A holiday let can be a tempting idea. It’s a great way to help people enjoy their holiday while giving yourself a lovely getaway nook on the coast.

Even though there are perks to running a holiday let, there are certainly challenges. Rising energy costs and the weight of bad reviews, to name a couple, can make holiday lets difficult to run.

If you’re unsure where you stand, we’ll be exploring the pros and cons of running a holiday let, plus the legal essentials and tips on how to get the most out of it.

Read on for the full guide or go straight to the sections you’re most interested in.

1. Are holiday lets a good investment?
2. Pros
3. Cons
4. What costs can I expect?
5. How much are business rates for holiday lets?
6. What electrical checks are required in holiday lets?
7. Holiday let regulations
8. Is it still worth running a holiday let?
9. Top tips for running your holiday let

Are holiday lets a good investment?

If we’re comparing holiday lets with buy-to-let, then there is a case for choosing the former. As you have more frequent short-term stays, plus the ability to price dynamically based on demand, you can earn more than you would from a long-term tenant.  

“We’re seeing more investors explore holiday lets as a way of diversifying from traditional buy-to-let, particularly in areas with strong tourism demand,” said Jorden Abbs, chief executive of specialist broker, Commercial Trust. “However, lenders will look closely at the sustainability of that income, so it’s important that the figures stack up over the long term, not just during peak periods.”

You might be tempted to go with the coast (and we might have cajoled you into it with the intro) but as a location it’s highly seasonal – you won’t get much business in winter. Opting for the countryside, for example, could see business being more consistent year-round.

Sykes Holiday Cottages did some research into the highest-earning regions in the UK for holiday lets. The Cotswolds remains the highest earning region at an average of £30,600 a year, followed by Cumbria and the Lake District at £28,400 and Highlands and Islands at £28,000.

“When selecting a location, consider factors such as local tourism trends, accessibility, and the availability of amenities,” said Abbs. “Features such as closeness to airports, train stations, and major motorways can significantly affect a property’s accessibility and appeal to guests. However, you don’t want the property to be so close that noise will disrupt the peace and tranquility holidaymakers will be looking for.”

Using a holiday let income calculator to give you a more specific idea of the numbers.

Pros

There’s a lot to like about running a holiday let.

• Shorter lets mean that you can opt for more flexible pricing and earn more
• You can use the property when it’s not occupied 
• It’s easy to advertise to international markets through platforms such as Airbnb
• You could be eligible for tax relief

“Don’t get me wrong, the hours are long. But it does offer a greater level of flexibility in when those hours happen, meaning I could be a lot more involved in the girls’ school events and be at home/the glamping site with them, rather than at an office during the school holidays,” said Alex Brewis, co-founder of The Four Bells Glamping.  

“After a number of years exclusively behind a desk for my work, it is amazing to be able to spend so much more time outside,” he added. “It is a huge relief for the mind to not just stare at a screen for hours a day; though there are emails to respond to, and website management to think about, the work is so varied that you can easily spend numerous working days away from the desk, which is a real bonus.”

Cons

Then of course, there are the downsides.

• Inconsistent income, especially in the off-season
• Running a holiday let is time and labour-intensive
• You’re susceptible to losing income during economic downturns and widespread health events, such as Covid-19
• Changing council rules and worsening local attitudes to short term and holiday lets make them more difficult to run

“There’s always been loads of challenges with running a holiday let, but one of the ones that springs to mind is actually getting bookings and how you manage those,” said Richard Young, holiday let owner and founder of selfcatering.co.uk. “There are agencies and online travel agents that will do this for you, but sometimes there’s a hefty fee, which can be 15 – 22% commission. 

“For some, this is just too much, and I can understand why, which is why getting your own bookings and dealing with the guests themselves can be a really useful thing to do. But with that comes the inevitable hassles of taking payments and updating calendars.”

It is a busy marketplace, so put a lot of thought into marketing and how to make yourself stand out. Check out The essential guide to small business marketing for more.

What costs can I expect?

• Electricity
• Council tax
• Insurance
• Mortgage
• Laundry
• Gardening
• Maintenance and repairs
• Management agent costs (which can take up to 25% of your income)
• Marketing
• Travel (if your holiday let is far away from you)

Speaking of mortgages, they’re not as easy to secure. They’ll typically have a higher loan-to-value (LTV) than standard buy-to-let because they’re seen as a riskier investment. Plus, they have a minimum 20% deposit. “Not all lenders operate in the holiday let space, so criteria is more specialised,” said Abbs. “Borrowers should be prepared with a projection of high, middle and low season rent, which can be secured from a reputable holiday rental company.”

