Buy-to-let vs holiday let – find out which makes the best investment

Holiday let

You need a specialist mortgage for a holiday let and rates are higher than for a BTL – Mr Boulger said buyers should expect rates of around 5.5pc. Affordability is calculated based on the past few years’ accounts for the property (which you will need to extract from the vendor). 

If the property has not been previously rented, lenders may be cautious, although if you have surplus income from your job or other sources they will take that into account.

To work as an effective investment, both BTL properties and holiday lets need to be able to generate enough rental income to cover your costs and hopefully offer some level of profit. 


Rents have risen strongly since the peak of the pandemic, which is good news for landlords. According to Rightmove, advertised rents jumped just over 9pc in the year to January.

Amounts vary depending on where you are, but tenants outside London face an average rent of £1,280pcm. In the capital, the average rent is more than £2,100pcm, according to Zoopla.

The big plus point for a BTL over a holiday let, said buying agent James Greenwood of Stacks Property Search, is that they offer a steady income throughout the year. “But the yield, relative to that of a holiday let, will look low,” he said.

Holiday let

Holiday lets earn you far more per night than BTLs, but the income is more seasonal and prone to void periods. Rachel and Stuart Smith own one BTL property, a two-bedroom house in Neath, south Wales, which is rented for £600pcm. 

The couple, from Somerset, also have two holiday lets, a two-bedroom flat in Brean, Somerset, which rents for between £80 and £90 per night, and a three-bedroom house in Tonypandy, Wales, which fetches circa £70 per night.

From a bottom line perspective, the holiday lets are far more lucrative. But Rachel, 42, who also runs a jewellery business and has three children, aged four, six, and eight, points out that they are also much harder work for her and Stuart, 40, who manages the properties himself.

Earnings are also unpredictable. “You might only have 30pc occupancy over a month,” she said. “On the other hand, I do like having the holiday lets because we do use them ourselves as a family.”

Mr Greenwood seconds these words of caution. Running a holiday let can be challenging.

“There is no guarantee of regular bookings, a bad review can cause considerable damage, and owners of holiday lets are operating in an unpredictable political environment where owners of second homes risk further penalisation,” he said.

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