Where parts of a house have a shared use, such as a kitchen or dining room, the Valuation Officer will visit the property and assess the amount to be paid.

SMALL BUSINESS RATE RELIEF

• Small Business Rate Relief is available to businesses. For up to date information please visit: https://www. gov.uk/apply-for-business-rate-relief/small-businessrate-relief

RATEABLE VALUES

• Currently as of 2020 where the rateable value of the property is less than £15,000, businesses with a ratea ble value of up to £12,000 receive 100% relief.

• While businesses with a rateable value between £12,000 and £15,000 receive tapered relief.

EXTRA SMALL BUSINESS RATE INFORMATION

If you have a second property, you'll keep getting any existing relief on your main property for 12 months. You can still get Small Business Rate relief on your main property after this if both of the following apply:

• None of your properties have a rateable value above £2,899

Credit: Flickr

• The total rateable value of all your properties is less than £20,000 (£28,000 in London)

Note: If your property has a rateable value of more than £15,000 but less than £51,000 your bill will be calculated using the small business multiplier, which is lower than the standard multiplier.

HOW ARE BUSINESS RATES CALCULATED?

• If you need to pay business rates, your property will have a 'rateable value' based on the rental value of your property.

• These values are set by an independent Government Agency, the Valuation Office Agency (VOA).

Note: Due to the impact of COVID-19, the Government has announced that the planned business rate revalua tion will no longer take place in 2021.

WHERE CAN YOU GET DETAILS OF A PROPERTY'S RATEABLE VALUE?

• You can obtain details of the rateable value of your property from your local Valuation Office or the busi ness rates department of your local authority.

• The VOA website allows you to access entries in local rating lists.

ADVICE ON LODGING AN APPEAL

• You can make an appeal against the 2017 valuation of your property at any time during the life of the valua tion (i.e. until April 1, 2022).

• You are advised to appeal as soon as possible as you will have to pay your rates in full until a decision has been reached and, for most appeals, there are limits on how far any resulting change in value will be backdated.

HOW ARE APPEALS MADE?

• Appeals are made in the form of a 'proposal' to the local Valuation Officer or online through the VOA website.

• If an agreement is not reached within three months of receipt of your proposal, it will be automatically referred to the local Valuation Tribunal, which will hear the case and give a decision.

PROFIT TIPS

Every business is different and will have their own targets and profit margins, but it is important to maximise these. Below are some tips to consider:

• Systemise Everything

• Know Your Key Drivers and Monitor Them

• Focus on a few key metrics. Eg. Gross profit margin. Bed Occupancy

• Review Your Prices

• Look at your price points.

• Work your margins.

• Maximise Efficiency, Automate.

• Use systems to monitor effectiveness.

• Justify Costs

• Look at all your costs, Are they necessary?

Extra things to consider:

• Hen parties, dog walking, water sports - who are your audience and what do you think to that?

• Cancellation policies, bedrooms, kitchen equipment etc.

• Look at the other properties and copy their terms.

• Many ask for 30% up front to secure the booking, balance within 60 days.

• Then the damage deposit needs to cover the insurance (payment you pay with any claim). Mine is £500.

Identifying the competition (nearby businesses)

• It is useful to select similar size properties close to yours and also properties close by.

• Consider what size of property is selling.

FINAL things to consider in terms of profit:

• Area

• Revenue

Setup estimate & cash flow forecast (for year 1)

• You need to be realistic about when you will launch which will dictate the first year’s earnings.

• Maybe your place is a summer place and so launching in October will leave a low year 1 revenue.

SUMMARY OF CHAPTER 1B

This brings Chapter 1B to a close, and we hope you now feel more confident when it comes to the more complex areas in setting up a holiday rental property.

It is definitely worth it in the end though, especially when you see guests enjoying themselves and the great reviews come rolling in, which is why it is good to cover all the ground you can at the very beginning, so you don’t run into issues later on down the line.

Keep a look out for Chapter 2 which will tell you everything you need to know about business plans, legal entity and finance - don’t miss it!

RESEARCH:

WHAT DO PEOPLE LOOK FOR?

Figure out:

• Who your ideal guest is (demographics)

• What your advantages are

• How you differ from your competition

• Which rooms and services got the best and worst feedback

• What your weaknesses are

• What your vision is

EXAMPLE SIMPLE PLAN

A VERY SIMPLE PLAN USED TO SECURE A MORTAGE.

Introduction

I wish to purchase a property in [X location]. My idea is to initially rent out the property as a short-term holiday let

Details of the property:

I plan to pay [£X] for the property. The property is in an excellent location and order. There is no work required on the property and it is currenrtly operating as a short-term holiday rental propoerty.

Existing Revenue Figures:

The figures below are actual figures (using public information):

LEGAL ENTITY

Deciding on whether you trade as a Part nership or Limited Company will depend on a range of different factors, including:

• Tax considerations

• Legal requirements

Identifying the pros and cons so that you have a good grasp of the difference between a Partnership and Limited Com pany, is an essential part of the process of business planning.

