New analysis shows huge returns on properties used as short lets

A new analysis of the top 30 holiday hotspots across England has tried to quantify the premium for homes on sale.

Using government data from the 2021 Census the analysis also looked at the rental price premiums landlords are able to secure across these areas, by letting properties as holiday homes rather than to traditional tenants within the private rental sector. 

The research shows that across these top 30 holiday hotspots, there are over 41,000 holiday homes which account for 1.4 per wof total dwellings stock, although this proportion climbs as high as 4.4 per cent in South Hams alone - home to the desirable Devon holiday destination, Salcombe.

There are almost 5,000 homes currently listed across the market in these 30 holiday home hotspots specifically targeted at investors looking for short-term let investment opportunities. 

This equates to as much as 7.0 per cent of total homes currently listed on the market, a significant proportion of stock that could instead be utilised to help buyers and private renters. Nationally these holiday investment listings account for just 2% of total homes listed across England.

Further analysis shows that the average monthly rent for a private rental property averages £849 per month across these top 30 hotspots. 

However, the average monthly income from a short-term holiday lets sits at a huge £3,325 per month based on an average monthly occupancy rate of just 58 per cent - that’s 292 per cent more than the rental income available via the traditional PRS. 

Across Westmorland and Furness in the North West, holiday homes already account for 2.0 per cent of total dwellings stock and, what’s more, the area is home to the highest holiday rental price premium. Holiday homes in the area command £3,978 per month based on a 68 per cent occupancy rate which comes in 488 per cent higher than the average PRS rent of £676 per month.

The analysis - by Zero Deposit - shows that in the last year, the average private rent has increased by 5.1 per cent across England. However, across the nation’s 30 top holiday home hotspots, this annual increase climbs to 6.4 per cent.

In Arun, this annual increase is as high as 22.6 per cent with Folkestone and Hythe (19.8%), Bournemouth, Christchurch and Pool (12.3%), Chichester (11.9%) and Torridge (10.3%) also seeing far higher rates of rental price growth.

A Zero Deposit spokesperson says: “Landlords have seen the profitability of their buy-to-let portfolios dwindle in recent years as a result of numerous legislative changes from the government. So you can understand why many are turning to the short-let model in areas where demand is high.”