How to buy a holiday let

Buying a holiday let means buying a property to rent out as short-stay holiday or business accommodation rather than on a long residential tenancy. The income arrives in many short bookings instead of one monthly rent, which is what gives a well-run holiday let the chance of a higher gross return than a standard buy to let, and also what makes it more involved to run and to finance. UK staycation demand has stayed strong since the travel disruption of the early 2020s, and operators such as Sykes Holiday Cottages report consistent interest in coastal and rural lets through their Staycation Index.

This guide walks through the whole process: choosing where and what to buy, running the numbers honestly, the deposit and the holiday let mortgage that funds the purchase, the rules and tax position you need to understand first, and the steps from offer to first booking. We arrange holiday let and serviced accommodation finance as a broker and introducer. We are not a lender, and nothing here is investment, tax or legal advice.

Is a holiday let right for you before you start?

A holiday let is a small hospitality business with a mortgage attached, not a passive bricks-and-mortar investment. The income is real, but it is earned booking by booking, through pricing, marketing, guest communication, cleaning turnarounds and maintenance. Before you commit, be honest about whether you will run it yourself, use a managing agent who typically takes 15 to 25 per cent of income, or list through a full-service operator who handles everything for a larger share.

The model rewards involvement. Owners who manage pricing actively, keep their listings and reviews strong and control their costs tend to out-earn those who treat a holiday let like a deposit account. If you want a genuinely hands-off return, a standard buy to let or a managed serviced accommodation arrangement may suit you better. Our guide on whether a holiday let is a good investment weighs the trade-offs in more depth.

Where and what should you buy?

Location does more to decide a holiday let's success than almost anything else, because it sets both the demand and the rate you can charge. The strongest staycation areas combine year-round appeal, good access and an established visitor economy: established coastal counties such as Cornwall, Devon and Pembrokeshire, the Lake District and Yorkshire Dales, the Scottish Highlands, and city-break and business-travel markets in places like Edinburgh, Bath and York. A property that is attractive in shoulder seasons, not just for six weeks of summer, is what turns a holiday let from seasonal into year-round.

On the property itself, think about who books and why. A two or three-bedroom cottage with parking, outdoor space and a feature or two such as a hot tub, sea view or dog-friendly policy will out-let a plain flat in the same area. City apartments work on a different rhythm, mixing weekend leisure stays with midweek business and contractor demand. Whatever you choose, walk the local competition on the booking platforms before you offer, because the rates and occupancy your neighbours actually achieve are the best evidence you will get. Our guide to the best places to buy a holiday let goes deeper on choosing an area.

How do you run the numbers honestly?

A holiday let stands or falls on net income, not the eye-catching peak-week rate. Build the picture from the bottom up. Estimate realistic occupancy across the whole year, not just summer, then apply seasonal rates rather than a flat average, because a coastal cottage might let at a premium in August and at a fraction of that in February. From the gross income, subtract the costs that buy to let owners often forget: platform and booking fees, cleaning and laundry between every stay, utilities and council tax or business rates, insurance, maintenance, management if you use it, and a sinking fund for the wear that constant turnover causes.

What is left is the figure that matters, and it is the figure a lender will care about too. Holiday let income is widely quoted as gross, so a property advertised on a strong gross yield can deliver a much more ordinary net yield once costs come out. Treat any projection from a selling agent or operator as a starting point to challenge, not a promise. Our holiday let yields guide sets out the gross-to-net calculation step by step, and the rental yield calculator on this site lets you test your own numbers.

Understand the rules and tax position first

Two areas catch buyers out, so check them before you fall in love with a property. The first is permission to let short-term at all. Some leases, mortgages, freeholders and planning conditions restrict or prohibit short-stay letting, and the picture varies across the UK: Scotland operates a short-term let licensing scheme, Wales applies a 182-day actual-letting test for holiday let business rates, and London restricts short lets of whole homes to 90 nights a year without planning permission. England is introducing a registration scheme for short-term lets. Our holiday let rules and licensing guide covers each of these.

The second is tax, where the position changed materially in 2025. The furnished holiday lettings (FHL) tax regime, which for years gave qualifying holiday lets favourable treatment on mortgage interest, capital allowances, pension-relevant earnings and certain capital gains reliefs, was abolished from April 2025. Holiday lets are now taxed broadly like other residential property businesses. This has pushed many buyers to consider holding through a limited company, and to take proper advice on structure before they buy. We are not tax advisers; our FHL tax changes guide explains what was abolished, and you should confirm your own position with an accountant.

How much deposit do you need, and how is it funded?

Most holiday let purchases are funded with a specialist holiday let mortgage, which is assessed on the property's projected short-let income rather than on a long-term tenancy. In our experience arranging these loans, lenders typically work to around 70 to 75 per cent loan to value, so buyers should plan for a deposit of roughly 25 to 30 per cent of the price, plus stamp duty, legal and survey fees, furnishing costs and a working capital buffer for the lettings-up period.

Lenders size the loan on a projection of low, average and high-season weekly income, usually evidenced by a letter from a holiday letting agent, and they want that projected income to cover the mortgage payment with a comfortable margin. They also look at the property type, the location's lettability and your own circumstances, and many require a minimum personal income outside the let. Our holiday let deposit guide breaks down what changes the deposit, and the deposit and loan to value calculator on this site lets you model it. We arrange this funding across specialist holiday let lenders and challenger banks as an introducer and broker, not a lender.

Should you buy personally or through a limited company?

Since the FHL regime was abolished in April 2025, the tax case for holding a holiday let inside a limited company has become more common, mirroring the shift the buy to let market made years ago. A company can offset finance costs against profits in a way individual higher-rate taxpayers now cannot for residential property, and it can retain profits for reinvestment, though it brings its own costs, administration and considerations around extracting income. This is genuinely individual, and it is a decision for your accountant rather than your broker.

It also affects funding. Lending to a limited company, usually a special purpose vehicle set up to hold property, is well established, and a wide range of holiday let and serviced accommodation lenders are comfortable with it, typically taking personal guarantees from the directors. If you are weighing the structure, our colleagues at Limited Company Property Finance focus on exactly this question. Decide the structure before you exchange, because changing it later can be slow and costly.

What does the process look like from offer to first booking?

The purchase itself follows the usual conveyancing path, with a few holiday-let-specific additions. Once your offer is accepted, instruct a solicitor who can check the lease, title and any planning or covenant restrictions on short letting, and arrange your survey. In parallel, your mortgage application proceeds, with the lender instructing a valuation that includes a holiday letting income assessment. Having a holiday let mortgage agreed in principle before you offer, which we can arrange, makes you a more credible buyer and shortens the path to exchange.

After completion the work shifts to launch. Most owners furnish to a standard that photographs well, set up listings across the major booking platforms and a direct booking route, arrange cleaning and changeover, and sort insurance designed for holiday lets rather than standard home or buy to let cover. The first season is when you learn your real occupancy and pricing, and many owners revisit their finance once they have a trading record, refinancing onto better terms or releasing equity to buy the next one. We help with that refinance as well as the purchase.