Buying a UK Holiday Let: Is It Right for You and How to Buy

A UK holiday let can give you a place to escape to and a business that earns its keep. But it is a bigger commitment than buying a home, and the rules have changed a lot since 2025. The tax perks that once set holiday lets apart have gone, councils have new powers to charge visitors and second homes, and lenders still apply stricter criteria than for a residential mortgage.

This guide brings everything together in one place. First, we help you decide whether a holiday let is right for you and whether the numbers work in 2026. Then we cover how to get your finance ready, how to make an offer a vendor will take seriously, and the five steps to buying your holiday let.

1. Is a holiday let right for you?

Before you look at properties, be honest about why you want one and how much time you can give it. A holiday let is a small hospitality business first and a second home second.

Personal use

Using the property yourself is one of the big attractions. You can choose a home and a location you love and stay there when it isn’t booked. But every week you spend there is a week you can’t let, and most holiday let lenders limit how much you can use it yourself. Decide early how many weeks you want, and tell your broker, as it affects which lenders will suit you.

Location

The best location for guests isn’t always the one you’d pick for yourself. Think about:

• Demand all year round, not just in August. Look at what comparable local holiday lets actually achieve.
• Amenities such as pubs, shops, beaches, walks and parking. Guests and lenders both look for them.
• Local rules. Some areas restrict new holiday homes, and some councils are introducing visitor levies or higher council tax on second homes (see section 2).
• The property itself. Lenders won’t lend on some property types, such as shepherd’s huts or homes with holiday-only occupancy restrictions. Read our guide to the properties to avoid before you fall in love with one.

A realistic workload

A busy holiday let means frequent changeovers. Someone has to clean, wash and replace linen, restock supplies and deal with a broken boiler or a locked-out guest, sometimes late at night. On top of that come marketing, pricing, bookings, reviews and safety checks.

There is new admin too. England is setting up a national register of short-term and holiday lets, expected to be fully running by March 2027, and Wales requires all visitor accommodation to be registered from autumn 2026.

Letting agent or manage it yourself?

If you live nearby and enjoy hosting, managing it yourself keeps more of the income. If you live far away or work full time, a professional holiday letting agent or a local housekeeper will usually be worth the fee. An agent can also give you the rental income forecast that lenders ask for (see section 4). Whichever you choose, build the cost into your numbers from day one.

2. The numbers in 2026/27

A holiday let has to work as a business, so run the numbers before you start viewing. Treat finance as the biggest risk: research the market properly and avoid impulse buys.

Demand

Demand for UK holiday lets is healthy. ONS figures show 100.9 million guest nights in UK short-term lets during 2025, up 11.5% on 2024, and about two thirds of those guests were from the UK. Lenders are seeing it too: 88% of brokers surveyed by Cumberland Building Society reported more holiday let mortgage enquiries over the past year. (Source: our October 2026 holiday let buying news).

But demand is local. It depends on location, property type, pricing, competition and season, and popular areas are busy with other holiday lets. Your property has to match or beat its rivals.

Realistic occupancy

Don’t base your plans on peak-season prices or on the best-performing cottage in the village. Ask a local holiday letting agent what similar properties achieve across a whole year, including quiet months. Then check that you could still pay the mortgage if occupancy or prices came in lower than forecast.

Running costs

Budget for these alongside the mortgage:

• cleaning, laundry and changeover supplies
• letting agent or booking platform fees
• utilities, broadband and TV licence
• specialist holiday let insurance
• business rates or council tax
• maintenance, safety checks and furnishing replacements
• accountancy fees
• any local visitor levy you need to collect

Remember the up-front costs too. In England and Northern Ireland, buying an additional home usually means paying the 5% stamp duty surcharge on top of the standard rates. Wales and Scotland have their own higher rates for additional homes.

The tax position

The Furnished Holiday Let (FHL) tax regime was abolished in April 2025 (6 April for individuals, 1 April for companies). Holiday lets are now taxed much like any other rental property.

In practice, that means:

• Mortgage interest: if you own in your own name, you no longer deduct it from your rental profit. Instead you get a tax credit at the 20% basic rate, the same as buy-to-let landlords. Companies can still deduct it in full
• Furnishings and equipment: capital allowances are no longer available for new spending, but you can claim relief for replacing domestic items.
• Capital gains tax: the FHL reliefs, such as Business Asset Disposal Relief, no longer apply when you sell.
• Pensions: holiday let profits no longer count as earnings for pension contributions.

Business rates or council tax? In England, a self-catering property can be assessed for business rates rather than council tax. It must be available to let for at least 140 nights a year and actually let for at least 70 of them. In Wales, the thresholds are 252 nights available and 182 nights let. A single property with a rateable value of £12,000 or less can get 100% Small Business Rate Relief, tapering up to £15,000.

If your let doesn’t meet those tests, it pays council tax. Many councils now charge a second-home premium: up to 100% in England and up to 300% in Wales.

Changes to watch. The government is reviewing how short-term lets are taxed in England. That includes whether some holiday lets should be treated as second homes for council tax, which would remove access to Small Business Rate Relief. Visitor levies are also spreading. Edinburgh already charges 5%, Glasgow and Aberdeen follow in 2027, Welsh councils can charge £1.30 per person per night from April 2027, and English mayoral authorities have been given the power to introduce a levy. Our October 2026 news round-up covers visitor levies and business rates in detail.

Tax depends on your circumstances, so speak to an accountant before you buy.

3. Get your finance ready before you view

Good holiday lets sell quickly, and vendors prefer buyers who can move without delays. Sorting your finance before you view puts you ahead of buyers who haven’t.

