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Holiday lettings - the things to consider guide

Holiday lettings, things to consider guide
As a villa owner there is much to consider when renting out your property, such as;

     • should I do it myself?
     • the legalities
     • tax issues,
     • health and safety,
     • inconvenience factors,
     • maintenance,
     • advertising costs,
     • agent fees
     • where to advertise
     • how many bookings,
     • managing those bookings
     • where to get bookings from

Not forgetting, if you’re using an agent you’ll have to have 100% trust in them.

Most people will use an agent on trust. But we urge you to dig a little deeper before you make a mistake and consider the facts and what suits your specific situation.

Not all agents are the same and what one agent thinks is a high level of service may be poor in comparison to another.

We’ve all heard the stories about unscrupulous agents who don’t manage the property well, don’t pay you the fees to you, let your property out without your knowledge and in some cases rent out fictional properties. Some of these things are still happening.

Remember, every agent operates slightly differently.

CHOOSING AN AGENT TO PLACE YOUR PROPERTY WITH
Holiday rentals is a totally different market to resales and agents who just tag on the odd property for holiday rental will not be able to compete with a company who specialise in this difficult marketplace. They may, however, be local and know the market well, so don’t altogether discount them.

From all the estate agents that exist in this area only 10% focus on holiday rental properly. Many others dabble, so our advice is ‘buyer beware’. Look carefully at what they can offer and how they deliver, as the week or two a customer spend on holiday can easily be ruined if things aren’t up to their expectations.

Most agents will have some form of guide on their web site which is written to support what and how they do it. What we’ve tried to do below is to get you to think about a few things from an impartial point of view.

We hope the following will make you think and help you decide who is the best agent for you.

Taking on an agent
Bear in mind where your property is located and where the agent is, as they should be close at hand should a problem occur. Beware of the big multi-national tour operators, as some are only in it for the bookings, and have little or no way of supporting you or the person renting, should things go wrong.

Consider what will suit you
What periods do you want to rent from and to, how much profit do you need to make it worth your while, what are the pros and cons of renting out your property and what might you have to do to make your property rentable?

Think about the following:

Agent’s charging policy/structure
This is a key area you’ll have to consider and there is no standard fee. It can be anything between 15% and 50%.
Some agents retain the whole of the booking fee and pay you after the letting. Some pay before or even part and part. Each option may cause a problem if you don’t receive your share and they don’t pay out for whatever reason, so ask specific questions. Your share should be the largest profit margin on each rental.

How do I get paid?
These are questions to ask:
When do you pay us if our property has been pre-booked or booked last minute?

What happens if your business fails and you have taken deposits?

How can we guarantee you’re not letting our property without our knowledge?

How many other properties do you rent?

How successful are you?

Do you have any recent recommendations from satisfied holiday makers?

Are you registered with the local tourist board?

Advertising fees and number of lettings
Advertising is a vital area to consider and may mean you should consider paying a higher commission to an agent. The average agent fee is likely to be 15 to 20% but consider what the agent is doing for this and how many bookings they currently achieve for their existing clients.

Some agents take as much as they can and get few bookings. This is because they are not professionals in the rental business.
An agent bringing you 3 weeks of bookings and charging you 15% is fine. But an agent bringing you 16 weeks of bookings and charging you 30% is far better. So, don’t be initially put off by a higher fee - do the maths yourself.

Equally, using a higher profile agent may allow you to negotiate slightly more per booking.

Every agent has to advertise to get each of their villas or properties noticed. This is purely a numbers game. The more people that see and consider your property the more bookings you’ll get.

Advertising is expensive and can be local, national or international and may take the form of internet, magazines, newspapers or even exhibitions.

Ask the agent:

Where do you advertise?

Bear in mind advertising in Spain is not appropriate if you are looking for clients from the UK to book your property.

How do you advertise and how often?

Advertising in a targeted publication in a certain demographic area is far better than advertising to just everyone, everywhere. It may cost more but you’re more likely to gain interest.

How many languages do you advertise in?

Do your staff speak any foreign languages?

Where do the majority of bookings come from?

How does someone book with you?

Photography and Video
Someone looking to book a holiday and trawling through the local paper, or searching online is far more likely to be interested in a property if it looks good. Don’t be put off by paying for professional photos or even a video. They should be treated as an investment.

The agent may subsidise the photographs as they also see them as an investment, and a way of getting you bookings.. If the agent just takes some quick snaps, and you’re not happy with them ask for them to be done again, or supply them with your own.

Consider a professional video as this can tell a much better story of your property and locality than just a photo, and can prompt a buyer to make an immediate decision.

Changeovers
A vital role in any letting service. What options do you have, who does this and can you do it yourself?

Each agent may have a number of options but ask yourself what is best for you. After all you have something they will make money from, so if you like the agent and they like what you have you can probably tailor-make a package to suit you both.

Preparing your property so it looks like for each letting can be a major task. Especially if you have a same day change over. You could do this yourself, and a good agent will have some form of manual you have to adhere too. If there is no guidance for their standards it shows they are not professional.

Managing changeovers yourself is fine if you live near the property, but if you don’t you’ll probably have to use an agent. Think twice about letting an agent do everything. It seems a good idea, but how do you know when your property is used if you’re not there? Spot checks from you, friends or neighbours are a good idea.

Think about ways that you can guarantee your property is not abused and is looked after. Maybe a neighbour can keep an eye on it or install an alarm system.

