Holiday lets have become an expensive investment in recent years. A hike in stamp duty and council tax premiums, as well as the end of the furnished holiday lettings tax scheme, have been pushing up costs for second homeowners and biting into profits.
However, amid seemingly relentless sunshine and fewer rainy days in the UK this year, a number of Brits are deciding to holiday closer to home.
Staycations are growing in popularity – nearly two-thirds (63%) of Brits will take a UK break this year, and about a third (34%) are planning to make it their main holiday in 2025, according to research by Sykes Holiday Cottages.
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Holiday spending is also on the rise, with families expected to splurge £1,292 this year – up from £1,070 or a 17% increase year-on-year.
This comes as good news for UK holiday let owners, especially those with properties in popular locations near the coast or tucked away in the countryside.
Here are the top locations where Brits are choosing to spend their days off, and where buy-to-let investors may find it profitable to own a property.
What are the most profitable holiday let destinations in the UK?
The top UK destination for holiday let investment in the UK is Brixham in Devon, new research shows, with bookings going up by 62% year-on-year in the harbour town.
That’s based on the latest Staycation Index report by Sykes Holiday Cottages, compiled using bookings data from 22,500 properties in the UK.
Trailing close behind is Teignmouth – also in Devon – and Saundersfoot in Pembrokeshire, with booking growth of just over 30%, suggesting coastal retreats are a favourite among trip goers.
The top destinations surging in demand are listed in the table below.
Swipe to scroll horizontally
Most popular UK destinations for holiday lets
Location
Growth in bookings (%)
Brixham, Torbay
62%
Teignmouth, Devon
32%
Saundersfoot, Pembrokeshire
31%
Newborough, Anglesey
30%
Paignton, Torbay
25%
Porthmadog, Gwynedd
25%
Warkworth, Northumberland
25%
Bideford, Devon
24%
Weston-super-Mare, North Somerset
23%
Morecombe, Lancashire
22%
Source: Staycation Index report by Sykes Holiday Cottages
Solo staycations surged by 28% in 2024, with Whitby, Keswick, and Ambleside being the most popular destinations.
Are holiday lets still a good investment?
James Shaw, managing director at Sykes Holiday Cottages, says: “While we recognise that some owners are facing increasing pressure from recent tax changes, the continued growth in domestic bookings – particularly in trending locations – presents a valuable opportunity to offset those challenges with strong demand and healthy returns.”
Shaw adds that the “enduring appeal of UK staycations is not only supporting local economies but also helping many owners navigate this shifting landscape”. The Sykes data shows that domestic tourism is projected to boost the UK economy by £24 billion this summer, which presents landlords with the opportunity to profit from the summer boost.
The buy-to-let market has faced a challenging few years, whether it’s the end of the furnished holiday letting tax or the withdrawal of the business asset disposal relief – something which previously reduced capital gains tax to 10%.
So, while holiday rentals are generally popular for their high returns, is that still the case?
Robert Jones, founder of Property Investments UK, says holiday let investments “generally earn much higher rents and yields than long-term buy-to-lets”.
He gives the example below:
Long-term let: If the property costs £200,000 to buy, and is rented out at £1,000 per month, it would earn an annual income of £12,000, or a rental yield of 6%.
Holiday let: The same property would generate a potential monthly income of £2,250 at 70% occupancy, considering that its average nightly rate is £107. That would mean that it earns the landlord an annual income of £27,000, or a rental yield of 13.5%.
While the running costs would be higher for a holiday rental, Jones says that it’s “not unrealistic to double your return compared to a traditional buy-to-let strategy, when you consider the net rental yield and income for both strategies.”
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Oojal has a background in consumer journalism and is interested in helping people make the most of their money.
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