Budget 28-40% of gross revenue for operating costs before your mortgage — laundry, furnishing replacement and specialist insurance alone run £2,600-£4,200 a year on a two-bed. The costs that catch people out are rarely the big obvious ones. Everybody models cleaning and the platform fee; almost nobody models linen replacement, the utilities gap between a guest and a tenant, or the fact that the UK's Furnished Holiday Lettings tax regime was abolished in April 2025.
The detail
Start with the fee you may be on without knowing it. Airbnb's split-fee model charges the host about 3%, but the host-only model — which is mandatory for listings connected through most channel managers, and standard for anyone also on Booking.com — charges 14-16%. That single structural choice is a £3,000 swing on a £26,000 listing, and it appears in no headline yield calculation.
Then the recurring items. Linen and towels on a two-bed run £1,200-£2,000 a year once you hold three sets and replace stained stock; guests use noticeably more energy than tenants, so utilities and broadband land at £2,000-£3,000 rather than nil; specialist short-let insurance costs £350-£700 against £150-£250 for a landlord policy, and a standard landlord policy is void if you short-let on it. Furnishings depreciate on a three-to-five year cycle, which is a £1,000-£1,500 annual sinking fund most people discover in year four.
Compliance is small per item and adds up: annual gas safety certificate £80-£120, an EICR every five years at £150-£250, PAT testing, a written fire risk assessment, interlinked smoke and heat alarms, and a legionella assessment. Finally, tax. The abolition of the Furnished Holiday Lettings regime from 6 April 2025 removed full mortgage-interest deductibility, capital allowances on furniture and the capital-gains reliefs — worth one to two percentage points of net yield to a leveraged higher-rate taxpayer.
The numbers that matter
Where this stops holding
These costs scale with turnover, not with revenue, which is why a single number for them is misleading. A listing with a two-night average stay at 65% occupancy runs about 118 changeovers a year; the same revenue at a five-night average stay runs 47. At £60 a clean plus laundry that is a £4,000-£5,000 gap on an identical top line. So the honest framing is that hidden costs are largely a function of your minimum-stay policy, and any benchmark quoted as a percentage of revenue is only valid at the average stay length it was measured on.
Sources
- GOV.UK — abolition of the Furnished Holiday Lettings tax regime
- GOV.UK — business rates for self-catering and holiday-let accommodation
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