The Boom of Holiday Lets in UK Coastal Regions
The staycation surge has transformed the holiday let market over the past few years. With international travel restrictions and rising costs abroad, more Britons are opting for domestic getaways. This shift has turned coastal areas such as Cornwall, Devon, and Northumberland into bustling short-term rental hotspots.
Key Advantages of Holiday Lets
Higher Rental Yields
Holiday lets generally offer significantly higher income potential compared to traditional rentals. In peak seasons, particularly during the summer months, owners in Cornwall can charge premium nightly rates. A well-located two-bedroom cottage in St Ives, for instance, might generate a full month’s worth of BTL income in just two or three weeks of bookings. Over the course of a year, a successful holiday let could outpace standard rental yields by a wide margin.
Flexible Personal Use
Another major advantage of holiday lets is the opportunity for dual benefit. Investors can reserve selected weeks for personal holidays while still earning rental income the rest of the year. This flexibility means that your investment can serve both as a revenue generator and as your own private coastal retreat.
Tax Benefits for Furnished Holiday Lets (FHLs)
Properties that qualify as FHLs receive favourable tax treatment under HMRC rules. Investors can claim full mortgage interest relief against rental income, enjoy capital allowances on furniture and equipment, and benefit from potential business rates relief instead of paying council tax. For higher-rate taxpayers, this can translate into substantial savings and an enhanced net return on investment.
Challenges to Consider
However, holiday lets come with increased operational demands. Frequent guest turnovers require regular cleaning, maintenance, marketing, and customer service. Investors must also prepare for seasonal variability, where income spikes during holiday periods but softens during off-peak months. To truly succeed, many owners engage professional management agencies – an added cost to consider.
The Enduring Appeal of Buy-to-Let on the Coast
While the holiday let sector is booming, traditional buy-to-let continues to hold strong appeal, particularly in coastal towns with robust local economies.
Key Advantages of Buy-to-Let
Stable, Predictable Income
Buy-to-let properties are typically let on Assured Shorthold Tenancy (AST) agreements, providing consistent, monthly rental income. For investors prioritising cash flow stability, a BTL property occupied by a long-term tenant offers peace of mind and reduces the risk of income gaps.
Lower Management Burden
Compared to the hands-on demands of holiday lets, BTL properties generally require less frequent attention. Once a tenant is in place, landlords are mainly responsible for property maintenance and compliance, making BTL a more passive investment model, particularly when letting agents are involved.
Steady Capital Growth
UK coastal towns like Newquay, Falmouth, and Penzance have seen strong house price growth in recent years. Coastal regeneration, improved transport links, and rising demand for second homes have contributed to sustained appreciation, offering investors a solid opportunity for long-term equity build-up.
Challenges to Consider
However, buy-to-let investors face increased regulatory pressure. The tightening of tax relief rules, licensing requirements, and energy efficiency standards have squeezed landlord profits. Careful financial planning and selection of high-demand locations are now more critical than ever.
Spotlight on Cornwall: A Prime Investment Destination
Cornwall remains a standout example of where both strategies can thrive.
Thanks to its rugged coastline, sandy beaches, and charming towns, Cornwall attracts over 4 million visitors annually, a major catalyst for the holiday let sector. Properties near hotspots like Padstow, St Ives, Falmouth, and Perranporth routinely command top-tier rental rates during the holiday season.
On the buy-to-let front, Truro, Penzance, and Redruth offer strong rental markets driven by local demand from professionals, hospital staff, and families. Properties here may not match holiday let incomes during peak months but offer year-round reliability and lower volatility.
Cornwall’s enduring appeal, alongside its limited supply of new properties due to strict planning regulations, continues to support both rental income and capital growth.
Which Strategy is Right for You?
Choosing between holiday let and buy-to-let depends largely on your investment priorities:
| Priority | Best Strategy | Reason |
|---|---|---|
| Maximise Rental Yield | Holiday Let | High nightly rates, especially in tourist hotspots. |
| Minimal Hands-On Management | Buy-to-Let | Longer tenancies, fewer turnovers, stable monthly income. |
| Tax Efficiency | Holiday Let (FHL Qualified) | Enhanced tax deductions available. |
| Steady Year-Round Income | Buy-to-Let | Consistent tenancies outside of seasonal fluctuations. |
| Lifestyle Benefit | Holiday Let | Personal use for family holidays. |
In practice, a hybrid strategy could offer the best of both worlds.
Some investors choose to holiday let during peak seasons and offer mid-term tenancies over winter months to optimise occupancy and returns.
Final Thoughts
The UK’s coastal property market, especially in thriving regions like Cornwall, offers rich opportunities for savvy investors.
Whether you lean toward the higher yields of holiday letting or the long-term security of buy-to-let, success depends on careful planning, local market knowledge, and a clear understanding of your personal financial goals.
In a world where lifestyle and investment potential are increasingly intertwined, coastal property remains one of the most exciting sectors to explore.