Month

January February March April May June July August September October November December

Running costs

Days 6 2 11 17 7 11 19 30 3 6 6 4

Rate £90.57 £100.57 £100.57 £116.29 £116.29 £136.29 £136.29 £116.29 £116.29 £100.57 £90.57 £770.29

Finance of purchase

Why making the right choice matters:

• Making the right choice can ensure optimum efficiency.

• It provides key protections and makes it simpler for your business to grow.

• It can be useful to discuss this with an accountant before you make the choice.

Partnership vs. Limited Company

What is a Limited Company?

Cleaner / Advertise: £100 per booking = £2k/year Maintenance: £50 per month Services: £100 per month Total: £3,800 / year Release: £12,995.71

Conclusion

Savings: £ N

Business loan on property: £ N Re-Mortgage on family home: £ N

• A limited company is a vehicle ideally designed for running a business.

• It’s one of the most popular choices because it can provide clarity and protection that other legal entities may not.

There are several benefits to opting for a limited company, including:

I feel this business proposal is very low risk. Revenue figures on this place are currently relatively low due to poor marketing and presentation. We believe we can at the very least maintain this level and are confident we can increase it. The property is in [X location} which is a very popular area and has consistent rental opportunities. Peronsally we have residual money left every month to cover the loan repayment even with £0 rental income.

I feel as a husband and wife team, we are very well placed to make an excellent holiday let business. [Partner A]'s eye for details and knowledge of the market is second to none. They have an excellent contact list of tradepeople and have led many large projects.

[Partner B] is an expert in branding and online marketing and has run a successful web design business for 15 years.

• Personal liability is minimised, as a limited company is a separate legal entity.

• Shareholders will only be liable for any unpaid amounts owed on shares.

• In most circumstances the company’s debts belong to the company.

• The individuals who run it won’t be responsible for paying the debts unless it can be proven that there has been a situation of negligence or fraudulent situations.

11 || Luxury BnB || Getting Started in Holiday Rental www.luxurybbmag.com Rev £543.43 £201.14 £1,106.29 £1,976.86 £814.00 £1,499.14 £2,589.43 £3,488.57 £348.86 £603.43 £543.43 £3,081.14 £16,795.71

This section will introduce you to Legal Entity, and will explain what Partnerships and Limited Companies are, and the benefits of each.

INFORMATION FROM MATT BRYANT AT OCL Accountants

•

•

BENEFITS OF A LIMITED COMPANY BENEFITS OF A PARTNERSHIP

Credible Structure

A limited company is a very credible structure.

• If you’re looking to create a professional impres sion, it’s a simple way to establish trust.

Investment Management

It’s easier to manage investment in your business via a limited company.

• In fact, some investors may not be willing to put cash into the enterprise, unless it is structured in this way.

Tax Efficiency

• A limited company may be more tax efficient.

• Shareholders are only taxed on what they with draw from the company, as opposed to their share of its profits.

No Filing Requirements

• There are no filing requirements for a traditional partnership and no need to register at Compa nies House.

Clear Business Structure

•

You can draw up a partnership agreement that makes the business structure clear and identifies the roles and responsibilities that each partner has.

Tax Efficiency

•

Partnerships may be more tax efficient.

• It depends on individual circumstances but there can be tax benefits to a partnership.

Partnership Liability

• If you set up a partnership all the partners will have joint and several liability.

• This means each one is liable for the entire debt of the business if something goes wrong.

OTHER THINGS TO CONSIDER

CONVENIENCE

• For some, the partnership vs limited company decision may come down to convenience.

• A limited company is a more complex structure than a straightforward partnership.

FILING REQUIREMENTS

• There are filing requirements and limited companies must publish annual accounts.

SEPERATE LEGAL ENTITIES

• The key difference between a partnership and limited company is often identified as the fact that a company is a separate legal entity.

WHAT IS A PARTNERSHIP

• In a partnership the partners own the business and are responsible for any liabilities it has.

SUMMARY OF CHAPTER 2A

This brings Chapter 2A to a close, and we hope that we have made the process of writing up the business plan and understanding the legal entities involved a little bit easier for you.

The next Chapter (2B) will explain the key parts of finance, which include the different types of borrowing available and how to get the right support. It will also introduce you to release from the pension pot and self-investment.

Chapter 2B

Welcome to Chapter 2B, which will introduce you to the financial aspect of setting up a BnB. It might seem like a complicated process but hopefully the content in this chapter will make it easier. In this chapter we will take you through the different types of borrowing available when it comes to finance, and how you can get the best support possible.

TYPES OF BORROWING AVAILABLE

This section will introduce you to the types of borrow ing available, including information on business loans and the steps to consider when it comes to arranging business finance.

INFORMATION FROM MATT BRYANT AT OCL ACCOUNTANTS

Mortgage

A mortgage is one of the most popular means of financing a Bed and Breakfast start up.

• Be wary of the risk of over-borrowing, do not overestimate the amount of business that you will attract during the year.

• Take into account any out of season periods.

Already have a suitable property?

• You may need to re-mortgage it to obtain the cash for conversion or modification work.

