Almas Uddin
Founder and Mortgage Advisor
27 Aug 2022
UK holiday rental properties have done incredibly well since the beginning of the pandemic, as people look for staycations without the cost, the hassle of testing requirements and the potential for lengthy delays we now associate with overseas trips.
Several popular holiday hotspots are dotted across the country, although some have higher rental yields and investment potential than others.
We looked into 21 such regions to evaluate average property investment costs and the types of profits you might expect to make from a quality holiday let.
Average Returns on a UK Holiday Let Property
The average holiday let property in the UK makes around £972 a month, representing 29.4% more than rental incomes for longer-term residential lets.
Investment values tend to be higher than other properties, at £353,015, adding a £30,000 premium to the initial budget, primarily because successful holiday lets tend to be in high-demand areas.
That outlay is offset by higher returns, with yields of 3.3%, or 0.5% more than you'd expect for a traditional rental property - the average in that sector is 2.8%.
UK Regions With the Highest Holiday Let Rental Premiums
One of the appeals of a holiday let is that the income received is often several times higher than landlords achieve from other rental assets.
The pretty seaside town of Worthing, West Sussex, is one of the best places to buy a holiday let - the proximity to Brighton, transport links and peaceful community means holiday renters pay £1,530 per month per property or 72.3% more than the average rental.
Next up, the South Wales town of Porthcawl pulls in a 70.5% uplift on standard property rental yields.
Llandudno, North Wales brings investors a premium of 65.6%, with holiday let returns reaching 44.8% in Bakewell, Peak District, and 44.3% in Southsea, Hampshire more.
Areas With the Largest Difference in Holiday Let Rental Yields
While Llandudno might score third place in terms of rental premiums, it offers investors the highest yield, with returns of 4.4%, which is 1.6% higher than average yields in the broader property rental market.
Worthing is still near the top of the pack, delivering yields 1.4% higher than the norm, followed by Amble, Northumberland and Porthcawl, both with yields 1.2% above national rental averages.
The interesting factor for investors is that not all locations provide higher rental yields, even if holiday lets in the area command a price premium.
For example, Exeter provides a holiday let average yield of 5.3%, which is 1% beneath the broader market.
This same scenario is replicated in Ripon and Buxton, Peak District, with 0.6% and 0.5% decreases in rental yields.
Some holiday let locations match average yields achievable on any rental property, including Ashbourne in Derbyshire and Weymouth in Dorset.
Choosing the Best Place to Buy a Holiday Let
Increasingly rigorous regulations and tax burdens have made it difficult for buy to let investors to return a profit - leading more to consider holiday lets as an alternative source of revenue.
Holiday lets typically cost more initially to purchase but can deliver excellent premiums over and above those from standard rental properties.
It remains important for investors to research their preferred destinations before making any financial decisions about a holiday let purchase.
Not all areas return comparable yields or holiday let premiums, and some may be less attractive. The key is to ensure you select a location with high, reliable demand levels and where slower property price increases make it a viable place to invest.
For more advice about holiday let investments, mortgage costs and eligibility, please contact Revolution Finance Brokers at your convenience.
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