A Deep Dive into Buying a Holiday Let for Landlords and Investors

Buying a holiday let investment is a popular type of property investment strategy. In this article, we look at everything you need to know about buying a holiday let (also known as holiday homes), including the pros and cons, rules and regulations and what sort of letting yield you might expect from a holiday let investment in the current UK market.

Article updated: July 2026

Should I Buy a Holiday Let?

Buyers consider holiday property because short-term rents can exceed long-term rents, demand can be concentrated in established visitor locations, and the owner may retain some personal use. Those advantages vary by property and season and sit against the higher set-up, management, maintenance and void costs covered below.

Location-specific demand. Staycation demand supports holiday lets in some locations, while occupancy can be seasonal and varies by area.

Higher gross rent. Nightly short-term rates can produce more gross income than a long-term tenancy, before cleaning, booking, management and void costs.

Different yield profile. Gross yields can exceed long-term-let yields, but occupancy and the extra operating costs determine the net return.

Personal use. Owners may reserve the property for part of the year, reducing the nights available to paying guests.

Although similar in style and returns, there are other options like buying an Airbnb property for a short-term corporate let, catering for lower nightly rates, but all year-round demand rather than a high nightly rate and more seasonal occupancy.

The Disadvantages of Holiday Let Ownership

Higher purchase and set-up costs. Property prices in some good holiday let locations can be high. Holiday lets also need to be fully furnished and equipped too.

Higher maintenance costs. Holiday lets will need more maintenance and are likely to have more wear and tear than long-term lets.

Holiday lets need more management. You'll need to deal with check-ins, check-outs, cleaning between lets and maybe queries and complaints - unless you pay an agency to do this for you.

Holiday lets have more void periods. Holiday lets tend to have more void periods than long-term lets. On average a holiday let will let for a maximum of 40 weeks a year. But this will depend on how popular your property is and what rent you charge.

It's also important to bear in mind that buying a holiday let involves ethical issues. Too many holiday properties in one area can 'hollow out' the local community.

What is the Definition of a Holiday Let?

A holiday let is normally thought of as a property let to somebody for holiday purposes or as a short-term stay in serviced accommodation that is not their main home, for periods between 1 and 31 days. Some buyers fund the higher fit-out costs by targeting below market value properties in holiday areas, and a holiday let often sits alongside a standard investment property in the same portfolio as a different income model. This is different to a standard residential tenancy, where the property is the tenant's main home (in England, an assured periodic tenancy since May 2026; previously often an assured shorthold tenancy, commonly with a 6 or 12 month fixed term).

The definition of a holiday let or short-term let, becomes important when you consider the tax and finance aspects too. For example, a holiday let maybe liable for business rates instead of local council tax. This can be of benefit to the owner, but you will need to prove a level of occupancy within the holiday let to the valuation office agency.

Some councils will also require planning permission, here is an example form York city council.

Are Holiday Lets a Good Investment?

Performance depends on occupancy, finance, management, maintenance, tax and purchase price. Holiday lets can earn higher gross rents and yields than long-term buy-to-lets, while their higher operating costs and seasonal voids reduce the net comparison. The worked example below compares the two models:

An Example Yield from a Long-Term Let

• Purchase price: £200,000
• Monthly rent: £1,000 pcm
• Annual rental income: £12,000
• Gross yield = 6%

An Example Yield from a Holiday Let

• Purchase price: £200,000
• Potential monthly income: approximately £2,274 (at about 70% occupancy)
• Average nightly rate: £107
• Annual rental income: approximately £27,285
• Gross yield = approximately 13.6%

To break this down further:

• The rounded occupancy assumption uses approximately 255 occupied nights per year
• In this illustration, the long-term let produces £12,000 gross rent and the holiday let produces approximately £27,285
• The illustrated difference in gross rental income is approximately £15,285 before the holiday let's additional costs

Important Note: These figures represent gross rental income. Holiday lets typically have higher running costs than traditional buy-to-lets, including:

• Regular cleaning between stays
• Utility bills
• Furnishing and maintenance
• Management fees if using an agency
• Marketing costs
• Insurance

The example does not establish that holiday letting will outperform a long-term tenancy. A net comparison needs the property's actual nightly rate, occupancy, finance, management, maintenance, tax and void costs.

(Figures used are examples only, not a forecast. Actual returns will depend on local prices, rents, occupancy and running costs.)

The Costs of Running a Holiday Let

Running a holiday let incurs several ongoing costs, with the average owner spending around £7,400 to £11,500 annually.

