Thinking about dipping your toe into the UK holiday let market? You're not alone. With more Brits embracing staycations and international guests returning in full swing, holiday lets are back in the spotlight. But is this still a good time to invest?
Let’s crunch the numbers, explore the trends, and see whether a holiday let investment in 2025 can deliver the kind of returns that make it all worthwhile.
So, are holiday lets a good investment in 2025?
If you’re willing to do your research, use the right tools, and deliver a solid guest experience, the answer is a resounding yes!
Holiday lets offer strong cash flow, personal flexibility, and tax advantages. But to truly unlock their potential, you need to treat them like a business – and that means tracking market trends, pricing smartly, and streamlining operations.
Before you make a decision, let's dive into some data and considerations.
What is a holiday let?
A holiday let is a short-term rental property – think a countryside cottage in the Cotswolds, a stylish flat in Edinburgh, or a seaside home in Cornwall – that is let out to paying guests for holidays or short stays. Unlike long-term rentals, holiday lets offer flexibility, higher nightly rates, and the opportunity to use the property yourself when it’s not booked.
Why holiday lets are popular right now
The UK’s holiday rental market has seen a post-pandemic boom, and while growth is now more stable, it’s still strong. Figures released by Sykes Holiday Cottages show bookings increased by 2.2% in 2024, with the average turnover per owner rising to £24,700. The top performing regions were the Lake District and the Cotswolds, which achieved average turnover of £40,000+.
Other factors fuelling the boom:
- Staycation culture is thriving – according to a Post Office survey, with more than 80% of Brits planning to holiday in the UK this year.
- International tourism has rebounded post-pandemic – overseas visitors are returning, particularly to cities and scenic regions.
- Hybrid working is enabling midweek and off-season bookings, smoothing out the calendar. Plus, people traveling for work often book a short-term rental rather than a hotel due to cost and convenience.
Add to that rising mortgage rates and cost-of-living pressures, and many investors are turning to holiday lets – rather than other forms of property investment – for better cash flow potential and more flexible use.
Are holiday lets a good investment?
Let’s break down the financials.
Higher income potential
Holiday lets typically earn 30-50% more per year than comparable long-term rentals. A three-bedroom property in a popular UK destination can command £150–£250 per night, depending on the season. However, holiday lets are more expensive to set up due to the furniture and amenities you need to buy.
They can also be more labour intensive. However there are excellent automation tools which can help owners to run their rentals on autopilot. There is also the option of working with property management companies to ensure your investment is truly hands-off.
Furnished Holiday Let (FHL) tax benefits
Until recently, owning a holiday let brought significant tax perks, including offsetting mortgage interest against income, claiming capital allowances, and the potential to roll over capital gains tax when selling.
However, the Furnished Holiday Let (FHL) tax regime has been altered significantly in 2025. Connect with experts like Zeal Tax to ensure your investment is as tax efficient as possible.
Flexibility and personal use
Unlike traditional buy-to-lets, you can block off time for personal stays.
Costs and seasonality
While the income potential is exciting, costs add up quickly:
- Cleaning, maintenance, and utilities.
- Booking platform fees (Airbnb typically charges 15%; Booking.com, 15–18%).
- Seasonal demand means income can be variable month by month.
It’s not passive income unless you’re using tools and systems to automate.
Key considerations before you buy
Before you invest in a holiday let, here are a few things to check:
Location and amenities
High-demand areas matter – but so do guest needs. Is the area accessible? Family-friendly? Pet-friendly? Well-connected?
Strong Wi-Fi, a kitchen with all the essentials, plus a smart TV with access to streaming platforms are minimum requirements for most guests. Extra amenities like parking, an EV charger, and hot tub will really help you stand out. In rural locations, being dog-friendly will help you appeal to a large percentage of guests.
Planning permission and regulations
Some councils (like in Cornwall, Brighton, and London boroughs) require change of use permissions or have restrictions on short-term lets. Always research local planning policies. New investors should also become familiar with minimum stay requirements to qualify for business rates (as opposed to paying council tax, which tends to be much more expensive). The rules are different in England, Scotland, and Wales.
Financing
Specialist holiday let mortgages are available but require a larger deposit (usually a minimum of 20%) and proof of expected income. Speak to brokers like HCH Financial Services who know the short-term rental market.
Common mistakes new investors make
New to holiday lets? Avoid these rookie errors:
Under-pricing the property
Trying to stay “affordable” will hurt your returns and undervalue your rental. Use real-time market data (like Beyond’s free data tool) to price competitively without leaving money on the table.
Poor guest experience
Bad reviews mean fewer bookings. Invest in cleanliness, communication, comfort, and smart tech like keyless entry systems.
Choosing the wrong location
You might love the idea of a remote cabin – but will your guests? Make sure demand, accessibility, and year-round appeal are part of your location checklist.
Maximise your investment
You don’t need to be an expert in property or pricing to succeed, you just need the right tools.
Dynamic pricing software
Platforms like Beyond use real-time data to adjust your prices daily based on local demand, events, seasonality, and competitor rates. This can boost revenue by up to 35% – and eliminates the guesswork.
Using tools to analyse market trends, occupancy, and competition can add another 9% in revenue and help offset fees taken by booking channels, like Airbnb and Booking.com. Beyond’s free market data tool helps you assess whether a property is worth the investment before you commit.
Local services
Promoting nearby businesses doesn’t just enhance your guests’ stay – it also shows you’re a host who cares about the community. Whether it’s adding locally sourced treats to your welcome hamper or teaming up with restaurants to offer discount vouchers, these small touches create a more memorable experience. Better still, they help you build positive relationships with neighbours and boost your earning potential. After all, when guests feel like locals, they’re more likely to leave glowing reviews and return for another stay.
Property management software
If you’re scaling up or just want peace of mind, PMS platforms can help automate:
- Guest messaging
- Calendar syncing across platforms
- Cleaning schedules
- Reviews and upsells
Final word: data is your best friend
Don’t rely on guesswork or seasonal pricing. Tools like Beyond can show you:
- What similar listings are earning
- Where you’re leaving money on the table
- How to maximise your ROI with dynamic pricing
Use Beyond’s free data tool to forecast potential earnings and assess profitability. With Beyond’s free Market Trends Reports, you can explore seasonal insights, booking lead times, and pricing benchmarks in any UK market.
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