• If this is the case, you will need to inform your current lender that you intend to run a B&B.

Business Loans

•

In the past, businesses would have contacted a high street bank for a business loan.

• Whilst this option is still popular, there are now more lenders willing to lend finance.

STEPS TO CONSIDER

RESEARCH

• Different lenders have different criteria as to what they consider a feasible finance plan.

DETAILED BUSINESS PLAN

• A strong business plan is a must; it is the backbone and starting point for any business.

• Make sure your projections are realistic, show you know and understand the sector.

• Numbers are key to a business plan.

STABILITY

• Understand and show a lender that you will be able to repay your debt.

• Show that your business is viable and that you will be able to meet the lenders requirements.

BE HONEST

• Be upfront with your current situation and the money needed.

• Be realistic; don’t overestimate revenues and under state expenses.

READ THE SMALL PRINT

• Understand terms of the loan and the repayment plan.

CREDIT HISTORY

• All lenders will check your credit history.

• Your credit history could have an effect on the avail ability of obtaining finance.

GETTING THE RIGHT SUPPORT

All of the topics mentioned above need to be consid ered when starting and running a Bed and Breakfast business. This section will introduce you to the financial support you can get for your BnB.

Why is finance important?

Whilst the financial side can seem daunting and time consuming, without it your business is more likely to struggle.

SHOULD YOU INVEST IN AN ACCOUNTANT?

• You need to spend time on running your business and doing what you do best.

• Therefore, you need to invest in an accountant to help with the financial side.

• It is up to you how much time and cost you want to spend on this.

A proactive accountant should provide the following support:

1. Business Growth - help and advice to help your business grow

2. Business Plans

3. Ongoing Support - Bookkeeping, Payroll Services, VAT

4. Management Information - Regular Management Accounts and meetings

5. Raising Finance - Assistance and advice on fi nancing

6. Tax advice - Tax planning for business owners, wealth management, Capital Allowance claims.

7. Compliance – Statutory accounts and tax returns

MORTGAGES AND FINANCE

Can you get a buy to let mortgage?

• It is not possible to get a Buy To Let mortgage because you are renting to more than 1 person

SELF INVESTED PENSION (SIP)

• You can do an SIP - Self-Invested Pension.

• This is where you take money from your pension and invest it in a property.

• Borrow against another property.

BUSINESS LOAN

• Earning ratio - banks are worried about getting their money.

WHAT IF YOU GET NO BOOKINGS? CAN YOU PAY THE BILL?

• We took out a 15 year business loan for 65% of the property value, an extension to our home mort gage for the balance.

• We then used savings to carry out the work.

Business Loan

• Lower setup

• Similar terms to a standard personal mortgage

• Can lend to a partnership - i.e. you can create a Limited Company but you don’t need to.

Creating a Limited Company(Benefits and Drawbacks)

• Drawbacks of creating a limited company are that you need to produce audited accounts (cost ly).

• The advantages of creating a limited company (protection) are not valid as all business loans are secured against the owners of the business.

Extra business loan information

• Bank will normally need at least a 30% contribu tion, lower than a standard mortgage.

• Advantage: you can make larger paybacks (nor mal mortgage is 10% per year) there is no limit to paybacks and no penalty clauses.

• Bank will look at the serviceability of the loan including the amount of income you’d expect to draw from the business.

Equity release from another property

• Possibly the cheapest option

FINAL TIPS

• Don’t just plan for the initial start-up of your B&B.

• Plan with the next 5 to 10 years in mind.

FINANCIAL INFORMATION FROM MATT BRYANT AT OCL ACCOUNTANTS

FINANCE

• Finance

• A potentially major headache for those owning a B&B is money.

• Just getting started can be incredibly tough, but with the correct foresight, planning and prepa ration, it is possible.

HOW MUCH WILL I NEED TO SPEND?

The cost of starting a Bed and Breakfast will vary depending on if you:

• Already own a suitable property

• Are aiming at the budget end of the market

Or

• The cost can be considerably higher if you have not yet purchased the right property and are looking to offer a high-end experience.

• These costs can very easily get out of control.

• Whatever your particular starting circumstanc es are, they should be factored into a business plan.

WEBSITES

KEY WEBSITES YOU MAY FIND USEFUL gov.uk/set-up-business gov.uk/vat-registration/how-to-register gov.uk/log-in-file-self-assessment-tax-return gov.uk/write-business-plan

SUMMARY OF CHAPTER 2B

We hope this chapter has helped introduce you to the financial aspects of running a BnB, including borrowing and support. Admittedly, they’re definitely not the most exciting part, but they are crucial steps that need to be completed in order to run a Bed and Breakfast that you’ll be proud of.

The next Chapter (3A) will introduce you to interior design configuration and renovation, soft furnishings and technology.

Welcome to Chapter 4. Chapter 4A will introduce you to the rental periods, terms and conditions and payment processes which are involved in setting up a Bed and Breakfast. Chapter 4B will introduce you to setting jobs and responsibilities, staffing and emergency planning.

