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Holiday rental properties are now enjoying higher yields than residential buy-to-lets, according to new research. Second Estates, which is a real estate fund for people investing in UK holiday properties, shows holiday rentals are among the highest returning assets in the property sector. Its study found that holiday property yields have been 1.1% higher than residential buy-to-lets in the past 12 months. Last year, a holiday let would earn an average income per week of £563, which compares favourably with an average of £191 for buy-to-let residential properties. Even when you make adjustments for off-peak weeks, holiday rentals bring in almost three times as much as residential buy-to-lets.

This data shows that holiday lets had an average yield of 6.1% in the past 12 months. The property sector which came closest in terms of yield was student accommodation, at 5.25%. The figures also show that holiday rentals are predicted to outperform other groups over the next five years as well, with an average total yield of 9.3%. Second Estates CEO, Alistair Malins, says the figures show the strength of the holiday property sector as an emerging alternative investment to traditional buy-to-let residential properties. The UK had a 7% increase in holidaymakers from overseas in 2017, as well as an 11% increase in tourism spend. With the UK tourism sector enjoying an upsurge, the sector is likely to remain strong. This confidence in the UK holiday market is having a positive knock-on effect for investment in holiday accommodation. About 165,000 properties are listed as holiday lets in the UK. Many UK residents are enjoying a staycation for various reasons. Holidays abroad are becoming more expensive, flights have been cancelled and more than 100,000 holidaymakers were stranded overseas when Monarch Airlines went bust. Sterling isn’t as strong as it was and so British holidaymakers are getting fewer euros for their pound, which is also putting up the price of a holiday within Europe.

When looking for holiday rental properties to invest in, the three C’s are the best locations, namely countryside, coast and city. The top locations are the Lake District, Cornwall, Yorkshire, the Peak District, Devon, Dorset, Norfolk, Cotswolds, Wales and the Isle of Wight. Proximity of the property to the main landmarks or attractions in a particular town or city will be a further bonus, as well as any views.

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