Most agents won’t rent your property without telling you, but we have heard of some that do. So unless you have a checking system you’ll have no idea this may be happening.

Health and Safety
A good agent will have as part of their service a safety assessment prior to you being able to let out your property. Comply with this and you are protected, as is the agent.

If they don’t and something goes wrong, it will be you that may be left with a legal battle and refund to deal with.

Refunds and legal issues
What happens in the event of a cancellation or a legal dispute?

Usually there’s a sliding scale for most agents. Cancel within 6 weeks: full refund bar deposit, within 10 days 50%, within 5 days nothing etc. Check the agent’s and policy and what happens to the fees they take .

Do you get your share if so what percentage?
What happen is if a legal problem occurs, for example, someone is hurt on your premises, and tries to claim compensation. How is this dealt with and what is your liability?

Tax declarations
If you’re renting out your property you should be paying tax on the income. An agent will help you ensure you are following the right procedure and may well have some advice in their welcome pack. However, it is your responsibility to declare the income. The Spanish government know thousands of owners rent without declaration and they are actively seeking out owners and checking they are paying. Fines may be high, in addition to the stress this situation may cause.

If you are resident in Spain get your gestor to advise you on the tax implications. If you reside in the UK, i.e. you are a non-resident the monies earned from renting will form part of your UK tax return. Discuss this with your accountant.

Tourist Board
Most provinces have a registered Tourist Board that is there to protect the buyer and seller. Ask if the agent is registered and if not, why not.

It’s not imperative that they are registered, but it does carry huge advantages for all concerned.

What if problems occur?
It is likely problems will occur at some point. No matter how hard you plan, there is always the unexpected to deal with. The boiler might break down on a Saturday afternoon, the pool filter clog up, the toilets overflow, the electricity blows …………..we could go on.
What happens in these situations?   Who will deal with them- you or the agent?

A holiday maker will want problems sorted out immediately as they will only be in your property for a limited amount of time. They won’t be prepared to wait a couple of days for a plumber or electrician.

A good agent will cover these things in their fees and have a network of support people to cover most eventualities.

Control & flexibility
Some agents have a very strict system that leaves little room for negotiation. There may be good reason for this, but considering all that is written here ask about flexibility on certain issues and consider the replies.

Safe guards – protect yourself
When you place your property with an agent they are representing it. Depending on their level of service and care, check to ensure you’re not liable for damage in any way, and that your property is protected. Remember, strangers won’t take care of it as you would.

Expect wear and tear - it’s part of renting. Build into your long term costs a percentage for wear and tear.

Some agents request a bond from guests, ask how this may work and who should pay if they don’t?

It’s highly likely you’ll need house insurance or to change your existing policy to cover renting. Check with the agent and your insurance company.

RENTING OUT YOUR PROPERTY YOURSELF
Anybody can rent out their own property, but after considering the above we hope you’ll see some of the clear advantages a good agent could provide for you.

If you want to rent out your property yourself read the relevant sections above and ensure you are fully protected. Key things to think about are:

Health and Safety
Do a safety assessment. There will be specific criteria you must adhere to for you to let out a property safely. If you don’t comply with these standards you will be liable in the even of an accident.
Ask the local Tourist board if they have a check list you can follow.

Check your insurance
Ensure your property is covered for holiday lettings and public liability. Public liability standard figures in Spain are lower than the UK, so ensure you are fully covered.

Present your property
Look at it as impartially as you can. Imagine you’ve just arrived on holiday and walk around the property. Make a list of improvements and action them.

Bear in mind every booking you take may want to rebook if they enjoyed the experience in your property. This means no extra cost to you so always be welcoming and present your property in perfect condition.

How to gain and manage bookings
There are so many places to advertise you must make the right decision. Each costs and has a specific target audience.
You need to place your property where people can see it - the more the better. Bear in mind the amount of readers or viewers the media may receive.

You may opt to build your own website or join one of the many holiday rental web sites where you can upload your property details yourself. Some will work and some won’t work. There are some that have no charge for a period (usually 6 months), then there is an annual cost from £95 upwards. You can soon spend £1000 on advertsing without realising it.

Advertising is an investment, but in the wrong place it’s a waste of money and time dealing with timewasters,   It’s worth considering the number of unique hits a web site gets and where the visitors are coming from. With paper advertising you should consider the number and type of readers a publication has.

Once you start to get bookings you need to manage them carefully, as you’re now acting as the tour operator. Keep a careful log of times, dates, requirements and all the information discussed to manage your booking well.

Changeovers
There are many local businesses specialising in just this so don’t feel you have to do this yourself. They usually charge a one off fee per changeover starting at about 80€.

If you are doing the changeover yourself make a checklist to perform every time and be organised. If you have guests leaving in the morning and some arriving later and the same day planning is key.

Planning
Think what could go wrong and plan for the worst. Make yourself a list of support people or use the Local info directory, so if the unthinkable happens you are ready.

Customer Service
You are representing yourself and so must ensure your guests go home happy. Their enjoyment of your property is your responsibility.
Keep them 100% happy and ensure they get what was promised and they may book again. Get it wrong and they are likely to tell all their friends how bad the property or holiday was. There is nothing worse than bad press.

Think about what you will do if things do go wrong.   How will you sort out the problems? Will you issue a refund or have a system in place to mediate a complaint?

Put a policy in place and it will give the buyer confidence in you.

We hope these recommendations were of some help. Should you have any ideas or comments that would improve this document please feel free to contact us via the contact form above.

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