A village in the heart of the Lake District is the best place to own a holiday let for the highest return - Simon Gakhar/Moment RF
The net is tightening on holiday let owners. In April, the tax regime for furnished holiday lets was brought into line with other residential property. The term to qualify as a holiday let is now more onerous – threatening a squeeze on profits.
But demand for rentals across Britain is still incredibly high as the cost of foreign holidays – particularly during school holidays – soars out of reach of millions of families.
So, where’s the best place to own a holiday let for the highest return?
Sykes Holiday Cottages annual analysis of the prices paid for properties on its books reveals the most in-demand villages, towns and regions – and there are some surprises.
Telegraph Money lists the top 10 locations to buy a holiday let, ranked on annual turnover.
10. Carbis Bay, Cornwall
Carbis Bay is known for its crystal blue waters and white sandy beach - Robert Reader/Moment RF
Tucked into a corner next to the picture-postcard fishing town of St Ives, Carbis Bay is known for its outstanding views of crystal blue waters and white sandy beach.
It is hard to think of a better-looking seaside destination, and combined with the restaurants, galleries and shopping that St Ives has to offer, the area is incredibly popular with visitors all year round. The 2021 G7 Summit was held at the Carbis Bay Hotel.
House prices average £427,849, says Rightmove, while the area’s holiday let owners will bag an average annual turnover of £34,200.
9. Bowness-on-Windermere, Cumbria
Windermere is arguably the most famous lake in Britain - Edwin Remsberg
The main settlement on Windermere, the most famous lake in Britain, is a Mecca for walkers as well as domestic and international tourists. Annual turnover averages £34,450.
8. Castleton, Derbyshire
The village of Castleton is positioned next to the Mam Tor, the Shivering Mountain, and its excellent for walking routes - FGM/iStockphoto
The Peak District, with its wild moors and steep valleys providing a stunning backdrop to the national park’s more than 100 towns and villages.
The village of Castleton checks all the boxes for visitors – it is positioned next to the awe-inspiring Mam Tor, nicknamed the Shivering Mountain due to its frequent mini-landslides, and its excellent walking routes will keep hikers coming back.
House prices average £470,000, with an average annual turnover for holiday let owners of £34,500.
7. Burford, Cotswolds
Burford is known as the gateway to the Cotswolds - Chris Rose/iStockphoto
The gateway to the Cotswolds is a phenomenally popular stop on the tourist trail – and for good reason.
The high street is quintessentially English, with its rows of Cotswolds stone. The town is handily positioned for the A40 to Oxford and to London. Annual turnover averages £34,600.
6. Southwold, Suffolk
Southwold is a small town on the English North Sea coast - Andrea Pucci/Moment RF
The gem of Suffolk, Southwold benefits from a stunning coastline lined with beach huts and a busy town to boot. Hikers and swimmers will fill their boots here, while beer lovers will appreciate a visit to Adnam’s Brewery.
Southwold’s prime location – a three-hour drive from London – sees property buyers pay a premium; the area has an average house price of £737,818. Average turnover of £35,400.
5. Crantock, Cornwall
Cornwall is one of the country’s most popular spots among Britons and international tourists - Abstract Aerial Art/Digital Vision
For a better chance sunny weather, holidaymakers may choose Crantock over Cumbria – and they would be rewarded with lush, sandy beaches, popular with surfers and sandcastle architects alike.
Cornwall is one of the country’s most popular spots among international and domestic tourists alike for a reason, and homes can be snapped up in Crantock for an average of £355,000, according to Rightmove. Annual turnover is £35,600.
4. Coniston, Cumbria
Coniston draws lovers of the outdoors for its fells and scenery - P A Thompson/The Image Bank RF
Comprised of the Lake District’s third-largest lake and a quaint village, Coniston draws lovers of the outdoors for its fells and scenery, with hiking, mountaineering and water sports all on offer in droves.
Owners of holiday lets in the area see an average annual turnover of £36,100, and an average house price of £305,200 may render it particularly attractive to investors.
3. Stow-on-the-Wold, Cotswolds
The charming and sleepy town of Stow-on-the-Wold is is adorned with the signature honey-coloured stone – and steeped in history - Andrea Pucci/Moment RF
Another jewel of the Cotswolds, Stow-on-the-Wold is known for its large market square boasting a range of shops and restaurants, all adorned with the signature honey-coloured stone.