4A: T&CS

Discover how a Terms and Conditions document should be set up, and what should be included.

Here’s an example of how you might set up the document: https://docs.google.com/document/d/132lKJldn lDUBJBVRjV-ijNZ2Z-rNIhCl7qYx4BPaJM8/

You should include the following sections within your terms and conditions document:

1. Disclaimer

• This is a statement that denies something, such as responsibility.

2. Cancellation Policy

• Outlines the cancellation terms.

• Outlines the amount of money the booker will or will not be refunded if the booking is cancelled up to a certain time.

3. Responsibilities of the tenant

• This will include what the tenant is respon sible for during their stay

4. Liability of manager / owner

• This should mention what they are legally responsible for.

5. Payment terms and deposits

• Outlines payment schedules and how much deposit is needed when.

6. Complaint process

• Outlines the process through which a ten ant may make a complaint.

7. Pet, child and any other policy

• Outlines the policies on above (e.g. guide lines, requirements, bans)

• Whether there will be any fines for break ing policies.

8. Your contact information

• How the tenant should contact you if they run into issues or have any queries, for example.

Other things to consider:

• If you are planning to use OTAs (Outside Travel Agencies) to find bookings, consider how their T’s & C’s align with yours.

• Some OTAs offer fantastic cancellation poli cies but that might leave you with little time to fill the cancellation.

• Consider sending out a welcome email with each booking highlighting the key terms and conditions.

4A: RENTAL PERIODS

This section will introduce rental periods and ex plain how to decide on the minimum lengths your guests should stay for, changeover days, the prices of each stay and which booking engine to use. You should consider the following questions:

• What type of property are you running and how likely are guests wanting to stay on average?

- You might be a stop-over location on a famous walk, which means that one night stays could be essential

- Alternatively, you might, ideally, prefer week-long guests but decide to off splitweeks.

• Which days can your changeover work?

- The cost of the changeover needs to be factored in.

- You might have a different set of rules for school holidays, or summer and winter

• Do you adopt one or more changeover days, e.g. Mondays and Fridays?

- If you don’t allow people to book part weeks, you might find odd days are free and be unable to sell them.

• What should the price of each day be?

- Weekend rates are generally more ex pensive than weekdays.

- You might need to charge a discount of 7 x per-night rate for a whole week.

• Which booking engine should you use?

- Some booking engines struggle with set changeover days.

- This is not necessarily a consideration when setting the rules but it is important when you are choosing a suitable booking engine.

4A: PAYMENTS

Discover payment processes, how you should handle deposits, why you should set up credit card booking systems and more.

Consider a staged payment

• The initial deposit needs to be small enough to not put people off booking but large enough so they complete the booking.

Deposits and cancellations

• An initial deposit of 30% - 40% refundable if they cancel within 60 days of the booking is typical, with the balance to pay within 60 days.

Should you provide a full refund for guests who cancel?

• Be fair and refund all money if you manage to resell those dates. This is fair to both parties

Setting up credit card processing systems

• It’s easy to set-up a credit card processing system like Stripe and PayPal.

Consider the benefits and drawbacks of each process ing system

• Stripe charges 20p + 2.9%, so a £1,000 booking would incur a credit card processing fee of £29.20

• Advantages: people like to use their credit card for security, which will help with bookings

Charging a damage deposit

• Very common - set it at the same level as the ex cess on your insurance policy. £500 is typical but can be a problem for some, as a result, I would not charge more than £500.

How will you send the money back to the guest?

• Credit card processing systems make it easy to cancel and return the money. But some credit card processing companies will not refund the fees (e.g. Stripe), so you'll lose £7.60 on each deposit refund.

Other options:

• You can ask guests to pay by Bacs but you will need the guests' bank details, (an extra admin step)

What is going to trigger the deposit refund and how will you manage it?

• Deposits can be a lot of cash and it belongs to your guest. Get their money back to them asap

Consider selling extra services

• These include late checkout or additional services.

What accounts package will you use?

• Plenty of online systems can be rented monthly. Alternatively, use a manual process of spreadsheets and word documents.

What should you communicate and when?

• Email confirmations can be templated to help auto mation. Clear communication is vital.

4B: JOBS AND RESPONSIBILITIES

This section will introduce you to the tasks and respon sibilities you should assign to people working for you, from gardening to accounts.

SKILLS: Jobs are often split into soft and hard skills. Soft Skills Examples: Interior design and marketing. Hard Skills Examples: Maintenance and tax returns

Table of Jobs:

For each job, you need to define who is responsible for it and who is going to be carrying it out: You, Partner, Outside staff (Name) or a company or agency. Here are some examples of the jobs you should be consid ering and how you should plan out assigning them:

• Renovation, maintenance and gardening

• Marketing (split this into sections)

• Customer Support / Bookings

• Cleaning and washing

• Check in / Check out

• Accounts / Book Keeping

• Legal, Admin & Tax

Seasonal Soft Furnishings: Think about how suita ble your soft furnishings are for the different seasons. Should you swap to summer and winter products in stead of year-round products? For example: Light, thin cotton blankets in Summer, and furry, heavier blankets and cushions in Winter. (This is a good opportunity to wash and check all bedding and give you time to find replacements)

Wear and tear on soft furnishings: Think about which soft furnishings need to be washed most regularly because they will need replacing more often (e.g. towels will be washed after every use. Sofas won’t need cleaning as often). Make sure your turn-over team checks everything carefully each time. It might not be possible or necessary to check the back of a sofa every month but it’ll be needed every quarter and you need to keep a track of that. Beware the fake tan - it looks so-much worse on a white towel than it is. Make sure your change over staff have stain remover.

