New research from Sykes Holiday Cottages has highlighted that popular destinations in the Cotswolds and Cumbria are among the most profitable locations in the UK for holiday let owners, maintaining strong earnings despite the introduction of recent regulatory changes.
The Cotswolds has been named the top-earning region in the UK, with the average holiday let owner set to generate £29,000 in gross income in 2024, marking a £500 increase from 2023. Nationally, holiday let businesses earned an average of £24,700 in 2024, slightly up from £24,500 in 2023, despite economic challenges.
Top-Earning Locations for Holiday Lets
Grasmere, a village in the Lake District, has emerged as the highest-earning holiday let location, with owners achieving an average annual income of £43,200. Other high-performing Cotswold villages, Bourton-on-the-Water and Stow-on-the-Wold, ranked second and third, with average earnings of £40,400 and £40,000, respectively, in 2024.
Sykes Holiday Cottages’ Holiday Letting Outlook Report, which analyzes data from 22,500 UK holiday rentals, reveals that countryside destinations with year-round appeal for short breaks tend to be the most profitable. Other notable locations include Coniston and Bowness-on-Windermere in the Lake District, as well as Burford in the Cotswolds. Southwold in Suffolk and Castleton in Derbyshire also made it into the top 10, with average annual revenues exceeding £34,000 in 2024.
James Shaw, managing director of Sykes Holiday Cottages, commented on the findings: “Staycation bookings remain strong, particularly in regions like the Lake District and the Cotswolds, which attract visitors year-round. This consistent demand results in higher earnings for owners. While location is key to profitability, small investments such as offering mid-week stays, adding a hot tub, or allowing pets can further increase revenue.”
Shaw also noted the resilience of the holiday let market, despite recent regulatory changes. “Despite challenges, many owners are optimistic about the future and their prospects in the sector,” he said, though acknowledging that new rules and regulations have already affected some businesses.
Concerns Over Regulatory Changes
Although holiday let earnings remain strong, many owners have expressed concerns about the impact of regulatory and tax changes, particularly in the face of rising operational costs. A survey conducted by Sykes among 500 holiday let owners found that 45% have already been affected by regulatory changes, a figure that rises to 63% for those based in Wales.
One of the most significant concerns has been the new ability of some local councils to raise council tax rates, with 58% of owners reporting an impact. Additionally, 33% of owners anticipate being affected by the removal of the Furnished Holiday Lettings tax regime in April, while 32% have already been impacted by new Welsh Government regulations that require minimum letting thresholds to qualify for business rates.
Nearly three-quarters (74%) of short-term let owners believe that new government measures could significantly impact the local economies where their properties are located.
A Call for Government Reconsideration
Sykes’ research also casts doubt on the government’s focus on short-term rental regulations, suggesting that the issue of long-term empty homes in England should be prioritized instead. According to Sykes’ analysis of AirDNA data, there are an estimated 212,500 short-term rental properties in England, representing just 0.85% of all residential properties. In contrast, there are approximately 719,500 long-term empty homes in the country, according to Office for National Statistics figures.
Ben Spier, head of regulation and policy at Sykes, urged the government to reassess its approach. “Over the last two years, small holiday let businesses have been caught up in policies aimed at addressing the housing crisis,” he said. “We are working hard to distinguish between holiday lets, which bring tourism and revenue to local economies, and second or empty homes, which contribute little to the community. Instead of penalizing holiday let businesses, the government should focus on building new homes and addressing the much larger issue of vacant properties and land.”
