New research from Sykes Holiday Cottages has revealed that popular towns and villages in the Cotswolds and Cumbria are among the best locations in the UK for holiday let owners, with strong earnings despite recent regulatory changes.
The Cotswolds has emerged as the top-earning UK region, with the average owner generating £29,000 in gross income in 2024, up by £500 from 2023. Across the UK, holiday let businesses brought in an average of £24,700 last year—slightly up on 2023’s £24,500—despite tougher economic conditions.
Best locations for holiday lets
The Lake District village of Grasmere has been identified as the highest-earning holiday let location, with owners achieving an average annual income of £43,200. The Cotswold destinations of Bourton-on-the-Water and Stow-on-the-Wold ranked second and third, with owners in these villages generating £40,400 and £40,000, respectively, in 2024.
Sykes Holiday Cottages’ Holiday Letting Outlook Report is based on an analysis of bookings and revenue data for 22,500 UK holiday rentals. It highlights that the most profitable locations tend to be countryside destinations with year-round appeal for short breaks.
Other high-performing holiday let 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 their way into the top 10, with average annual gross revenues exceeding £34,000 in 2024.
James Shaw, managing director of Sykes Holiday Cottages, said: “Staycation bookings are strong – particularly to regions like the Lake District and the Cotswolds that are appealing for short breaks all year round, which translates into higher earnings for owners.
“Location is obviously incredibly important in the earning-potential of holiday lets, but other small investments and decisions can drive additional income too, including accepting short mid-week stays, adding a hot tub and allowing pets – these are all things we advise our owners on.
“Despite significant change in the industry, the findings throughout our report show the resilience of the holiday let market, with average incomes up last year. The owners we speak to are feeling good about the future and their prospects within the sector, but many say they have already been affected by new rules and regulations introduced.”
Concerns over regulation changes
While average holiday let earnings have remained strong, many owners have raised concerns over recent and upcoming regulatory and tax changes, particularly in light of rising running costs.
A survey of 500 holiday let owners conducted by Sykes found that nearly half (45%) of UK owners say they have already been affected by regulatory changes, with this figure rising to 63% for those in Wales.
The most significant factor for many owners has been new rules allowing some councils to increase council tax rates, with 58% reporting an impact. A further 33% of owners say they expect to be affected by the removal of the Furnished Holiday Lettings tax regime in April, while 32% have already been impacted by new Welsh Government regulations requiring 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 operate.
Government focus should shift
Sykes’ research also found that long-term empty homes far outnumber holiday lets in England, raising questions over the government’s focus on restricting short-term lets as a solution to the housing crisis.
According to its analysis of AirDNA data, there are an estimated 212,500 short-term rental properties across England, representing just 0.85% of all residential properties. This compares to 719,500 long-term empty homes, based on ONS figures.
Ben Spier, head of regulation and policy at Sykes, added: “Unfortunately, over the last two years, small holiday let businesses have been caught up in policies aimed at improving housing availability. We’re working hard to lobby the Government to distinguish between holiday lets, that bring tourism to the area and generate spend locally, and second and empty homes that comparatively contribute nothing.
“Instead of penalising holiday let businesses, Government focus should shift to building new homes or policy tackling the many more properties and land that lay vacant.”
