Most owners remember cleaning. Many remember commission. The budget usually goes wrong in the quieter lines: linen replacement, utilities, compliance, small repairs, subscriptions, call-outs and the furniture that wears out two years earlier than expected.
The useful question is not “What percentage will I pay a manager?” It is “What will I keep after the property has been operated properly?”
Start with revenue that can actually be earned
A nightly rate is not annual revenue. If a two-bedroom Brighton flat appears online at £220 for a Saturday in August, multiplying £220 by 365 produces fiction.
Gross accommodation revenue depends on at least four moving parts:
- the rate achieved on each booked night;
- the number of nights available after owner stays and maintenance;
- occupancy across high, shoulder and low seasons; and
- the length and timing of bookings, which can leave gaps that are difficult to sell.
The property may also collect cleaning fees or charges for pets and extra guests. Those are revenue lines, but often correspond to a cost. Keep them visible rather than using them to make the top line look better.
Once the revenue forecast is credible, divide costs into fixed, booking-related, percentage-based and periodic. That prevents a quiet winter month from being mistaken for a cheap one.
Fixed and annual costs
These costs usually continue whether the property is full or empty.
Finance
Mortgage interest and repayments can be the largest cash outflow, but they are not the same thing for tax or profit calculations. Keep a cash-flow view and an accounting view, then ask your accountant how finance costs are treated for your ownership structure.
Council tax or business rates
A self-catering property in England can move into business rates only when it meets the qualifying conditions. If it does not, council tax remains relevant and a second-home premium may apply. The detail is covered in our guide to holiday-let business rates and council tax.
Insurance
Budget for dedicated holiday-let cover, including public liability and buildings and contents cover suitable for short-term guests. Standard home or buy-to-let insurance may not cover the actual use. The cheapest premium is expensive if a claim is declined.
Utilities and connectivity
Guests do not pay the gas, electricity or water bill directly, and their usage rarely resembles an owner’s. Heating may be left high, windows open, showers run longer and appliances used more heavily. Add broadband strong enough for the capacity advertised. If guests can watch live television or BBC iPlayer, include a TV Licence.
Compliance and professional costs
Allow for fire-safety work, gas and electrical inspection, alarm and extinguisher servicing where required, accountancy, bookkeeping and any planning or legal advice. Some items are annual; others should still be converted into an annual reserve.
Software and services
Channel managers, property-management systems, dynamic-pricing tools, smart locks, noise monitoring and accounting software may each be modest. Together they form a real monthly line.
Costs created by each stay
Shorter bookings produce more turnovers for the same number of occupied nights. That is why “80 per cent occupied” does not tell you whether the operating model is efficient.
The main per-stay costs are:
- cleaning and inspection;
- laundry or linen hire;
- toiletries, tea, coffee and other consumables;
- card or payment charges on direct bookings;
- guest support and out-of-hours call-outs; and
- damage or missing-item administration.
Suppose one property sells 24 nights through twelve two-night stays while another sells the same 24 nights through four six-night stays. The occupancy is identical. The first property has three times as many changeovers.
A cleaning fee paid by the guest can offset the cleaner’s invoice, but check the arithmetic. Platform commission may be calculated on the booking subtotal including host-set fees, and the amount collected may not cover laundry, quality checks, consumables and VAT. Treat cleaning income and cleaning cost as separate lines.
What Airbnb and Booking.com charge
Platform fees are not stable enough to copy from an old business plan.
Airbnb has historically used two structures. Under the split-fee model, the host pays a smaller host fee and the guest pays a separate service fee on top. Under the single-fee model, the whole charge comes out of the host payout instead. The direction of travel is towards that single host fee, at 15.5 per cent plus VAT, and it is already mandatory for certain hosts, including many who use property-management software.
Whichever structure a listing sits on, the number that matters is the one on the account, not a percentage quoted in an article. Check Airbnb’s current service-fee guidance against the actual listing before building it into a forecast.
Booking.com works on an agreed commission percentage. The exact rate depends on the country, property type and accommodation agreement. Additional payment or programme charges may also apply. The reliable figure is the one shown in the property’s contract and finance dashboard, not a percentage quoted in a general article.
Direct bookings avoid some platform commission but are not free. The website, payment processing, marketing, customer service, fraud risk and booking technology still need funding. Direct demand is valuable because it gives the operator more control and can improve the economics over time, not because every direct booking costs nothing.
How much do holiday-let management companies charge?