3B: TECHNOLOGY

The modern holiday home, guest house, B&B or hotel needs good technology. From reliable WiFi to smart heating controls, make sure it works!

• Use brands your guests are most likely to know and be familiar with

• Consider anti-tech guests and how you can sup port them (e.g. bluetooth speakers AND an old fashioned FM radio)

• Keep the tech simple and leave a user guide

• If you want to use smart locks, consider what can happen if it goes wrong

• Privacy - Security cameras: Some guests may not feel comfortable with cameras right outside their door. Think about where you can place them in hallways without them being overly intrusive

• Privacy - Smart speakers: Some guests may be wary of smart speakers like Alexa and Google Nest. Leave a user guide about how to silence these gadgets or turn them off altogether.

• Under-promise and over-deliver. Be careful about what you market to your guests regarding technology. It’s great to have super fast and reli able WiFi, but it doesn’t sell a holiday. Be careful about what you promise - you don’t want to be called out to fix technical problems at inconven ient times.

• Leave spare batteries and bulbs (think about the quantity in the room - they'll likely disappear!)

• Smart TVs are great and guests will appreciate access to Netflix or Amazon Prime, but consider legal and financial obligations. For example, your credit card will be linked to your Prime Vid eo account and some guests may choose movies not included in Prime and before you know it, you’re paying for a different movie every night. You also need to consider guests using their own accounts may forget to log out, allowing future guests to rent movies on the previous guest’s card.

• Smart heating controlled from your phone may be useful in Winter months

• Smart plugs & systems like Nest are useful for turning appliances off automatically if guests leave them on

3B: RENOVATIONS

If you are considering a renovation/refurbish ment, remember to consider your level of accom modation and the type of guests you provide for.

Consider:

• Will you close your entire property for the duration of renovation, redecorating or refur bishment?

• Will you only close half the rooms and run at half occupancy whilst you get work done on the property?

• How often do you want to update your prop erty, either interior or exterior?

• Do you need more regular touch ups?

During renovations take plenty of photographs of hidden areas to help with future maintenance. Remember: Everything in a holiday let gets used more, so it will deteriorate quicker than your own home.

For regular, on-going maintenance, keep a list of items you like so you know where you can find replacements that are exactly the same. Keep all user guides either for the guests or to order replacement parts.

If you need to repaint well used areas, keep a list of the RAL Codes (the unique paint identifier). This will ensure you can always get your specific colour in future even if they stop selling the trade name.

FINANCE

• Will you pay a professional company to do it all for you?

• Can you save some money by doing odd jobs yourself, or by asking a family member or friend to help you?

• Are there any local tradesmen or suppliers you can support?

When updating, you could add features guests might find useful, for example:

• Drying room

• Dog washing area (E.g. outdoor hose with a hook to tie the dog to and sufficient drain age)

• Bike storage

3B: CONFIGURATION

It can be hard to decide how big you want your business to be. Maybe the number of bedrooms you have availa ble is dictated by the building you have. Or maybe you’re lucky enough to be building from scratch and able to decide, specifically, how many rooms you want.

You would have already researched the type of place you want to create from your target customer. Be it sep arate rooms / suites or individual family units, you now need to kit these rooms out.

Main Considerations:

• How many bedrooms do you want?

• How many people (maximum) per bedroom?

Personal feelings:

• How do you feel about having multiple groups of people in your B&B at once?

• Would you prefer to cater for just 2 guests at a time?

Bed options:

Think about your family or group bookings and what types of beds they will need.

• Do you want to offer single rooms with a single bed?

• If you want double beds, what size would you want? (Small Double / Double / King / Super King)

Family Rooms:

If you want to offer a family suite, how would you want this set up? Consider whether you need to re serve larger rooms for your family groups. You will then need to consider the set up of the beds:

• Permanent Double bed

• Permanent Single bed

• Single sofa bed

• Twin Singles that make a Double

• Movable cot (think about where you will store a travel cot)

Remember that the youngsters have shorter legs than us! Consider looking into the height of the beds that younger guests will be using.

SUMMARY OF CHAPTER 4

This brings Chapter 3 to a close. Hopefully this has provided you with some helpful food for thought when deciding on how to run your business. We hope you gleaned some helpful tips and advice that you can use to your advantage should you cater for families, dog owners and guests with disabilities. We also hope you found the information regarding technology, furnishings and renovations helpful. The next Chapter (4) will introduce you to booking and management operations, outlining what you may want to consider when looking at rental periods, T&Cs and the payment process and more.

