Top 2025 vacation rental investment hotspots in the United Kingdom
In the vibrant world of holiday lets, the UK is witnessing a significant shift in popular destinations. According to the latest Sykes Holiday Cottages' Staycation Index report, several coastal towns and scenic rural areas are emerging as lucrative and sought-after locations for holiday let investments.
Leading the pack is Brixham in Devon, with a staggering 62% growth in bookings year-on-year. Close behind are Teignmouth in Devon, Saundersfoot in Pembrokeshire, and Newborough in Anglesey, all showing strong booking growth of over 30%.
The North Norfolk area, particularly Blakeney and Weybourne, are also generating impressive Airbnb returns. Blakeney, for instance, boasts average annual revenues exceeding £56,000 and occupancy rates ranging from 68-74%.
The Scottish Highlands are another high-demand market, with an average Airbnb occupancy rate of 74%, an average daily rate of £142, and approximately £36,000 in annual revenue.
Established regions like the Peak District, the Cotswolds, and the Lake District continue to be popular, indicating sustained popularity.
James Shaw, managing director at Sykes Holiday Cottages, asserts that the continued growth in domestic bookings presents a valuable opportunity to offset tax challenges with strong demand and healthy returns.
Coastal retreats are particularly popular, as evidenced by the high booking growth in Teignmouth and Saundersfoot. Holiday spending is expected to rise to £1,292 this year, a 17% increase year-on-year.
Interestingly, solo staycations surged by 28% in 2024, with Whitby, Keswick, and Ambleside being the most popular destinations.
The enduring appeal of UK staycations is supporting local economies and helping many owners navigate the shifting landscape, particularly in the wake of the end of the furnished holiday letting tax scheme and the withdrawal of the business asset disposal relief, which previously reduced capital gains tax to 10%.
Robert Jones, founder of Property Investments UK, asserts that holiday let investments generally earn much higher rents and yields than long-term buy-to-lets. For instance, a holiday let could earn an annual income of £27,000, or a rental yield of 13.5%, compared to a long-term let earning an annual income of £12,000, or a rental yield of 6%.
The Sykes data projects that domestic tourism will boost the UK economy by £24 billion this summer. With such promising trends, it's no wonder that nearly two-thirds (63%) of Brits will take a UK break this year, and about a third (34%) plan to make UK breaks their main holiday in 2025.
In conclusion, fast-growing coastal towns like Brixham and Teignmouth, scenic rural areas such as the Peak District and Lake District, and high-demand Airbnb markets in North Norfolk and the Scottish Highlands rank among the most lucrative and popular holiday let destinations in the UK for 2025 based on booking and revenue trends.
- The lucrative market of holiday let investments in the UK is shifting towards coastal towns and scenic rural areas, with Brixham in Devon leading the pack due to a 62% growth in bookings.
- James Shaw, the managing director at Sykes Holiday Cottages, highlights that the growth in domestic bookings for holiday lets presents a valuable opportunity for investors, as they can offset tax challenges with strong demand and healthy returns.
- Property Investments UK's founder, Robert Jones, asserts that holiday let investments generally earn much higher rents and yields than long-term buy-to-lets, making them an appealing option for investors.