UK short-let management is usually sold as a percentage of booking revenue, often plus VAT. Published 2026 prices show a wide market, with lighter services starting around 10 to 12 per cent and full management commonly landing around 15 to 25 per cent plus VAT. The percentage alone is almost useless without its basis and inclusions.
Ask every manager the same questions:
- Is the percentage calculated on accommodation revenue, the full booking value or the amount left after platform commission?
- Is VAT included in the quoted rate?
- Are cleaning and laundry paid by the owner, recovered from the guest or marked up?
- Are photography, listing creation and onboarding separate charges?
- Are pricing, minimum-stay rules and event demand actively managed?
- Is maintenance coordination included, and is there a margin on contractors?
- Are guest refunds, chargebacks or damage claims shared with the owner?
- Is there a monthly software, account or minimum-income fee?
- Who owns the listing, reviews, photographs and guest data if the agreement ends?
- What notice period or minimum term applies?
South House prices each property according to scope, location and the work involved. We explain the structure during the Performance Review rather than publish a single percentage that may not describe the job.
A lower management percentage can leave the owner with less
Consider two illustrative proposals for the same property. These figures are not a South House forecast and exclude all other operating costs.
| Same property, two proposals | Manager A | Manager B |
|---|---|---|
| Annual accommodation revenue achieved | £45,000 | £55,000 |
| Management rate | 15% + VAT | 20% + VAT |
| Management cost including 20% VAT | £8,100 | £13,200 |
| Revenue after management cost | £36,900 | £41,800 |
Manager B costs £5,100 more but leaves £4,900 more before the remaining property costs. That does not prove a higher fee is better. It proves that the outcome depends on both the fee and the revenue produced.
The comparison also needs to be like for like. If one manager includes pricing, guest communication and maintenance coordination while another bills each item separately, the headline percentages are not comparable.
Test your numbers against the local market
A Performance Review benchmarks achievable rate and occupancy for your property, then works down to what you would actually keep.
Maintenance is a cost; depreciation is a warning
Holiday lets wear differently from private homes. Suitcase wheels mark walls. Dining chairs loosen. Towels stain. Keys disappear. A sofa may remain technically usable after its appearance has started lowering review scores and conversion.
Create two reserves:
- reactive maintenance, for call-outs, leaks, locks, appliances and minor repairs;
- replacement and reinvestment, for linen, mattresses, furniture, paint, photography and periodic refreshes.
A fixed annual percentage can be a useful starting assumption, but the property’s age, finish and guest capacity matter more than a generic benchmark. A listed townhouse sleeping ten and a modern one-bedroom flat should not share the same maintenance budget.
The commercially important point is that tired presentation has a revenue cost before an item fails. One poor review about the mattress can affect months of bookings.
Build a cost model you can audit
Use this structure for twelve months, with low, central and high cases for revenue and variable costs:
| Revenue or cost | Calculation |
|---|---|
| Accommodation revenue | Booked nights × achieved average daily rate |
| Other guest charges | Cleaning, pets, extra guests and other fees collected |
| Platform and payment fees | Actual contracted rate × relevant booking value |
| Management | Quoted rate × stated fee basis, plus VAT if applicable |
| Cleaning and laundry | Number of stays × true turnover cost |
| Consumables | Number of stays × average replenishment cost |
| Utilities and broadband | Twelve-month estimate with seasonal energy use |
| Council tax or business rates | Current bill after confirmed reliefs or premiums |
| Insurance and compliance | Quotes and scheduled renewals |
| Maintenance | Expected work plus contingency |
| Reinvestment | Planned furniture, linen, decoration and photography |
| Finance | Actual cash payments, shown separately from operating profit |
Do not hide owner stays. They remove inventory, usually from the dates the owner most wants to use. Record the revenue forgone if those dates sit in high demand.
Do not use average nightly rate from a competitor’s calendar as achieved ADR. Public prices include unsold nights and can change before booking. Likewise, do not treat an Airbnb earnings estimate as net income unless every cost above has been deducted.
Gross revenue is the opening line, not the result
The property with the highest top line is not always the best business. Equally, the manager with the lowest fee is not always the cheapest choice.
What matters is the owner’s return after a well-run operation, with enough reinvestment to protect reviews and future demand. South House’s revenue optimisation work looks at rates, occupancy, minimum stays, booking windows, guest mix and channel costs together, because none of them works in isolation.
If you want to test your assumptions against the local market, start with a South House Performance Review. It is a diagnosis of the property and its commercial system, with no obligation to change manager.