How to Make Money from Holiday Lets in the UK

You make money from a UK holiday let by keeping more nights booked at the right price while controlling three costs: platform fees, cleaning and tax. In 2026 the margins are tighter than they were. The old Furnished Holiday Let tax breaks have gone, Airbnb has changed how it charges UK hosts, and registration rules are arriving in every UK nation.

We run serviced apartments and holiday lets in Leeds, Harrogate, York, Brighton and London. This guide covers what works for us and the real numbers behind it.

Key takeaways

• Average gross income: £25,600 in 2025. One-bed lets averaged £16,800 and five-beds £48,200 (Sykes 2026).
• Biggest revenue levers: accepting short breaks (about 25% more revenue), being pet-friendly (about 16% more) and having a hot tub (up to 40% more).
• Tax: the FHL regime ended on 6 April 2025. Holiday lets are now taxed like any other rental.
• Platform fees: Airbnb moved UK hosts to a single 15.5% host-only fee on 22 June 2026.
• Registration: England’s mandatory register is due in March 2027. Wales opened its register in October 2026. Scotland requires a licence.

What’s changed in this update (October 2026)

• England’s short-term let register now has a confirmed date of March 2027.
• Wales’ visitor accommodation register opened in October 2026, with a deadline of 31 March 2027.
• Edinburgh’s 5% visitor levy went live on 24 July 2026.
• Airbnb’s UK host-only fee change is now covered.
• Income figures are updated to the Sykes Holiday Letting Outlook Report 2026.
• A worked profit example now shows the post-FHL tax impact.

The UK Holiday Let Market in 2026

Demand for UK holiday lets is strong, but income now depends much more on the property type and how you run it. Sykes Holiday Cottages analysed more than 25,000 UK lets for its 2026 report. It found that 2025 was its biggest year on record for bookings, and early 2026 bookings were ahead of the year before.

Average gross income by property size (2025):

Bedrooms	Average gross income
1	£16,800
2	£21,000
3	£25,600
4	£36,000
5	£48,200

The top-earning places are rural and heritage destinations. Grasmere in the Lake District averaged £45,900, and the Cotswolds was the highest-earning region at £30,600.

What the big agencies rarely mention is that city lets work differently. A city apartment earns less per booking than a Lake District cottage, but it fills far more weeknights. In our portfolio, contractors, relocating families and business travellers book Monday to Friday, and tourists fill the weekends. That mix smooths out the seasonal dips that rural cottages depend on summer and school holidays to cover.

What Counts as a Holiday Let in 2026?

A holiday let is a fully furnished property rented to guests for short stays, usually from one night to a few weeks. Since April 2025 there is no special tax category for holiday lets. HMRC treats them as ordinary residential property income.

Holiday lets still differ from buy-to-let in five ways:

	Holiday let	Buy-to-let
Income	Higher, but varies by season	Lower, but steady and monthly
Workload	Changeovers, guest messages, pricing	Little day to day
Local tax	Business rates or council tax	Tenant pays council tax
Personal use	Yes, you can block dates	No
Tax treatment	Same as buy-to-let since April 2025	Standard property income

 

Common types of holiday let:

• Coastal cottages: popular with families and couples
• Rural lodges: popular with walkers and dog owners
• City apartments: suited to tourists plus contractor and business stays
• Large group homes: suited to celebrations and reunions

Read our full explainer: What are holiday lets in the UK?

Holiday Let Tax Rules in 2026: What Has Changed

The Furnished Holiday Let regime was abolished on 6 April 2025. Your holiday let is now taxed in exactly the same way as a long-term rental.

Mortgage interest relief

You can no longer deduct mortgage interest as an expense. Instead you get a tax credit of 20% of your interest. Basic-rate taxpayers barely notice the change. Higher-rate and additional-rate taxpayers with large mortgages pay noticeably more tax, as the worked example below shows.

Capital gains tax

Business Asset Disposal Relief (10% CGT) no longer applies. Gains are taxed at the residential rates of 18% for basic-rate taxpayers and 24% for higher-rate taxpayers.