T&CS

Discover how a Terms and Conditions document should be set up, and what should be included.

Here’s an example of how you might set up the document: https://docs.google.com/document/d/132lKJld nlDUBJBVRjV-ijNZ2Z-rNIhCl7qYx4BPaJM8/

You should include the following sections within your terms and conditions document:

1. Disclaimer

Welcome to Chapter 4A which will introduce you to the rental periods, terms and conditions and payment processes which are involved in setting up a Bed and Breakfast. This chapter takes you step-bystep through deciding on rental periods, putting together terms and conditions, and the payment process, such as deposits.

Contents:

• This is a statement that denies some thing, such as responsibility.

2. Cancellation Policy

• Outlines the cancellation terms.

• Outlines the amount of money the booker will or will not be refunded if the booking is cancelled up to a certain time.

3. Responsibilities of the tenant

• This will include what the tenant is re sponsible for during their stay

4. Liability of manager / owner

• This should mention what they are le gally responsible for.

5. Payment terms and deposits

• Outlines payment schedules and how much deposit is needed when.

6. Complaint process

• Outlines the process through which a tenant may make a complaint.

7. Pet, child and any other policy

• Outlines the policies on above (e.g. guidelines, requirements, bans)

• Whether there will be any fines for breaking policies.

8. Your contact information

• How the tenant should contact you if they run into issues or have any queries, for example.

Other things to consider:

• If you are planning to use OTAs (Outside Travel Agencies) to find bookings, consider how their T’s & C’s align with yours.

• Some OTAs offer fantastic cancellation pol icies but that might leave you with little time to fill the cancellation.

• Consider sending out a welcome email with each booking highlighting the key terms and conditions.

RENTAL PERIODS

This section will introduce rental periods and explain how to decide on the minimum lengths your guests should stay for, changeover days, the prices of each stay and which booking en gine to use. You should consider the following questions:

• What type of property are you running and how likely are guests wanting to stay on average?

- You might be a stop-over location on a famous walk, which means that one night stays could be essential

- Alternatively, you might, ideally, prefer week-long guests but decide to off splitweeks.

• Which days can your changeover work?

- The cost of the changeover needs to be factored in.

- You might have a different set of rules for school holidays, or summer and winter

• Do you adopt one or more changeover days, e.g. Mondays and Fridays?

- If you don’t allow people to book part weeks, you might find odd days are free and be unable to sell them.

• What should the price of each day be?

- Weekend rates are generally more expen sive than weekdays.

- You might need to charge a discount of 7 x per-night rate for a whole week.

• Which booking engine should you use?

- Some booking engines struggle with set changeover days.

- This is not necessarily a consideration when setting the rules but it is important when you are choosing a suitable booking engine.

SUMMARY OF CHAPTER 4A

PAYMENTS

Discover payment processes, how you should handle deposits, why you should set up credit card booking systems and more.

Consider a staged payment

• The initial deposit needs to be small enough to not put people off booking but large enough so they complete the booking.

Deposits and cancellations

• An initial deposit of 30% - 40% refundable if they cancel within 60 days of the booking is typical, with the balance to pay within 60 days.

Should you provide full refunds for cancellations?

• Be fair and refund all money if you manage to re-sell those dates. This is fair to both parties

Setting up credit card processing systems

• It’s easy to set-up a credit card processing sys tem like Stripe and PayPal.

Consider the benefits and drawbacks of each pro cessing system

• Stripe charges 20p + 2.9%, so a £1,000 book ing would incur a credit card processing fee of £29.20

• Advantages: people like to use their credit card for security, which will help with bookings

Charging a damage deposit

• Very common - set it at the same level as the excess on your insurance policy. £500 is typi cal but can be a problem for some, as a result, I would not charge more than £500.

How will you send the money back to the guest?

• Credit card processing systems make it easy to cancel and return the money. But some credit card processing companies will not refund the fees (e.g. Stripe), so you'll lose £7.60 on each deposit refund.

Other options:

• Ask guests to pay by Bacs but you will need the guests' bank details, (an extra admin step)

What is going to trigger the deposit refund and how will you manage it?

• Deposits can be a lot of cash and it belongs to your guest. Get their money back to them asap

Consider selling extra services

• Including late checkout or additional services. What accounts package will you use?

• Plenty of online systems can be rented monthly. Alternatively, use a manual process of spread sheets and word documents.

What should you communicate and when?

• Email confirmations can be templated to help automation. Clear communication is vital.

That brings this chapter to an end, which introduced you to the rental periods, terms and conditions and payment processes involved with running a B&B. We hope you have found it useful. The next Chapter (4B) will take you through the jobs and responsibilities you should assign your staff with, whether you should go for an agency or selfmanagement, as well as what is involved with emergency planning.

Welcome to Chapter 4B of our new ebook series on how to set up your own holiday rental. This chapter will introduce you to setting jobs and responsibilities, staffing and emergency planning. This chapter will explain how to assign jobs and responsibilities to your staff, general information on staffing, as well as how you should plan for emergencies.