The key expenses of running a holiday home include utilities, cleaning, maintenance, insurance, and business rates.

Additionally, some owners may choose to work with a holiday let management company, which typically involves agency fees such as commission rates, setup fees, and annual fees.

An agency can handle pricing, marketing, bookings and guest operations in exchange for its fees. Whether that cost produces a better net result than self-management depends on the agency's charges, the owner's time and the property's actual occupancy and nightly rates.

Sykes' Holiday Letting Outlook Report published in 2024 reported average annual owner income of around £24,500. It also reported 12% more revenue, on average, for owners following Sykes' Income Maximisation Strategy than for those who did not. These are supplier-reported results from its managed-property dataset, not a forecast for an individual property; location, occupancy, rates, fees and costs determine the result. Property data can help compare those inputs.

Sykes have a Holiday Let Income Calculator to estimate how much you could earn.

Holiday Let Mortgages

You can't normally buy a holiday let investment with a standard residential or standard buy-to-let mortgage. You will need a specialist holiday let mortgage.

Rates will vary all the time and like a buy-to-let, with a holiday let mortgage the maximum LTV (see our loan to value calculator here) will often be around 75%, however, we often see this is even lower for holiday lets around 50-65% loan-to-value, meaning you'll need a minimum deposit of 25%. The interest rate is also likely to be higher.

Locations

What Makes a Good Holiday Let Location?

A location comparison should separate personal preference from evidence about short-term-let demand, supply, nightly rates and seasonality.

Major cities, seaside resorts and historic rural locations can have demand for furnished short stays, but the level of competition and occupancy varies within each market.

Holiday property letting agencies can usually tell you about supply and demand if you are considering a particular area. For example, Manchester has very high demand at the moment from property buyers, sellers and tenants, but what is the holiday let demand like?

Chester and York are wonderful historic cities with a lot of interest from tourists and short-term stays, but you might find it is more seasonal, with quiet times outside of school holidays like November and really busy months in the summer.

The countryside and the coast tend to be favourite locations for holiday homes. But don't forget that some towns and cities have a holiday let trade too that is very seasonal and comes with a lot of local competition from hotels, BnB's, campsites and caravan parks.

Considerations

• Distances from major towns and cities. Is it near enough for a weekend break as well as a holiday?
• What local amenities are there - such as pubs, restaurants and local shops?
• Things to do - beaches, walks, sporting amenities, arts, cultural and historic places to visit.

The Best Locations in England for Holiday Lets

The most popular holiday locations in England include Cornwall (even inland areas like Truro), the Cotswolds (which is known for its historic villages and pretty listed buildings), Devon, Dorset, the Isle of Wight, the Lake District, London, Norfolk, the Peak District and the Yorkshire Dales and coast.

The Best Locations in Scotland for Holiday Lets

The most popular holiday home locations in Scotland can really vary, with lots of interest in small villages across the highlands for rural breaks, whilst the major cities like Edinburgh and Glasgow can attract year-round tourists whatever the weather with major festivals like the Edinburgh Fringe and monthly festivals across Glasgow as a major city of culture.

The Best Locations in Wales for Holiday Lets

Wales has homes below £120,000 in some postcodes and is known for its scenery and outdoor destinations. Holiday-let markets include Carmarthenshire, Gower, Pembrokeshire, the North Wales coast and Snowdonia. Cardiff and Swansea can serve visitors exploring the south coast and the Brecon Beacons.

Rules and Regulations

Do I Need a Licence?

You do not always need a licence to set up and run a holiday let in England, however that does depend on the local council.

In London, you can only let a property on a short-term basis for up to 90 days a year without planning permission.

The government has recently run a consultation regarding introducing a registration scheme for short-term lets. This is not the law at the time of writing.

In Scotland, you will need a short-term let licence to let a holiday property.

Wales is planning to introduce a licensing scheme for short-term accommodation.

In Northern Ireland holiday property must be approved by Tourism NI.

Restrictive covenants, local occupancy conditions or leasehold restrictions can stop you from letting a property for holiday use in some cases, so it is important to consult with the local council and your conveyancing solicitor before buying.

Proposed New Planning Rules for Holiday Lets

The government has recently run a consultation on changing the planning permission rules so that short-term lets, including holiday lets, might need planning permission in some areas in future. This proposal has not become law at the time of writing.

Stamp Duty

If you already own a property or properties you will have to pay the higher rates of Stamp Duty when buying your holiday let in England. These rates are 3% over the standard rates. These additional costs need to be factored into your buying costs.