Expenses you can still deduct

• Cleaning and laundry
• Repairs and maintenance
• Insurance
• Platform, agency and management fees
• Utilities and broadband
• Advertising and software
• Accountancy fees

Business rates or council tax (England)

Your let is assessed for business rates if it was available for at least 140 days and actually let for at least 70 days in the previous year. If not, it pays council tax. Many councils now charge second-home premiums of up to 100% on council tax.

Business rates multipliers from April 2026. England now has five multipliers instead of two. For qualifying retail, hospitality and leisure (RHL) properties:

• 38.2p is the small business RHL multiplier (rateable value under £51,000).
• 43.0p is the standard RHL multiplier (rateable value from £51,000 to £499,999).

Self-catering holiday lets generally fall under the hospitality category, so check that the right multiplier appears on your 2026/27 bill. If your rateable value is under £12,000, you may still qualify for Small Business Rates Relief, which can bring the bill to nil.

Wales uses different thresholds. A let must be available for 252 days and actually let for 182 days to be rated for business rates. If not, it pays council tax, which may include a local premium.

Making Tax Digital is now live

Since 6 April 2026, landlords and sole traders with qualifying income over £50,000 must keep digital records and send HMRC quarterly updates. The threshold falls to £30,000 from April 2027, so many holiday let owners will be brought in next year. Check HMRC’s Making Tax Digital guidance to confirm your position.

Worked Example: What a Holiday Let Really Makes After Tax

Gross income figures can hide how much you keep. Below is an illustrative example for a two-bedroom city apartment. The figures are rounded examples, not a forecast.

Assumptions:

• Purchase price: £250,000
• Mortgage: 75% loan-to-value (£187,500) at 5% interest, interest-only
• Nightly rate: £120
• Occupancy: 70% (255 nights)
• Average stay: 3 nights, so 85 changeovers a year

	£ per year
Gross booking income (255 nights × £120)	30,600
Airbnb host fee (15.5%)	−4,743
Cleaning and laundry (85 × £60)	−5,100
Utilities, broadband, TV licence	−3,200
Maintenance, linen, consumables	−1,800
Insurance	−600
Pricing and channel software	−400
Business rates (assuming Small Business Rates Relief)	0
Operating profit	14,757
Mortgage interest (£187,500 × 5%)	−9,375
Profit before tax	5,382

 

Tax under the post-2025 rules. Mortgage interest is not deducted from profit. Instead you get a 20% credit on it.

	Basic-rate taxpayer	Higher-rate taxpayer
Tax on £14,757	2,951	5,903
Less 20% credit on interest	−1,875	−1,875
Tax payable	1,076	4,028
Profit after tax	£4,306	£1,354

 

What this tells you:

1. A 12% gross yield looks strong, but the profit you actually keep can be a small fraction of it.
2. Platform fees and cleaning together take about a third of gross income. Shifting even 20% of your bookings to direct can add more than a price rise.
3. For higher-rate taxpayers, a smaller mortgage or a bigger deposit often improves returns more than any amenity upgrade.

This example assumes your personal allowance is already used by other income. Your figures will differ, so run your own numbers with an accountant.

Registration and Licensing: What Every UK Nation Requires

Every UK nation is moving towards registering or licensing short-term lets. Here is where things stand in October 2026.

Nation	What’s required	Status
England	National short-term let register: register, pay a fee, and show your registration number on every listing	Confirmed for March 2027
Wales	Register with the Welsh Revenue Authority (free)	Open since October 2026, deadline 31 March 2027
Scotland	Short-term let licence from your council	In force since 2022; Edinburgh’s 5% visitor levy live since 24 July 2026
Northern Ireland	Tourism NI certification	Long-standing requirement

England: the register arrives in March 2027

To register, owners will provide details about themselves and the property and pay a registration fee. They will then receive a registration number that must appear wherever they advertise. Councils will get access to the register data to check compliance.

The fee and the penalties had not been published at the time of writing, so check GOV.UK for updates.

There is also a proposed new planning class for short-term lets, Use Class C5, which is not yet in force. Watch for it if you’re converting a home into a holiday let. Once it applies, some councils may require planning permission.

Wales: register now and plan for the visitor levy

Anyone taking paid overnight bookings in Wales must register, even if their council never introduces a visitor levy.

Councils can also choose to charge a per-person, per-night visitor levy. Cardiff is the first to do so. Providers there must account for it on new bookings made from 28 September 2026, for stays from 1 April 2027.