EMERGENCY PLANNING

This section will introduce you to planning for emergencies and includes examples of emer gency situations, who should be your emergency contact, as well as looking at risk assessments.

Examples of Emergency Plans (FIRE):

• Marking the fire exits clearly

• Numbers to call

• Fire extinguishers

• Designated meeting/check points

Emergency Contacts

If your property is closeby, you will be the emer gency contact and so you only need to consider who will be the emergency contact for times when you are away. However, you might live far away or be too busy to deal with urgent situations and so you need a good and trusted person on hand to step up. Make sure whoever is staying with you, or what ever staff you have on shift, always know who to contact in an emergency.

Think about:

• What could happen and what happens when things go wrong? Everything goes wrong in time, which means you need to plan for this so you don’t ruin someone's holiday. Consid er things such as leaving toilet plungers and spare light bulbs

• Try and get a local or neighbour to act as an emergency contact

• Consider what can go wrong and what your guests will do about it. It is important to put a plan into place

JOBS AND RESPONSIBILITIES

This section will introduce you to the tasks and respon sibilities you should assign to people working for you, from gardening to accounts.

SKILLS: Jobs are often split into soft and hard skills.

Soft Skills Examples: Interior design and marketing.

Hard Skills Examples: Maintenance and tax returns

Table of Jobs: For each job, you need to define who is responsible for it and who is going to be carrying it out: You, Part ner, Outside staff (Name) or a company or agency. Here are some examples of the jobs you should be considering and how you should plan out assigning them:

• Renovation, maintenance and gardening

• Marketing (split this into sections)

• Customer Support / Bookings

• Cleaning and washing

• Check in / Check out

• Accounts / Book Keeping

• Legal, Admin & Tax

AGENCY OR SELF MANAGED?

Traditional agencies:

• A traditional agency (e.g. https://www.bram leyandteal.co.uk/) is a smaller team where you'd have personal & direct contact with them.

• Reach can be smaller than an OTA but then the management process is often more personal.

• If you feel you need a hand, talk to at least one agency. They often have extensive knowledge of the local area and holiday rentals. Get a list from other owners nearby, either directly or through a search engine

OTA (Online Travel Agents):

• An OTA, like Booking.com, or AirBnB is a web site with a much larger reach

• The holiday maker has little or no personal contact with the agency. This DIY approach is carried across to the property owners.

• Won't insist on an exclusivity deal, so it's pos sible to have a mix of solutions / agencies to market your property.

Traditional OTA

Fees 20-30% 3-20%

Personal Contact It depends on the size of the agency but is generally higher.

Marketing Reach Variable but as a whole tends to be more local

Risk Agency going out of business.

Biased treatment of other clients, smaller reach.

Some agencies focus on selling the easy dates but don’t have a strategy for the more difficult periods of rental.

Email only. Contact via a team.

Some OTA’s are worth billions and this is reflected in their marketing spend.

They set the rules for us to follow. For example, Booking. com started at a 5% commission and now charge 20%.

An over-reliance on one particular OTA is a large risk as they will be setting the terms of your business.

Options:

• You do everything from marketing, customer service through to tax returns.

• You do everything operational and but use a combo of advertising and OTAs to market your property.

• You hand over everything to an agency.

STAFF

This section will introduce you to some key points on staffing that you should consider, such as mak ing sure that you hire a good cleaner to keep your B&B looking at its best. Consider the following:

• A good cleaner / turnover staff

i) It depends on your personal situation as you might want to take this on yourself but you can always choose to hire someone

• Take photographs and written descriptions of the key interiors

i) E.g. how you would like a bed to be made up

• Booking and customer service support

i) Consider how you want them to appear to the guest. Guests often like a personal connec tion to the owners as it gives it a more special and unique feel.

• Bed and Breakfast Coach Advice

i) Yvonne Halling, Bed and Breakfast Coach, believes that removing the owners faces/story from the website makes it more professional.

ii) However, this would depend on your business and audience. Sometimes the story and faces of the owners is a unique selling point and can help make a guest’s stay more homely and personal.

iii) There are many training programmes and businesses coaches for you to look into

WOW FACTOR / GUEST JOURNEY

Our final section will explain exactly what you should consider to add to the ‘wow fac tor’ of stays at your Bed and Breakfast, that will make guests want to come back.

What is a 'guest journey'?

Putting yourself in the place of a customer and following their journey through the stay. It's a well-known and common tool used by marketers to iron out any issues.

Example:

• One owner used to work her way through the guest experience and go from park ing her car, picking up keys and following all the steps a customer would take when entering the property.

• At each stage, she asked, “Are there any demons?" and "What improvements could we make here?”

• Examples could include a welcome pack here, a plant there, wood for the fire that's easy to fetch.

What is a 'WOW factor'? Your wow factor will depend on you and your property. You can use anything that is slightly unique or personal to you and your story or the story of the business.

Example:

• One owner described the wow factor she wanted to create, similar to putting on a performance at a theatre when the curtains go back.