Appoint a specialist holiday let mortgage broker

Holiday let mortgages are more complex than residential ones. Criteria are stricter, deposits are bigger and there are fewer lenders, many of which don’t advertise holiday let products. Most lenders want a deposit of around 25% and a minimum personal income, often £25,000 to £30,000 a year. A specialist broker knows which lenders will suit you and your property, and having one reassures the vendor that the sale is less likely to fall through.

Get a Mortgage in Principle

A holiday let Mortgage in Principle shows the vendor and agent how much a lender is likely to offer you. A broker can arrange one quickly, and it gives you credibility over buyers who don’t have one.

Have your paperwork in order

Gather your payslips or accounts, tax returns, bank statements and ID in advance, and check your credit report. Having them ready proves you can afford the purchase and stops the application stalling later.

Proof of your deposit

Know your minimum and maximum deposit, and have evidence ready to show where it comes from. That might be savings statements, a signed gift letter from family, or a solicitor’s confirmation of an inheritance. Our holiday let deposits guide explains what lenders accept.

Personal name or limited company?

Decide this before you offer, because it changes which lenders and products are available. Since the FHL regime ended, many buyers, especially higher-rate taxpayers and those planning more than one property, look at buying through a limited company, as companies can still deduct mortgage interest in full. But company mortgages can cost more, and there is extra admin. If you choose a company, have an accountant in place to set it up properly. Read more about buying a holiday let through a limited company.

Releasing capital from another property

If you’re raising your deposit by remortgaging your home or another property, give your broker the details of your existing properties and mortgages up front. Lenders will want to see exactly how the money raised will be used. If you plan to keep your current home as a holiday let while you buy your next home, ask about a holiday let to buy arrangement.

4. Make your offer stand out

There is strong competition for good holiday lets. A buyer who looks organised and committed often has more room to negotiate on price.

Have clear intentions

Show the agent and vendor that you know what you want and why this property fits. A buyer who sounds vague about the area or the type of property looks like someone who might pull out.

Line up your surveyor and solicitor

Choose a surveyor before you offer, so you can book the survey as soon as your offer is accepted. Do the same with your solicitor. Good conveyancers are often busy, and finding one with availability after your offer is accepted is a common cause of delay. Tell the agent who you’ve instructed: it shows you are ready to proceed.

Have your business plan ready

Lenders want evidence that the property can earn enough to cover the mortgage. That usually means a rental income forecast letter from a professional holiday letting agent, setting out what the property could earn over a year. Put it together with your plan for marketing, management and maintenance. Our guide to what lenders want to see in a holiday let business plan explains what to include.

Buying at auction?

Auctions move much faster than a normal sale: you usually exchange when the hammer falls and complete within about 28 days. All of the preparation above needs to be done before auction day. Read buying a holiday let at auction before you bid.

5. The 5 steps to buying your holiday let

Once you’ve decided a holiday let is right for you, here is the process from start to finish.

Step 1: Decide what you want to buy

A city apartment, a lakeside lodge or a country cottage? Be practical: the dream property isn’t always a workable one. Some areas restrict new holiday homes, lenders won’t lend on certain property types, and some locations won’t attract guests without good amenities nearby. Lenders and guests both look for a convenient location, a well-furnished home and modern essentials such as reliable Wi-Fi and good heating.

Step 2: Sort out your finances

Work out your total budget: the deposit, stamp duty, legal fees, furnishing and any renovation, from a fresh coat of paint to a new bathroom. Then add ongoing costs such as housekeeping, management, insurance and business rates or council tax. Holiday let mortgages need a bigger deposit than residential ones, so speak to a specialist early.

Step 3: Put your business hat on

You’re starting a business, so build a solid business plan. Focus on two things: winning bookings, and keeping guests happy once they arrive. Plan your marketing and pricing, check the safety requirements, decide whether you need a cleaner, housekeeper or agent, and check whether you’ll need to register the property with your council.

Step 4: Learn about holiday let mortgages

Holiday let mortgages are different from residential and buy-to-let mortgages, and a high-street bank is unlikely to offer one. Lenders will want proof of the property’s projected rental income, usually from a professional holiday letting agent. They’ll also check that the property is suitable security with good letting potential. Read our guide to holiday let mortgage criteria.

Step 5: Find your lender, or let HCM find one for you

Searching for holiday let lenders yourself takes time, and many don’t promote holiday let products on their websites. We watch the market and the small group of lenders who lend on holiday lets. We’ll check whether you’re eligible and match you with the lender that best suits your circumstances, which helps you avoid a failed application. Find out more about how to get a holiday let mortgage.

6. Frequently asked questions

Is a holiday let still a good investment in 2026?

It can be, but it depends on the property and the numbers. Demand for UK stays is strong, with UK short-term let guest nights up 11.5% in 2025. But the FHL tax benefits ended in April 2025, and some areas now face visitor levies and second-home council tax premiums. Base your decision on realistic year-round occupancy and full running costs, not on tax breaks.

Can I buy a holiday let in a limited company?

Yes. Many lenders offer limited company holiday let mortgages, and since April 2025 some buyers prefer this route because companies can still deduct mortgage interest in full. Company mortgages can be more expensive and come with extra admin, so speak to an accountant and a specialist broker first.

How much deposit do I need for a holiday let?

Most lenders want around 25% of the purchase price. You’ll also need money for stamp duty, legal fees and furnishing. Your broker can tell you what’s available for your circumstances.

Can I use my holiday let myself?

Usually, yes, within limits. Most lenders allow some personal use, but they set limits, and every week you stay there is a week you can’t let. Personal use can also affect whether the property qualifies for business rates. Tell your broker how much you plan to use it.

7. Ready to take the next step?

Find out how much you could borrow with our free holiday let mortgage calculator. Or take our free initial assessment. It takes about five minutes, and one of our holiday let mortgage specialists will come back to you with personalised results. Prefer to talk? Call us on 01372 502001.