Holiday Lets, Why Are They So Popular?
- Ben Stephenson
- Jan 30
- 6 min read
Updated: Oct 29
In recent years, the phenomenon of owning a property specifically for short-term holiday letting has exploded across the UK.
A growing number of homeowners and investors are asking: “Why are holiday lets so popular in the UK right now?”
At Manor Mortgages we’ve tracked the drivers behind this trend, from domestic staycation boom, to new borrowing routes and changing tax/usage rules, and we want to guide you through what’s fuelling demand, what financing looks like, and whether a holiday-let could be the right move for you.
Last updated: 29 October 2025
What is a Holiday Let?
Let’s start by defining what we mean by a “holiday let”: in this context, it’s a property you own which you make available for short-term lets (often through platforms like Airbnb, VRBO or independent holiday-letting specialists) rather than long-term tenancy (“Buy to Let”).
The rental periods tend to be days or weeks, not months, and the property may be a second home, holiday property or investment. Because of the short-term nature, lenders and tax authorities often treat holiday lets differently.
Key distinguishing features:
The property is let out for short stays (often multiple guests per year).
You might also use the property yourself for holidays or breaks.
Rental income often fluctuates a lot due to season, location, and demand.
Lenders often require specialist holiday-let mortgages rather than standard residential ones.
Major Drivers of Popularity in the UK
1) Surge in UK Staycations & Domestic Tourism
With travel uncertainty, many UK residents now prefer staying closer to home. That has increased demand for holiday-let accommodation in scenic, coastal and countryside locations. High demand means higher potential rental yields compared with traditional long-term lets.
2) Attractive Investment Proposition (When Done Right)
For investors, holiday lets often present:
Potential for higher short-term rental income during peak seasons vs long-term tenancy.
Dual benefit: personal holiday usage + rental income.
Capital growth potential in desirable holiday locations.
3) Broadening Product Availability & Lender Appetite
Originally a niche finance product, more specialist lenders are now offering holiday-let mortgages, opening up access to this market.
4) Lifestyle & Flexibility Appeal
Many buyers are attracted by the idea of owning a “home from home” that also pays for itself (or partially does so). A holiday-let gives lifestyle benefits as well as investment potential.
5) Strategic Tax & Regulatory Changes (for Better or Worse)
Tax and regulation play a major role: Formerly some holiday-let properties benefited from favourable tax treatment (e.g., furnished holiday-let rules) which made them more attractive. But recent changes mean the rules are evolving and buyers must be aware.
Benefits of Holiday-Let Investments
Higher income potential: Especially during peak holiday seasons, you may achieve nightly or weekly rates much greater than a standard long-term rental.
Personal use: You can enjoy the property yourself, which gives dual use value.
Capital appreciation: Great locations for holiday lets often have strong demand which can support capital growth.
Flexibility: You choose when and how you let the property; you’re not committed to long leases.
Diversification: For property investors, adding a holiday-let to a portfolio can diversify risk and income streams.
What Makes Holiday Lets Different (and More Complex)
It’s not all smooth sailing, the uniqueness of holiday lets means there are extra layers of complexity.
Specialist Lending & Higher Risk Perception
Lenders regard holiday lets as higher risk due to variable occupancy, seasonality, maintenance costs and market sensitivity. That means higher deposit requirements, stricter criteria and fewer lenders overall.
Location & Demand Sensitivity
Holiday let success depends heavily on location, accessibility, amenities, and seasonal appeal. A property in a less-desirable spot may underperform.
Managing Voids & Operational Costs
Unlike long-term rental, short-term lets may have periods with no bookings. Running costs (cleaning, furnishings, utilities, marketing) can be higher.
Tax & Regulation Risks
Tax reliefs that enhanced holiday lets’ appeal are being scaled back. For example, special status for “Furnished Holiday Let” (FHL) in the UK has changed.
Financing Complexity
You often need a holiday-let or specialist finance product (rather than standard mortgage). Your personal income, projected rental income and property value all come into play.
