"Despite significant changes in the industry, the findings throughout our report show the resilience of the holiday let market, with average incomes up last year"
- James Shaw - Sykes Holiday Cottages
Popular holiday spots in Cumbria and the Cotswolds with year-round appeal dominate the list of highest-earning locations for holiday let businesses – with the Cotswolds retaining its position as the most profitable UK region to run a short-term rental
Sykes’ fourth Holiday Letting Outlook Report also reviews the attitudes of holiday let owners in the context of recent and upcoming changes in the sector. 45% of UK owners say they’ve been affected by regulation changes
A government shift is needed as, according to Sykes’ analysis, there are nearly 3.5 times as many long-term empty homes in England than short-term rentals, with the former contributing nothing to local economies
Popular towns and villages in the Cotswolds and Cumbria are among the best places in the UK to own a holiday let, according to a new industry report by Sykes Holiday Cottages.
The Cotswolds is the UK region in which owners generate the most gross income overall, with the average owner in the area earning £29,000 in 2024, up £500 year-on-year.
Looking at the UK average, holiday let businesses generated an income of £24,700 last year – slightly up on 2023 (£24,500), despite tougher economic conditions.
Best locations to run a holiday-let
The Lake District village of Grasmere tops the overall location rankings, with holiday let business there now earning £43,200 on average annually.
Meanwhile, two popular destinations in the Cotswolds, Bourton-on-the-Water and Stow-on-the-Wold, make up the top three, with owners in these villages generating an average of £40,400 and £40,000, respectively, last year.
The Holiday Letting Outlook Report is based on an analysis of bookings and revenue data for 22,500 UK holiday rentals let through Sykes. All of the locations which feature in the top 10 for earnings are within England, with countryside spots that have year-round appeal for short bookings dominating the list.
Other Lake District holiday destinations such as Coniston and Bowness-on-Windermere, and Burford in the Cotswolds, are also among the most profitable places to own a holiday let.
Southwold in Suffolk and Castleton in Derbyshire are new additions to this year’s top 10, ranking sixth and eighth and with an average annual gross revenue last year in excess of £34,000.
“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," explained James Shaw, Managing Director of Sykes Holiday Cottages.
He added, “Location is obviously incredibly important in the earning potential of holiday lets, but other small investments and decisions can drive additional income too, including accepting short mid-week stays, adding a hot tub and allowing pets – these are all things we advise our owners on.
“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.”
Concerns about industry changes
Although average annual earnings are up slightly, many owners are concerned about the impact recent and upcoming regulatory and tax changes will have on their businesses – especially in the context of other rising running costs.
Sykes conducted a survey of 500 holiday-let owners to understand their attitudes to the industry and views on recent changes. 45% of UK owners say they’ve already been affected by regulation changes, which increases to 63% of those in Wales.
Owners say rules allowing some councils to charge increased rates of council tax are most impacting their businesses, with 58% affected by this. 33% of owners say they will be impacted by the removal of the Furnished Holiday Lettings tax regime in April. A similar number (32%) have been affected by the policy in Wales upping the minimum number of days you’re required to let your property to qualify for business rates.
What’s more, 74% of short-term let owners believe the recently introduced Government measures risk having a significant bearing on the local economies where their holiday lets operate.
A need for UK Governments to shift focus
According to Sykes’ analysis, there are nearly 3.5 times as many long-term empty homes in England than holiday lets, with empty homes contributing very little to local tourism economies.
Official Government data doesn’t currently exist on the number of short-term lets within the UK. As such, Sykes has analysed AirDNA data to estimate that there are 212,500 short-term rentals throughout England – representing 0.85% of all residential properties. This compares with 719,500 long-term empty homes (based on ONS figures) and, in all regions in England, long-term empty homes outnumber holiday lets.
Sykes’ Head of Regulation and Policy, 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 spend 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.”
