Property investors with holiday lets are set for a bumper year as record numbers of tourists visit Britain. New research from specialist mortgage lender Together has revealed that investors who specialise in short-term holiday accommodation can expect to generate yields of as much as 12% in some of the UK’s most popular tourist destinations.

Last year, 39.2 million overseas visitors came to the UK – up 4% on 2016 – adding £24.5 billion to the UK economy. Tourism chiefs, though, predict 2018 to be an even bigger year for UK tourism, with overseas visitors passing 40 million for the first time on record. Numbers have been boosted by the Royal Wedding in May and the continued weakness of sterling, which is offering overseas holidaymakers a favourable exchange rate.

The tourist boom, as you would expect, has upped demand for short-term holiday lets. In York, for example, investors could achieve potential yields of 12.2% if they rent out their flat, making the historic Roman city – home to York Minster and medieval shopping street The Shambles – a shrewd choice for those looking to invest in property.

Similarly, Bath – with its literary connections to Jane Austen, Roman Baths and stylish Georgian architecture – is a massive draw for both tourists and investors, with short-term lets in the city and the wider North East Somerset area offering yields of 7.5%.

Another major tourist hub is Stratford-upon-Avon, birthplace of William Shakespeare, which draws hordes of visitors throughout the year. Yields of 6.3% can be achieved from flats and maisonettes situated within a few miles of the Bard’s final resting place in the town’s Holy Trinity Church.

Windsor is another big draw thanks to its inextricable links to the royal family. Flats in its historic centre, which played host to the Royal Wedding at Windsor Castle in May – watched by a staggering global TV audience of 2 billion – can achieve yields of 4.4%.

“Tourists from across Europe, the US, Japan, China and Canada have a long-held fascination with Britain, our Royal family and cultural heritage, so it’s not surprising that they’re still flocking here en masse, despite continued uncertainty around Brexit,” Daniel Owen-Parr, head of field sales at Together, said.

“These tourists are looking for good quality accommodation, both in hotels and B&Bs but also in short-term lettings such as flats in central locations or holiday cottages by the coast, which are easier than ever to find and rent thanks to the growth of websites like Airbnb.”

As the number of overseas visitors to the UK has increased every year since 2010, demand for holiday lets has as a consequence grown and grown, representing an ‘extremely lucrative opportunity for savvy investors in the market for holiday properties to rent out on a short-term basis’.

Owen-Parr added: “Holiday lets are widely regarded as attractive investments as they generally achieve higher yields than longer-term buy-to-let properties and in most cases are exempt from the tax hikes which hit buy-to-let investors last April.”

Under new rules introduced in April 2017, buy-to-let investors can currently offset only a portion of mortgage interest. This will fall to zero by 2020, replaced by basic-rate relief of 20% regardless of the landlord’s tax band.

By contrast, owners of holiday lets can still deduct mortgage interest payments from rent before calculating their tax liability – provided they can satisfy certain tests. What’s more, holiday let owners have the added benefit of being able to claim the full cost of furnishing the property, whereas buy-to-let investors can only claim for repairs.