If you are thinking of running a bed and breakfast business from your UK home, this will almost certainly involve significant finance considerations. Our specialist team of b&b finance advisors, here at Stewart Hindley, have identified 5 key factors which will come into play:
- Planning Permissions
Whether or not you will need building planning permissions will depend on the amount of building work required and will be subject to the local authority’s usual residential planning guidelines.
If you are converting more than one or two bedrooms, you may also be required to apply for ‘change of use’ and your local council should be able to provide advice.
- Building Regulations
The building regulations which apply to bed and breakfast establishments change quite regularly, particularly with regard to health and safety regulations, so it’s vital to refer to an up-to-date source of information.
Different regulations will apply depending on the size of your house and the number of guests you want to accommodate. At minimum, you are likely to have to install things like fire doors, emergency lighting and fire safety signage, and the kitchen will probably need some work too.
Bed and breakfast businesses are also required to offer separate washing and toilet facilities for your family which won’t be used by guests and you may find that this involves quite a lot of unexpected work.
- Fitting Out Costs
Furniture and fittings will need to be of good quality to withstand constant use, and soft furnishings and beds etc will need to comply with current fire regulations.
To attract guests in a very competitive UK b&b market, allow enough in your budget to make communal areas like dining rooms and lounges, clean, bright and fresh.
- Advertising and Marketing costs
The hardest part of advertising and marketing is to come up with your image and style. We would advice setting some money aside to commission a graphic designer to come up with a logo and brochure material to give a professional look to your website and promotional materials.
Spend time researching the local market and the search engines, like Trip Advisor, which are likely to be most effective at attracting the clientele you are seeking to attract.
- Do you have a b&b mortgage?
If you are thinking of running a b&b from home, you are legally required to advise your current mortgage provider of your intentions. Most residential mortgages do not allow you trade rooms, so you would need to re-mortgage onto a commercial mortgage – but don’t worry because our team at Stewart Hindley & Partners can advise you.
There are a limited number of lenders who will allow 1 or 2 rooms to be let on a residential mortgage, but it has to be done in agreement with the lender. If a lender realises that you are trading on a residential mortgage they can call in the loan due to breach of covenant.
Trading on a residential mortgage can have serious consequences. You could be forced to re-mortgage and in some cases, if your trade income is not enough to cover the amount of debt involved, this may not be possible. The worst case scenario may be that you lose your home as well as your business.
We strongly recommend that you don’t wait until it’s too late and look to take out a commercial b&b mortgage from the start.