The charming and sleepy town is steeped in history – as the highest town in the Cotswolds, its position gave it strategic importance, and it was the setting for the final battle in the English Civil War. House prices average £650,159.
2. Bourton-on-the-Water, Cotswolds
On a summer’s day in Bourton, hundreds of visitors can be found milling about the riverside - eye35.pix / Alamy Stock Photo
Few villages epitomise the beauty of the Cotswolds like Bourton-on-the-Water, with its idyllic village life and famous five stone bridges spanning the river Windrush, which draws young revellers into its waters when the sun shines.
Holiday let owners in what is sometimes called the Venice of the Cotswolds can expect to see an annual turnover of £40,400. Rightmove reports an average house price in the area of £530,500.
1. Grasmere, Cumbria
Grasmere is renowned as the home of poet William Wordsworth - Michael Roberts/Moment RF
Owners of holiday lets in the village of Grasmere, located in the heart of the Lake District, enjoy the highest average annual turnover in the UK of £43,200.
It’s not hard to see why – Grasmere’s location at the foot of spectacular fells, along with its own lake frequented by wild swimmers, makes it a prime choice for visitors to the region, who can also stop by William Wordsworth’s cottage before enjoying some local gingerbread.
Don’t expect to snap up cheap property there, though. The average house price in Grasmere is £926,250, according to Rightmove, though most homes sold in the area are detached houses.
Top regions
When you think of the most lucrative parts of the country to own a holiday home, your mind may gravitate to Cornwall. But Scotland is quickly gaining popularity as a holiday destination, with record levels of international tourism to the country – and holiday let owners in one of its regions have seen their incomes surge.
The vast Highlands easily look their best as the leaves burn golden orange, smouldering red and shimmering yellow - George Clerk/iStockphoto
Sykes Holiday Cottages found that holiday let owners in the Highlands and Scottish islands saw the second-highest average annual turnover of any UK region in 2024, with £28,200. This marks a 12pc jump from the previous year, when the region failed to make the top five.
In the first half of 2024, international visitors made a record two million trips to Scotland, 14pc more than over the same period the year before and 46pc more than in 2019, according to Visit Scotland.
The Cotswolds retained its crown as the highest-earning region for holiday let owners from previous years, boasting three of the top 10 locations for turnover.
Regionally, Cumbria and the Lake District placed third for average annual turnover with £27,000,. The village of Grasmere’s holiday let owners scored an average annual turnover of £43,200.
Matlock in Derbyshire was the fastest growing location for income, with average annual revenue of £28,890 in 2024, a 26.9pc increase on the year before.
Visitor numbers falling in Cornwall
Two Cornwall locations, Crantock and Carbis Bay, were among the top 10 for average turnover – but regionally, Cornwall slipped down the rankings. The region failed to make the top five in 2024, having placed fourth last year, amid a slip in popularity as a top UK destination.
Cornwall enjoyed a record five million visitors in 2022, but the trend is reversing. Visitor numbers fell by between 10pc and 15pc in 2023, with provisional numbers for 2024 showing a further decline of more than 10pc, returning to levels last seen over a decade ago.
Holiday let owners in Pembrokeshire, Cornwall, have been hammered by increases in council tax on second homes of up to 200pc - Andrea Pucci/Moment RF
Holiday let owners have been hammered by increases in council tax on second homes of up to 200pc in regions including Pembrokeshire, Cornwall and Oxford.
Pembrokeshire County Council backtracked in October, voting to reduce its 200pc charge to 150pc just six months after it was implemented, amid concerns it was harming tourism.
Despite increasingly challenging conditions for holiday let owners, many in the industry remain optimistic, says James Shaw of Sykes Holiday Cottages.
“Staycation bookings are strong – particularly to regions like the Lake District and the Cotswolds that are appealing for short breaks all year round, which translates into higher earnings for owners.
“Despite significant change in the industry, the findings throughout our report show the resilience of the holiday let market, with average incomes up last year.
“The owners we speak to are feeling good about the future and their prospects within the sector, but many say they have already been affected by new rules and regulations introduced.”
Sykes’ Ben Spier added: “Unfortunately, over the last two years, small holiday let businesses have been caught up in policies aimed at improving housing availability.
“We’re working hard to lobby the Government to distinguish between holiday lets, that bring tourism to the area and generate spending locally, and second and empty homes that comparatively contribute nothing.
“Instead of penalising holiday let businesses, government focus should shift to building new homes or policy tackling the many more properties and land that lay vacant.”