Speak to a broker about a mortgage as they can secure you a better deal. As holiday let mortgages aren’t regulated, but brokers are, they will be able to give you the best advice for your needs.

Mortgages offered by building societies such as:

• Cumberland Building Society
• Leeds Building Society
• Furness Building Society
• Bath Building Society
• Hodge Bank
• Ipswich Building Society
• Monmouthshire Building Society
• Principality Building Society
• Scottish Building Society
• Teachers Building Society
• Vernon Building Society

How much are business rates for holiday lets?

For the 2026/27 tax year, the small business multiplier for holiday lets is 38.2p while the standard multiplier is 43p.  

As for how business rates apply, it’ll differ depending on whether you live in England, Scotland or Wales.

In England, it’ll be rated as a self-catering property if both of these things hold true for the past 12 months

• It was available for short-term rental for at least 140 nights
• It was let for at least 70 nights

In Wales, you’ll be valuated for business rates if you let out your property for 28 nights a year or fewer (per visit). All of the following conditions must apply.

• It was available to let for at least 282 nights in the last 12 months
• It was let for at least 182 nights in the last 12 months or at least 182 nights a year in the past 24 to 36 months
• You plan to make it available to let for 252 nights in the next 12 months

You can include up to 14 nights a year that you donate to a registered charity on or after April 1, 2026. These can count towards the 252 nights you made the property available to let or the 182 nights that it was actually let.

In Scotland they’re called non-domestic rates. You’ll need to pay if:

• It isn’t your main or only residence
• You rent the property as a short-term commercial rent
• It’s been available to let for at least 140 days in the past financial year
• It’s let for at least 70 days in a financial year

In Northern Ireland, business rates don’t apply if your property is let out for fewer than 140 days a year.

What electrical checks are required in holiday lets?

Electrics are the most common cause of domestic fires here in the UK. Preventing them, especially when there are guests involved, is paramount.

In Scotland, you must get an Electrical Installation Condition Report (EICR), but this isn’t necessary in the rest of the UK.

Wherever you are in the UK, it’s strongly advised to:

• Ask an electrician to complete a five-year electrical safety check on all of the property’s fixed electrics
• An annual electricity safety check by a suitable electrician on swimming pools, saunas, steam rooms and hot tubs
• Having Portable Appliance Tests done annually to show that your appliances are safe. You should also follow the guidance given from your tester and remove any equipment that’s faulty
• Buy any future items from reputable suppliers
• Ensuring that are no cables that can trip anyone up – not least your guests  

On a related note, you do need a valid gas safety certificate. This applies across the UK and to all gas appliances, flues and pipework.

Holiday let regulations

As you can see, you can’t jump into holiday lets in a gung-ho fashion. There are a couple more rules you need to know.

Let’s start with licensing. Scotland already has a licensing scheme in place, Wales is phasing one in and England is having a nation-wide consultation on introducing a licensing scheme.

Licensing laws in England

Nothing is in place yet, but a whitepaper on the subject is seeking greater health and safety compliance, improved oversight from the local authority and greater data transparency.

Licensing laws in Wales

From 2029, visitor accommodation providers will be expected to register and get a licence. To get the licence, owners will need to prove that their accommodation has gas and electricity safety certificates, carbon monoxide alarms and public liability insurance as well as having a fire safety risk assessment done.

Licensing laws in Scotland

Licensing laws in Scotland have been around since October 2022. If you’re new to holiday letting, you need to get a licence before you start accepting guests. You could be fined up to £2,500 if you don’t get one. Different licences exist for the likes of ‘home sharing’, ‘home letting’ and ‘secondary letting’. The local authority will be the ones you apply to and the people responsible for enforcing the laws. 

Aside from that, it’s wise to get on top of these actions:

• Child-proof the property
• Make sure the windows open by 100mm or less when above the ground floor or accessible by a child
• Minimise tripping and slip hazards in and around the property
• Install handrails on staircases and make sure that they’re secure
• Fit non-slip tiles around the pool, if you have one
• Install cordless blinds
• Have warning signs for hazards such as low ceilings around the property (as well as in the property description)
• Provide a list of contacts in case there’s an emergency

The Health and Safety Executive can tell you what you need to check as part of your risk assessment.  