Scotland and Wales also charge a higher rate of Land and Buildings Transaction Tax or Land Transaction Tax respectively for additional properties.

What Tax Benefits Apply to Holiday Lets Since April 2025?

Holiday-let tax treatment depends on the ownership structure, location and applicable tax year.

Before April 2025, qualifying furnished holiday lets had a separate tax regime, including different treatment of finance costs. Standard residential landlords have instead received a basic-rate tax reduction for finance costs since the restriction was fully phased in from the 2020/2021 tax year, as Which's mortgage-tax guide explains.

That treatment ended when the government abolished the furnished holiday lettings tax regime from 6 April 2025 for Income Tax and Capital Gains Tax (1 April 2025 for Corporation Tax).

The abolition removed the tax advantages furnished holiday let landlords had over other property businesses in 4 key areas:

What changed from April 2025

• the finance cost restriction rules now apply, so loan interest is restricted to basic rate for Income Tax
• capital allowances rules were removed for new expenditure, with replacement of domestic items relief allowed instead
• access to reliefs from taxes on chargeable gains for trading business assets was withdrawn
• this income no longer counts within relevant UK earnings when calculating maximum pension relief

Since the repeal, former furnished holiday let properties form part of the person's UK or overseas property business and are subject to the same rules as other let property businesses.

Link to the latest gov.uk updates here

In addition to the day to day running costs, there are other tax considerations. Under the business rates rules, holiday lets may be eligible to pay business rates rather than Council Tax, which may be cheaper or even zero if you are eligible for Small Business Rate Relief.

The old furnished holiday lettings regime carried Capital Gains Tax advantages on sale, but it was abolished from 6 April 2025, so holiday lets now follow the same CGT rules as other rental property. Governments can and do change the tax position over time, so what is true today may not be in 5, 10 or 20 years, whenever you choose to sell.

It is essential to set up correctly and take professional financial and tax advice before buying an Airbnb property or a buy-to-let property.

Is It Best to Use a Specialist Holiday Management Agency?

Many people buying holiday homes ask whether it is best to manage your property yourself or use a holiday property letting agency to do it for you.

The comparison depends on the owner's hospitality experience, available time and the cost and scope of the agency service.

A holiday property letting agency can handle pricing and marketing across its own channels and platforms such as Airbnb.co.uk, Booking.com and Vrbo.com. Wider distribution may affect enquiries and occupancy, but no agency can guarantee either.

Remember they can handle enquiries and bookings and also your guest changeovers, cleaning and maintenance too.

The main disadvantage is that their charges will cut into your gross rental yield. Holiday letting agents are likely to charge around 20% of your rental income as commission.

Self-management avoids agency commission but transfers pricing, marketing, enquiries, bookings and guest operations to the owner. The net comparison should assign a cost to that time as well as to external services.

7 Top Tips When Buying a Holiday Home

1. Look for a property that has something special, to help it stand out from other holiday lets in the area. For example, barn conversions, converted churches, old mills and country cottages often feature in holiday property searches.
2. Look for properties with features that renters look for. For example, a sea view, waterside location, a wood burner, close to a pub and a garden or terrace.
3. Larger properties can accommodate couples, families or groups and may command a higher nightly rate, while their purchase price, cleaning, maintenance and utility costs are also higher. Occupancy and net income determine the comparison.
4. Allowing dogs widens the eligible guest group but can add cleaning, furnishing and maintenance requirements. Local booking evidence is needed to measure the effect on occupancy.
5. Furnish, decorate and equip your holiday let to a high standard. Use good quality furnishings that will resist wear and tear and which will last.
6. If you can, offer the amenities that holiday renters are coming to expect nowadays. For example, a dishwasher, a power shower, king-size beds, superfast broadband, think creatively.
7. Guest expectations can be benchmarked against comparable holiday lets and local hotels. A distinctive feature may help a property stand out, but its cost should be compared with evidence about rates and occupancy.

Finding The Best Holiday Let Investments

Location and property comparisons require evidence about purchase price, local restrictions, competing supply, occupancy, nightly rates and operating costs.

Those inputs vary across the UK, so the same property type can produce different results in different local markets.

Our investment-agent partner sources properties across the country, including holiday homes. Current holiday-let listings are available here; listing yields and projections need to be checked against the property's costs and local evidence.

Properties marketed for short-stay platforms are listed on our Airbnb properties page, subject to the same property-level checks.

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