• Monkstadt 1745 is a B&B on the Isle of Skye which heavily emphasises their ties to the history of their building and loca tion. One (of many) of the things they do is they have a piece of original stonework in one of their main doorways. This has a big chunk in it and was originally used to sharpen knives/swords.

SUMMARY OF CHAPTER 4B

That brings this chapter to an end, which introduced you to the jobs and responsibilities you should assign, information on staff, emergency planning and the wow factor/guest journey. The next chapter (5A) will introduce you to information on income/outgoings, configuration/ capacity, the market/competition, finance, property, renovations, storage and furnishings.

Welcome to Chapter 5 of our ebook series on how to set up your own holiday rental. This chapter can be used a checklist for your property. We have outlined the different aspects of getting yourself set up online so that you know what your options are and what is available. Use this checklist to help you get your online platform up and running.

WEBSITE

Options for building/creating a website:

Hire an agency or a freelancer

• Ideal for someone who isn’t interested or feels they don’t have the technical knowl edge, hire someone to build a site for you.

Use website builders such as Wix or Squarespace

• Very easy to use and can make a great looking website. They often contain specific business templates to make your life easier.

Use Wordpress and a purchased template

• Wordpress is the worlds leading CMS (Con tent Management System) and runs about 30% of all the websites in the world.

• Wordpress uses web design templatescalled themes - that can be purchased for little money. Once installed you then follow the setup to produce your own website.

Use holiday rental specific website builders

• E.g. https://www.amenitiz.io/ or https://www.siteminder.com/

• The advantage of these is that they often come with a number of other useful mar keting tools - e.g booking engine, channel manager.

SOCIAL MEDIA

• Setup accounts on Facebook, Twitter and Instagram early to ensure you ‘grab’ your profile names before someone else does.

• Consider which social media sites you’re planning to use and how. Create a strategy.

•

PRESSNational and local newspapers and magazines are always looking for stories. Does your prop erty have anything unique? What would make it news-worthy?

DRESSING & PHOTOGRAPHY

• Create images that sum up the key experi ences at your property.

• Have a look around and keep note of the photos you are attracted to on other web sites.

•

To get your place noticed by the press you need to write to each news source with a story pitch. Make sure it’s simple, interesting and accompa nied by a good set of photos (the industry is run by photos)

• Do some research on your local area to find out what publications and news outlets are availa ble. Most websites will have a page of contacts which you can use to get in touch with press people. Remember, there’s nothing stopping you from reaching out on social media!

• Online news sources can provide excellent links into your site - this is a key factor used by goog le to rank the importance and relevance of your website / property.

ADVERTISING

• OFFLINE

Are there any local or interest specific magazines you can utilise?

• ONLINE: Pay Per Click (PPC)

Where you pay only when people click on your advert / link.

Examples of PPC are Google PPC, Bing Ads and facebook advertising.

They can be a very effective tool as you can target your audience very effectively.

•

Avoid suspicion and misleading photos.

• You’ll never meet anyone who doesn’t think they are a great photographer. Whilst cam era phones are technically capable of taking excellent photos, think carefully about pro ducing your own photos. A great collection of photos is a vital part of the marketing mix.

•

Once you’ve decided on the photos you want to use, store them in a separate folder on your computer and well labelled. Produce different versions of the photos - high and low res, portrait & landscape. This will save you time if you’re planning to market your property on a number of websites

• Use Dropbox.com to keep your photos and marketing materials. There is a free version and this will allow you to share photos with partners rather than emailing them across.

BOOKING PROCESS

Booking Engine:

•

A booking engine is vital. Remember if you are running your own website, you are competing with the likes of AirBnb where guests can get an immediate book ing acknowledgement (if the property owner has agreed to this setting in setup).

•

ONLINE TRAVEL AGENCIES (OTAs) E.g. Booking.com and Airbnb.

Used well you can find guests from all over the world and manage many administrative tasks.

The best Holiday Rental Marketeers use OTAs where needed and do what they can to encourage guests to re-book directly.

• Make a list of your booking terms: Max days per rent, varying rates for weekend breaks… Many booking engines need specific settings and complicated pricing structures

•

Many of the website builders will have in tegrated booking engines. Many of these can embed these into your website.

• Many people now just link to their pres ence on an OTA (e.g. Airbnb) to manage all bookings.

• Using external websites to manage book ings may be cheaper than an OTA

OTA:

• There are plenty of large, popular OTAs but there are also specialist ones such as Dog Friendly, Large houses or those based on lifestyle - advertising properties that are cool / more stylish…

ADDRESS: 2931 MONSON ROAD, TUNBRIDGE WELLS, KENT TN1 1LS TEL: 01892 711 144

IN PRINT • DIGITAL • SOCIAL • EBOOK FOR OWNERS AND MANAGERS OF BNB’S, INNS, BOUTIQUE HOTELS & HOLIDAY LETS

SALES

Lisa Ebdy e. lisaebdymedia@outlook.com t. 07799 886 115

PUBLISHER

Dominic Johnson

e. dominic@miramedia.co.uk t. 01892 711144