In England and Wales, you’ll need a fire risk assessment to meet the requirements of the Regulatory Reform (Fire Safety) Order 2005. Depending on your property, you can do this yourself or enlist a professional to come in. From there, it’s a good idea to carry out an annual review.

New fire regulations were introduced for England and Wales in October 2023. Have a read through the links below.

Making your small paying guest accommodation safe from fire (England)

Make your guest accommodation safe from fire (Wales)

Properties in England and Wales must have interlinked smoke alarms and heat alarms in every area where a fire could start. For kitchens and other rooms where a fire alarm could be easily and falsely triggered, there should be a heat alarm. All alarms should be mains powered with a tamper-proof back-up battery power supply.

Is it still worth running a holiday let?

Yes, it’s a lot of work and a lot of logistics. However, some people who run holiday lets seem to get a lot of value out of them.

“I would say one of the biggest positives is that you can really steer your own course,” said Alex Brewis. “You get back from the business what you put into it, so if you put in the time and research, and don’t just follow the crowd, you get the satisfaction of building a strong and unique offering.”

Top tips for running your holiday let

According to Sykes Holiday Cottages, the three most sought after features in properties are WiFi, a hot tub and large outdoor spaces. Parking and fire pits are also popular.

The same research says that allowing pets gives you a 16% boost in bookings. Do consider allergies of other guests who might be staying. They need lots of space, outdoor walking areas and extra cleaning. Consider whether it’s worth the extra bookings.

Now to hear from our two holiday let owners. Alex Brewis shares some of his advice.

1. In our area of holiday letting, when there are things happening around you like severe weather, it can get quite stressful. It is really important to remember that reality happens; it is how you deal with it that can be the difference between a happy guest or a less positive experience.

2. I am always amazed by the number of holiday lets that have alcohol as part of packages they offer their guests, not realising that proper licensing needs to be adhered to. Even offering a bottle of bubbly as a freebie in a hamper can land you in very hot water!

3. Proper research of what legislation is associated with your particular holiday let is so important to make sure your guests have an enjoyable and safe experience.

4. For those thinking of glamping, there can be a perception that the market is at saturation point. I don’t agree with this viewpoint, but I can see why people come to this conclusion. I think part of the issue is that many sites sign up with a pod builder or franchise, but because the development of pods has become so turnkey, they all turn out looking the same. With a fixed layout, with limited scope for real personalisation, it makes it hard to stand out, so you feel like you are lost in a sea of pods. This is something that is increasingly happening with shepherd’s huts also, so, if you can, bespoke is best or something where you can really make into your own.

5. If you do look at an off-the-shelf structure, check, check, and check again on the company’s ROI calculations, as there is some absolute pie in the sky floating around. Look at what else is around you and make sure you are comparing apples with apples when developing your offering and pricing.

Richard Young shares his advice.

1. You have to be able to distance yourself from things that go wrong, people that are upset with something, and sometimes people who just are after free stuff, really. On some of the platforms, specifically Airbnb, you can be bullied into offering discounts by the threat of a poor review for something that may not be your fault or even a real issue.

2. There’s the practical side of things, like the wear and tear and damage of things like bedding getting damaged, or people arriving late, or not doing what they say they’re going to do, whacking the heating up high and having the windows open. Don’t let any of this put you off; it’s still a great business to be in. You just have to be able to put systems and things in place and account for the issues that do arise.

3. I would make sure that if it’s a business you wish to get involved in, you start to get your own customers and own contacts as soon as possible. It’s very easy to take credit card payments these days and there are lots of tools to help with managing your business.

4. I’d also ensure that you do adequate accounting from the start. No one likes to be working out what a receipt was for at the end of the year, so an accounting software platform is a must.

5. Make sure you stay on the right side of the law with stuff like smoke alarms, carbon monoxide detectors, and other safety features. 

6. Stay in the property yourself or get a relative to do the same and give you feedback. You will notice things that you might have missed and then act on them. Put things in place to help make it easy. It can sometimes be as simple as having a checklist which the cleaning staff may go through, and that one checklist can stop people finding things that they might not like and contacting you or even leaving a bad review.

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