Scotland: licence plus the Edinburgh levy

Edinburgh charges a visitor levy of 5% on the accommodation cost. It applies only to the first five nights of a stay, and hosts file quarterly returns.

How to prepare for England’s register now

• Fire: a current fire risk assessment and interlinked smoke alarms
• Gas: a valid Gas Safety Certificate (CP12), if the property has gas
• Electrics: an EICR (renewed every 5 years) and PAT testing for portable appliances
• Energy: an EPC rated Band E or above
• Insurance: a specialist holiday let insurance policy that covers public liability

Having this paperwork ready means you can register on day one, rather than risk your listings being taken down.

How Much Can You Earn? Income by Property and Location

Income depends mostly on bedroom count, location and how many nights you can sell.

Top-earning UK areas

Rural and heritage destinations lead the Sykes 2026 rankings: Grasmere (£45,900), Aldeburgh (£33,600) and the Cotswolds region (£30,600). These areas earn high weekly rates but are very seasonal.

City lets: lower peaks, fuller weeknights

• London: has the highest nightly rates. Remember the 90-night annual cap on whole-home short lets in Greater London without planning permission.
• Leeds: steady demand from contractors, relocating professionals and university visitors.
• York: strong tourist demand, with peaks during school holidays and the Christmas markets.
• Harrogate: conferences at the convention centre plus spa-town leisure breaks.
• Brighton: year-round demand from weekend breaks, summer holidays and conferences.

Platform Fees in 2026: The Hidden Profit Leak

Airbnb completed its UK switch on 22 June 2026. UK hosts moved from the old split fee, where the host paid about 3%, to a single 15.5% host-only fee deducted from the payout. If you’re not VAT-registered, VAT on that fee pushes the effective cost higher still.

What to do about it:

1. Reprice. If you haven’t changed your rates since June 2026, you’re probably earning around 12% less per booking than you think.
2. Spread your bookings across channels. List on Booking.com and Vrbo too, as each charges differently.
3. Build direct bookings. Repeat guests, contractors and corporate clients should book with you directly. We take direct bookings through our own booking site.

7 Proven Ways to Increase Holiday Let Income

1. Accept short breaks

Sykes data shows that accepting short breaks and multiple bookings per week brings in about 25% more revenue on average. Use 2-night minimum stays mid-week, and keep longer minimums only for peak weeks.

2. Price dynamically, not just by season

Review your rates every week. Look at local events, school holidays and how fast bookings are coming in. If bookings are coming in quickly, raise your prices rather than only cutting them when it’s quiet.

3. Go pet-friendly

Pet-friendly lets earn about 16% more on average. Protect the property with a pet cleaning fee and clear house rules, such as no dogs upstairs.

4. Add one standout feature

Homes with a hot tub can earn up to 40% more. For a city apartment, the equivalent is a proper workspace, fast Wi-Fi and parking. These are what win contractor and business bookings.

5. Target a second type of guest

One property can serve more than one audience. A city flat can host contractors during the week and families or couples at the weekend. Write listings that speak to each group. See our pages on contractor accommodation and relocation stays.

6. Treat photos and reviews as revenue tools

Use professional photos, with the main living space shown first. Reply to every review within 24 hours. Fix the small things guests mention, such as blackout blinds, spare phone chargers and clear heating instructions, before they turn up in the next review.

7. Cut the cost of each booking

Longer stays mean fewer changeovers. Direct repeat bookings avoid the 15.5% platform fee. Lowering these costs often adds more profit than raising your nightly rate.

Buying and Financing a Holiday Let

Location checklist

• Is there demand all year round (business, events, tourism), not just in summer?
• Is the area affected by a short-let cap, a council tax premium or planning restrictions?
• Do the numbers still work at 60% occupancy, not 80%?
• Is there parking, and are there good transport links?

Holiday let mortgages

You’ll need a specialist holiday let mortgage. Lenders typically:

• Lend up to about 75% loan-to-value, so plan for a deposit of at least 25%
• Assess affordability on projected short-let income, often based on a letting agent’s projection, rather than monthly rent
• Set their own limits on personal use and the minimum personal income they require

Criteria vary by lender, so speak to a specialist broker.

