Firstly some background. Prior to the start of the 2008 "credit crunch," prices for second homes in the most popular seaside resorts were set to rise more than double the UK average. Holiday homes in these "super prime" resorts arguably offer even better investment opportunity and the astute investors are aware of this. Some of the finest properties are in Cornwall, Devon and Norfolk, The Cotswolds, The Lake District and many UK coastal areas. Here the prime properties can be found alongside an established holiday letting infrastructure to help support and maintain the income flow and ongoing returns. Like all investments, there is a risk and values can fall and rise but the illustration below can provide an example of the type of yield that could be achieved.

Please remember that people have run holiday homes as a business and as part of their property investment portfolio for decades and they have generally been very profitable. Firstly we should appraise the yield or rental income as a percentage of the property price. holiday lets in prime resorts, can earn you as much income in a week as the property can fetch in a month if let on a 6 month Assured Shorthold Tenancy (AST). On the whole, the weeks that are let on a holiday basis will produce greater annual income than a buy-to-let rental could have achieved even though the property may be vacant for much longer than a normal buy-to-let void.


For example, a 2-bedroom furnished apartment in Cornwall may rent for an average of £750 per week to holiday makers but may achieve £750 a month if let on a 6-month AST. In effect, if you rent the property to the holiday market, you have considerably enhanced your gross income. With the buy-to-let you may see around 30% loss of income due to management, voids costs etc whilst the holiday home let would again see around 30% reduction in the same rent received due to higher management cleaning and changeover costs. Therefore, you can see a property in a prime location achieving 25 weeks rental as being very profitable and it isn’t surprising that some UK lets that are well run can achieve an 8-10% gross yield on a purchase price compared to around 5% for many buy-to-lets. In cherished locations such as The Lake District, Cornwall and Devon some properties achieve 40 to 50 weeks a year let but you pay in capital values pro-rata for the increased rental potential.