The UK holiday let market has grown into a significant part of the accommodation sector.
In 2025, there were more than 100.9 million guest nights spent in short-term lets across the UK, an increase of 11.5% year-on-year. Domestic visitors accounted for 67.2% of those guest nights.
Short-term accommodation is no longer a niche corner of the market. It is a substantial and increasingly professionalised sector, with investors able to generate income from leisure travel, short breaks, events, business trips and domestic tourism.
So what does the market look like in 2026, and why are holiday lets continuing to attract investor attention?
Demand remains strong
The clearest starting point is demand.
UK short-term lets recorded 100,911,620 guest nights in 2025, up from 90.5 million the year before. England alone accounted for more than 78 million guest nights.
The market also continues to perform strongly into 2026.
VisitBritain reported that in June 2026, both average revenues & nightly rates reached a new June high, exceeding the same month in both 2024 and 2025 while occupancy remained broadly stable year-on-year.
That combination is important.
Stable occupancy alongside stronger average rates suggests that operators are not relying purely on filling more nights. In some parts of the market, they are also achieving stronger pricing.
For investors, this is where a well-positioned holiday let can become interesting.
What can a UK holiday let earn?
According to the 2026 Sykes Holiday Letting Outlook, the average UK holiday let generated approximately £25,600 in gross income during 2025, up from £24,700 the previous year.
The research was based on bookings and revenue data from more than 23,500 UK holiday rentals and highlights the potential income available in the sector, particularly where an investor has the right property in the right location.
Why holiday lets can generate higher income
The biggest difference between a traditional long-term rental and a holiday let is how the income is generated.
A long-term tenant typically agrees a monthly rental figure, whereas a holiday let is priced on a nightly basis.
That gives an operator the ability to adjust pricing depending on:
season
weekends
school holidays
major events
local demand
booking lead time
occupancy levels
A property may therefore command materially different rates throughout the year.
A Friday night during peak summer can have a very different value from a Tuesday in November.
That flexibility can give well-managed holiday lets greater revenue potential than a fixed monthly rental model.
A market that has remained resilient
The wider UK property market has gone through substantial change over recent years.
Interest rates have moved, taxation has changed and landlords have had to adapt to a changing regulatory environment.
Despite that, short-term accommodation demand has continued to grow.
Guest nights increased by 11.5% in 2025, while average UK holiday-let gross income increased from £24,700 to £25,600 over the same period.
Operators have also adapted.
Industry data suggests holiday-let owners are increasingly making properties available for more days, improving facilities and accepting shorter stays to maximise occupancy and revenue. Owners who accepted short breaks and multiple bookings in the same week were reported to achieve, on average, more bookings and higher revenue.
This flexibility is one of the sector’s strengths.
A different regulatory framework
Holiday lets also operate under a different legal framework from standard residential tenancies.
From 1 May 2026, most private rented tenancies in England moved onto the new assured periodic tenancy framework introduced by the Renters’ Rights Act.
Genuine holiday lettings, however, remain excluded from the assured tenancy regime.
Under Schedule 1 of the Housing Act 1988, a tenancy granted for the purpose of occupying a property for a holiday is excluded from being an assured tenancy, and this position remains under the Renters’ Rights reforms.
That means holiday accommodation operates differently from the traditional private rented sector which can offer investors greater flexibility around how and when the property is let.
It is important to remember that holiday lets still have their own requirements around areas such as fire safety, planning, insurance and electrical and gas safety.
But they are not subject to exactly the same tenancy framework as a standard long-term residential let making them an attractive alternative to traditional buy-to-let investing.
Could holiday lets benefit from business rates relief?
There is another feature investors sometimes overlook.
Qualifying self-catering holiday accommodation in England can be assessed for business rates rather than council tax.
To qualify, the property must generally:
be available to let commercially for at least 140 nights in a 12-month period
actually be let commercially for at least 70 nights
be intended to remain available for at least 140 nights in the following year.
Where the property qualifies for business rates, Small Business Rate Relief may also apply.
If the property has a rateable value of £12,000 or less and is the only property used by the business, the business-rates bill can potentially be reduced to £0.
Properties with a rateable value between £12,001 and £15,000 can receive tapered relief.
This will not apply to every investor or every property, and eligibility needs to be confirmed on an individual basis.
But for the right property, it can materially affect operating costs.
Location still matters most
The growth of short-term letting does not mean every property automatically makes a good holiday let.
Location remains fundamental.
Strong holiday-let locations usually benefit from one or more clear sources of demand:
established tourism
beaches and coastline
national parks
events
attractions
business travel
transport links
year-round visitor activity
The best markets can also attract more than one type of guest.
A coastal property, for example, may benefit from peak summer tourism while also attracting weekend breaks, couples, families and off-season stays.
This is where professional management, dynamic pricing and local demand analysis can make a significant difference.
What should investors look for in a holiday let?
Rather than simply asking whether holiday lets are a good investment, investors should look at the individual property.
Some of the key considerations include:
Entry price
Does the purchase price make sense relative to realistic income?
Occupancy
How many nights can the property reasonably be expected to achieve?
Average nightly rate
What are comparable properties actually charging?
Seasonality
Is demand concentrated into a few months, or does the location attract visitors throughout the year?
Management
Will the property be self-managed or professionally managed?
Operating costs
What does the investment generate after all running costs?
Demand drivers
Why are people actually visiting the area?
These fundamentals matter far more than simply buying a property and listing it online.
The bigger picture
The numbers suggest the UK short-term accommodation market continues to have significant demand behind it.
More than 100 million guest nights were recorded in 2025, demand increased by 11.5%, and average holiday-let gross income also rose year-on-year.
For investors, holiday lets can offer several attractive characteristics:
flexible nightly pricing
exposure to growing domestic travel demand
potentially stronger income than fixed monthly rents
a different regulatory structure from standard residential tenancies
possible business-rates relief for qualifying properties
the ability to outsource management and operate the property on a hands-off basis
But as with any property investment, the quality of the opportunity comes down to the fundamentals.
The right property, in the right location, bought at the right price and operated effectively.
At Lion Rose, we assess holiday-let opportunities based on both the income potential and the underlying investment fundamentals, including location, demand, operating costs and projected NET return.
To explore our latest UK holiday-let investment opportunities, give us a call or email hello@lionrose.co.uk.
Investment returns are not guaranteed. Tax, business-rates and regulatory treatment depend on individual circumstances and should be confirmed with the relevant professional advisers.