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Investors should expect rapid growth in holiday lets, say experts

Industry experts say there will be no slow-down in the rapid growth of the holiday lets sector.

Travel restrictions during the pandemic led to a boom in staycations and soaring prices for UK holidays this year, but leading brokers who specialise in the holiday let market still see plenty of scope for continued growth.

Andrew Soye, director of Holiday Cottage Mortgages Limited, says: “The holiday let market is still tiny compared to the buy-to-let market which is estimated to be around 2-3 million properties. No one knows exactly how many furnished holiday lets there are - maybe you could guess at 2-300,000 - so it is still very much a growth market.


“The market was growing at about 15% per annum long before Covid which is when private equity spotted the trend. That led to a number of acquisitions and rolling up little cottage companies into bigger companies, but there is still plenty of room for people who want to have just one or two properties.”

But Soye does predict that holiday let owners and investors might be wise to prepare for a readjustment in rental prices which he thinks will crash back down to their pre-Covid levels.

“When people can holiday abroad freely again there will still be plenty of demand for staycations,” he adds. “But I think prices will return to normal levels and that’s a good thing - over-pricing is not good. People have been paying £5,000 for a week’s holiday and they realise that it’s not worth it.”

Joe Stallard, director of House and Holiday Home Mortgages, agrees, but also detects an important shift in the market which means investors are looking at a wider selection of areas rather than just the traditional honeypots.

“We have been exceptionally busy but there are still many opportunities for people looking to start a holiday let business,” he comments. “But what I would say is that the areas of inquiry have broadened.

“People are looking for new holiday let locations and want to explore new places. I went to Whitstable and Canterbury, for example, rather than heading to the Lake District or Devon and Cornwall - a lot of people are trying out new locations.”

Stallard says people are realising there are other fantastic parts of the country – different landscapes, countryside and towns to explore, with Yorkshire, Norfolk and Scotland particularly popular.

“I don’t think we will snap back into old habits next year when travel restrictions are eased because while we may enjoy a holiday abroad there will still be plenty of interest in exploring this country, rather than having two or three holidays abroad. The pandemic opened people’s eyes to holidays in the UK,” he states.

The optimistic assessment of brokers is endorsed by David Robinson, head of intermediary at The Cumberland. The building society specialises in supporting the hospitality sector and holiday let mortgages and has seen significant growth over the last year.

Robinson explains: “We believe staycations will remain a key part of peoples holiday plans and perhaps the longer-term picture will be a sort of hybrid situation, similar to the approach many employers are adopting with home verses office working.”

“Overseas travel will inevitably return, but consumers also now have a fresh perspective on UK breaks, and all the benefits they bring. And this can only remain good news for the holiday lets market.”


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