Costs, Insurance and Compliance

Cost	Typical range
Management agency	15–25% of income
Airbnb host fee	15.5% (UK, from June 2026)
Cleaning per changeover	£50–£120
Insurance	Specialist policy required
Business rates	Often £0 with Small Business Rates Relief
Council tax (if not rated for business rates)	A second-home premium may apply

 

Standard home insurance rarely covers paying guests. Choose a policy that covers accidental damage by guests, loss of rental income and public liability.

For safety, you need:

• Smoke alarms on every floor
• Carbon monoxide alarms near any fuel-burning appliance
• Up-to-date gas and electrical certificates

Use our landlord checklist for the full list.

Should You Self-Manage or Use a Management Company?

Self-managing saves you the 15–25% management fee. In return, you handle the pricing, late-night guest messages, cleaner no-shows and compliance yourself. A good management company should pay for itself through higher occupancy and better rates.

At JF Property Partners, we offer several options:

• Holiday let management and Airbnb management: we run pricing, listings, guest communication, cleaning and compliance for you.
• Guaranteed rent: a fixed income with no void periods.
• Airbnb coaching: for owners who’d rather learn to run their let themselves.

👉 Get a free income estimate for your property

Conclusion

Holiday lets can still make good money in 2026, but the easy margins have gone. The owners who do well:

• Price dynamically
• Accept short breaks
• Serve more than one type of guest
• Keep platform and cleaning costs under control
• Plan for post-FHL tax before they buy

Get your compliance paperwork ready now, so the new registration schemes don’t catch you out.

If you’d like help getting more from your property, talk to our team at JF Property Partners.

Frequently Asked Questions

Is a holiday let still a good investment in the UK in 2026?

It can be, but margins are tighter. The average let earned £25,600 gross in 2025. Since the FHL regime ended, mortgage interest only gets 20% tax relief, so higher-rate taxpayers with large mortgages keep much less. Work out your profit after tax, not just gross yield, before you buy.

How much does a holiday let make per year in the UK?

The average gross income in 2025 was £25,600, ranging from £16,800 for a one-bed to £48,200 for a five-bed (Sykes 2026). Top areas such as Grasmere averaged £45,900. After platform fees, cleaning, bills, mortgage interest and tax, net profit is often a fraction of the gross figure.

What happened to the Furnished Holiday Let tax rules?

They were abolished on 6 April 2025, and holiday lets are now taxed like any other rental property. Mortgage interest gets a 20% tax credit instead of being fully deducted. Gains are now taxed at the standard 18% or 24% CGT rates, instead of 10% through Business Asset Disposal Relief.

Do I need to register my holiday let in England?

Yes, from March 2027. England’s mandatory short-term let register will require you to register, pay a fee, and show a registration number on your listings. Prepare now by making sure your fire, gas, electrical and EPC paperwork is up to date.

Do I need to register a holiday let in Wales?

Yes. The Welsh Revenue Authority register opened in October 2026, and you must register by 31 March 2027. Registration is free. You must register even if your local council does not charge a visitor levy.

How much does Airbnb charge hosts in the UK in 2026?

Since 22 June 2026, most UK hosts pay a single 15.5% host-only fee, which is deducted from the payout. This replaced the old split fee, where hosts paid about 3%. If you’re not VAT-registered, VAT on the fee raises your effective cost.

Does a holiday let pay business rates or council tax?

In England, a holiday let pays business rates if it was available for 140 days and actually let for 70 days in the previous year. Otherwise it pays council tax, possibly with a second-home premium. In Wales, the thresholds are 252 days available and 182 days let.

Where is the most profitable place to own a holiday let in the UK?

Larger properties in rural and heritage areas earn the most per year. Grasmere, Aldeburgh and the Cotswolds lead the Sykes 2026 rankings. City lets earn less per booking but fill more weeknights from contractors and business travellers, which gives steadier income all year.

How can I increase my holiday let income?

Accept short breaks (about 25% more revenue), go pet-friendly (about 16% more), and add a standout feature such as a hot tub (up to 40% more). Price dynamically, and grow your direct bookings so you pay less in platform fees.

Do I need Making Tax Digital for my holiday let?

Since April 2026, you must use Making Tax Digital if your combined property and self-employment income is over £50,000. The threshold drops to £30,000 from April 2027, so more holiday let owners will need it next year.