Dreaming of owning a seaside escape or cute country cottage? You’re not alone. More and more people across the UK are turning to short-term rentals to grow their income, diversify investments, and maybe even enjoy a few bonus weekends away. But where do you start in relation to this unique form of property investment? Let’s break it down.
What is a holiday let?
A holiday let is a furnished property that’s rented out on a short-term basis to paying guests, think stylish city pads, beachfront apartments, or cozy thatched cottages listed on platforms like Airbnb and Booking.com. It’s different from a traditional buy-to-let in that your guests come and go more frequently – and ideally, pay a much higher nightly rate.
Why they’re booming
The UK holiday rental market is thriving. Domestic travel is stronger than ever, especially post-pandemic, with people opting for staycations and exploring lesser-known gems. A recent survey conducted by the Post Office found that 80% of Brits were planning to holiday in the UK this year. Add to that the rise of remote working and the Airbnb effect, and it’s no surprise holiday lets are being seen as a smart investment.
The returns can be impressive: short-term rentals often generate higher yields than long-term lets – particularly in popular destinations. But it’s not all cash and confetti. Seasonality, management costs, and local regulations can impact profits – and understanding these nuances is key to long-term success.
Key buying considerations
1. Location
The most profitable holiday homes in the UK tend to be in scenic or tourist-heavy areas – think Cornwall, the Lake District, Northumberland, and the Cotswolds. But don’t rule out urban stays near universities or business hubs.
2. Financing
You will likely need a holiday let mortgage, which is different from standard residential or buy-to-let loans. Lenders will typically demand a deposit of at least 20% – with some banks and building societies insisting on anything up to 40%. Lenders will also request an income projection from a reputable management company to prove the property will generate enough income to cover repayments.
3. Tax
Until recently, furnished holiday let (FHL) properties came with unique tax perks, like being able to deduct mortgage interest payments and claim capital allowances. But the rules have changed and it is vital that anyone starting out seeks specialist tax advice before investing. New investors should also understand that FHLs must be available and let for a minimum number of nights each year. This will qualify the property for business rates instead of council tax, which tends to be much cheaper. The rules are different in England, Scotland, and Wales, so new owners must do their research before taking the plunge.
4. Planning permission and regulations
Before buying, check if the property requires planning permission for use as a holiday let—especially if it’s in a national park, an Area of Outstanding Natural Beauty, or a city with recent short-let restrictions. For example, in some parts of England (like London), short-term letting is limited to 90 nights per year without planning consent. Local councils may also have Article 4 directions in place that restrict changing use from a residential dwelling to a holiday let. Always confirm the latest rules with the local authority before purchasing.
Common pitfalls to avoid
- Under-pricing: too many new hosts set low rates to attract bookings but lose money in the process. Smart pricing = better profits.
- Choosing the wrong spot: if your holiday let is too remote or in a seasonal-only market, occupancy could suffer.
- Neglecting the guest experience: poor communication, lack of local tips, or a flea-bitten mattress can tank your reviews and your future bookings.
Tools to supercharge your success
Enter: Beyond, a dynamic pricing platform built for short-term rentals. With Beyond, you can increase revenue by up to 35% by using intelligent pricing strategies that adapt to demand, competition, and events. You’ll also gain up to 9% more income through advanced insights to help you make smarter, faster decisions.
Try this first: get free short-term rental data
Want to know when your area sees the most demand? Use Beyond’s free Market Trends Reports to explore seasonal insights, booking lead times, and pricing benchmarks in any UK market.
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