Holiday Let prospects strengthen for advisers
By Kevin Aitken, Senior Sales Manager, The Cumberland Building Society
As the summer holiday season draws to a close, many property investors will begin turning their attention to potentially growing their portfolio ahead of next year’s season.
For advisers, this period presents a valuable opportunity to guide clients through the practicalities of financing and managing a Holiday Let property in a resilient and growing market.
According to the Holiday Letting Pulse Report by Sykes Cottages, almost two-thirds of UK adults (63%) are expected to take a domestic holiday this year, with Generation Z the most likely of all age groups to opt for a staycation. Booking behaviour remains flexible: nearly a quarter of breaks were booked within a month of departure, while searches for October half-term breaks rose by 24% month on month, and interest in Christmas breaks increased by 22%
Location, location, location
The location is everything with a Holiday Let and it makes sense to encourage clients to track popular destinations when they begin the property search. So, it’s sensible to encourage clients to match their purchase to existing demand rather than attempting to generate it in untested areas. With this in mind, the Holiday Letting Pulse has listed ‘destinations to watch’ for new owners across the UK:
- Brixham, Teignmouth, Paignton and Bideford – Devon, South West England
- Saundersfoot – Pembrokeshire, South West Wales
- Newborough – Anglesey, North Wales
- Porthmadog – Gwynedd, North Wales
- Warkworth – Northumberland, North East England
- Weston-super-Mare – North Somerset, South West England
- Morecambe – Lancashire, North West England
Even within a destination, the location of a property can make a difference and local letting agents provide insight into the nuances of each location, from licensing requirements and seasonal demand to guest expectations such as parking and pet-friendly access.
Income potential and potential considerations
Annual Holiday Let income across the UK stood at £24,500 in 2023, with top-performing regions such as the Cotswolds and Cumbria delivering higher figures. In 2024, owners in the Cotswolds achieved average earnings of approximately £29,000, underlining the strength of demand in tourist-led markets.
Compared with mainstream buy-to-let, short-term lets often deliver stronger gross income in high-demand regions. While operating costs and management requirements are higher, these headline revenues are attractive, particularly against the backdrop of relatively modest gross yields reported across many southern cities for traditional rental property.
However, guest expectations are also shifting, with experience-driven breaks becoming more common. Properties with Instagrammable features such as hot tubs, wood burners and luxurious or quirky decor are more likely to stand out in a crowded market and investment in the renovation can often deliver better occupancy rates.
At The Cumberland, we have more than two decades of specialist experience in the Holiday Let sector. We know it’s important to establish relationships with lenders offering remortgage products or that allow clients to release equity or restructure borrowing.
Clients keen to work their property, or properties, harder may need to raise capital for refurbishment or expansion. For portfolio landlords, we offer commercial holiday let finance for up to 20 properties, whether concentrated in one region or spread across the UK. But whichever lender you choose to work with, you’ll need keen underwriting, conducted on a case-by-case basis ready to flex when the situation calls for it. A lender ready to help when a license agreement has been delayed or that knows the area well enough to understand its investment potential.
Advisers should also ensure clients are fully aware of the changing regulatory environment. In Scotland, mandatory short-term let licensing is in force nationwide, with requirements varying by local authority. Similar policy developments may follow elsewhere in the UK.
However, your client's success depends on aligning property choice with demand, finance that enables both purchase and improvement, and partnering with lenders and letting professionals who understand the intricacies of the sector. Post-summer, with interest levels high and clients motivated, this is a timely moment to position yourself as a trusted expert.