How to Finance a Holiday-Let Property: What You Need to Know
If you’re thinking about buying a holiday let, here are key financing considerations:
Mortgage product: You’ll likely need a specialist holiday-let mortgage or buy-to-let mortgage adapted for holiday use. A standard residential mortgage often won’t cover short-term lets.
Deposit / Loan-to-Value (LTV): Many lenders require larger deposits (often 20-30% or more) for holiday lets.
Income & affordability: Lenders will ask for projected rental income and criteria about how many weeks you expect to let, occupancy rates, and whether you personally have income to cover shortfalls.
Term, interest rates & fees: Rates may be higher than standard residential; product fees may be higher too.
Tax, holiday-let status & regulations: Understand the tax regime (for example, changes for FHLs), whether you must let for a minimum number of days, business/non-business classification, rates vs council tax issues.
Why the Popularity Doesn’t Guarantee Success
Just because holiday lets are popular doesn’t mean they’re always the right investment. Some of the pitfalls:
If you overestimate occupancy or rental income, you may struggle during off-peak times.
If costs (maintenance, management, furnishing) are underestimated, margins can shrink or disappear.
Some locations are saturated - competition, regulatory clampdowns or tourist downturns can hurt.
Tax & regulation changes can reduce the advantages you thought you had.
Because the market is more niche, resale or refinancing may be more challenging than for standard residential homes.
Trends & Outlook for 2025 & Beyond
Demand for UK holiday lets remains strong thanks to staycations and domestic travel growth.
Lenders are becoming more cautious in certain “hotspot” areas where local authorities are concerned about housing supply.
Tax rules are evolving - what was once a big tax-advantage may now yield less favourable treatment. Investors need to account for that.
Properties in rural or coastal hotspots may still command premium rates, but competition and regulation are increasing.
Overall, holiday lets remain popular, but the bar for success is rising, and investors need stronger foundations (good location, strong business plan, reserve cash) to succeed.
Is a Holiday Let Right for You?
Consider these questions before diving into the holiday-let market:
Do you have the deposit and personal income to meet tougher lending criteria?
Can you handle the extra work, management, guest turnover, cleaning, maintenance?
Is the location strong for holiday rental demand (seasonality, appeal, amenities)?
Are you comfortable with fluctuations and off-peak periods?
Have you factored in tax changes, holiday-let licensing or area regulation?
Can you hold the property and meet repayments even if the income is lower than forecasted?
If you answer “yes” to most of these, a holiday let might be a viable investment, but one that requires specialist advice, careful modelling and realistic expectations.
Frequently Asked Questions (FAQ)
Q: Why are holiday lets so in demand in the UK?
A: Several reasons: increased domestic tourism, attractive rental yields in peak seasons, lifestyle-investment appeal (you also use the home), and growing lender interest in holiday-let finance.
Q: Can I get a normal mortgage for a holiday-let property?
A: Usually not. If you’re letting the property on a short-term basis to tourists rather than long-term tenants, lenders typically require a specialist holiday-let mortgage or a buy-to-let product adapted for holiday use.
Q: What deposit do I need for a holiday-let mortgage?
A: Many lenders ask for a higher deposit than a standard residential mortgage, often 20-30% (so LTV of 70-80% or less) depending on the location, property type and income forecasts.
Q: Are holiday-lets riskier than buy-to-lets?
A: Yes, in several ways: rental income can fluctuate more (due to seasonality), the property may lie vacant more often, competition in holiday-let markets may be fierce, and regulatory or tax changes can hit harder. Investment success often depends heavily on location and management.
Q: What key trends should I watch for in holiday-lets in the UK?
A: Monitor tax rule changes (especially for furnished holiday lets), shifting council tax/business rates regimes, lending criteria tightening in tourist hotspots, and changes in domestic holiday behaviour (demand, seasonality).
Final Thoughts
Holiday-let properties have become popular in the UK for good reason: increased domestic travel, strong peak-season demand, lifestyle appeal and the potential for higher returns.
But popularity alone doesn’t guarantee success. These investments demand specialist financing, deep research, careful budgeting and realistic expectations.
At Manor Mortgages we specialise in holiday-let lending and investment advice. Whether you’re exploring a holiday-let for the first time or want to compare financing options, we’re here to help you.