Owning and running a holiday home is becoming more expensive. The increased 20% VAT rate, the recent rises in gas and electricity bills, increased travel costs and the threat of a removal of the council tax discount all add up to extra expense.

Of course many of these rising costs are not exclusive to holiday home ownership. So while the entire country enters into a period of austerity, what can holiday home owners do to manage and reduce their outgoings?

Shop around for Holiday Home Insurance

Holiday home insurance is essential, so shop around when the renewal is due to ensure you are getting the best cover at the best price.

Check and review their energy suppliers

All six of the major gas and electricity suppliers have recently announced price rises of between 10 and 20% for their gas and electricity (summer 2011). And when was the last time they announced a price reduction on these scales? So a periodic check of energy supplier rates and awareness of introductory offers can be the route to lower bills. Check offers on Money Saving Expert and price comparison sites such as uSwitch and Which?. Owners who pay by direct debit will also receive a discount.

Move to a water meter

Using water on a pay as you go meter will in most cases reduce costs, especially as the property is used less frequently than the main residence. And the old tip of putting a brick in the cistern to reduce the amount of water used during a flush will save money, it is better to use an alternative such as a plastic bottle filled with sand as a brick can degrade and cause damage over time.

Register a holiday let for business rates

If a property is let for 140 days a year it should be registered for business rates instead of council tax. The business rate is set by the Valuation Office Agency and is calculated based on the earning potential of the holiday let. Typically the business rate is lower than council tax, unless the property is in a local authority area where the full 50% discount is applied.

Insulate the property

25% of a home’s heat is lost through the roof and 35% through the walls. Insulating a property can save hundreds of pounds every year.

Encourage guests to go green

Owners need to be careful with information in the property. Too many instructions and orders on the walls of kitchens and around the property is off-putting for guests. Instead use the welcome book to include advice for reducing energy costs, such as switching lights off. In South West England, the tourism body came up with a creative solution to providing information with a series of small cards for accommodation providers. http://www.swtourismalliance.org.uk/files/download.php?m=documents&f=100721110531-Roomcards.pdf

Reduce wear and tear

Or rather buy high quality items which will last longer. Wear and tear in a holiday let can often seem to be much quicker than at home. Sometimes buying as cheaply possible can prove to be a false economy as items have to be replaced more frequently.

Review rental rates

Increasing prices is one way to improve profitability but of course carries risks. One empty week in the summer will cost far more than any % increase in price. But if a property books early and you have to turn down a lot of enquiries, this would suggest higher prices could be sustained.

Increase occupancy

More bookings = more income = more profit. Achieving bookings over the quieter winter months can be challenging when demand is low. And pricing to attract those bookings needs to be considered carefully, as a typically lower winter rate can be consumer in higher running costs, especially in heating the property.

Instead look for ways to attract guests at more sustainable rates, by focussing on business stays, events or performances that are taking place in the area, and special interest groups such as photographers, walkers and clubs or societies.

Spend more money

And finally, investing in a property can see higher rental rates and therefore more profit per booking. Items such as a games console or inclusive wi-fi pay for themselves after only one extra booking. Similarly offering complementary welcome gifts or included access to local services, such as a hotel’s leisure facilities can be built into the price and add value to the property.