How Falling House Prices are Creating Great Opportunities to Buy a Holiday Let in 2026

You might have noticed the media talking about how, in some areas of the country, second home and holiday let ‘fire sales’ are driving average house prices down. This means there are some excellent purchase opportunities opening up for those who are prepared to get their ducks in a row, make a fast offer, and snap up a superb holiday let property at a discount.

In this post we’ll explore how shifts in the second home and holiday let markets are influencing house prices in parts of the UK, and why some experts say the situation is surfacing some unusually good purchases.

How government and local council policies affect second home ownership

Tougher tax and regulatory measures are being designed to shift the dynamics of housing in places where there are a lot of second homes. In Wales, for example, councils are allowed to charge a 300% council tax premium on second homes and empty homes in an effort to discourage absentee ownership in communities where locals struggle to buy.

In England, according to Hamptons estate agency, more than 200 local authorities have put a 100% council tax premium on second homes following changes to the Levelling Up and Regeneration Act.

These changes have forced some second home owners to reconsider their cottages. Many have chosen to sell to avoid the tax changes. In certain areas this has caused a flurry of properties to suddenly hit the market, leading to changes in the overall property market in certain spots around the country.

Areas of the UK where prices are on the move

Gwynedd in North Wales has one of the biggest second home scenes in the UK. Once local councils increased council tax for holiday home owners average house prices fell 7–8%, driving a sharp increase in the number of properties for sale. Welsh government stats also reveal a noticeable drop in average property prices, a clear case of a policy-induced supply increase working in line with local property price reductions.

In Pembrokeshire, Wales, increases in council tax tripled the number of second homes for sale from fewer than 40 to more than 130 in less than a year. The council tax premium was later reduced to make homes more affordable for locals while also protecting the tourist economy. As you can imagine, it can be a delicate balance.

The same goes for Cornwall and South West England, where estate agencies reported demand for second homes dropping when council tax increases came into play. It’s clear some owners would rather sell up than pay higher bills.

How long will the phenomenon last?

When second home owners decide to sell because of higher taxes, more properties come onto the market. When extra supply meets the same basic local demand, house prices stay as they are, or sometimes fall. Then there’s something called disrupted demand, when higher taxes and regulatory uncertainty mean fewer people are entering the market as second home buyers, reducing the competition and sending the price of properties downwards.

It’s important to know these trends aren’t nationwide. They’re most dramatic where second homes make up a significant share of the available housing – typically coastal or countryside locations. In big cities like London and Manchester, house prices are driven by supply, demand, employment and broader economic factors rather than second-home policies.

It is also wise to remember some of the property price drops we’re seeing might not last forever. They might be down to short term changes in supply rather than lasting declines, especially when the underlying demand remains strong because the location is popular. A ‘fire sale’ sounds pretty dramatic, and they do exist in some holiday hot spots, but where housing shortages still exist prices might not be dropping, just moderating or re-balancing.

The opportunity for the holiday let buyer

When properties owned by out-of-town buyers come onto the market, people who were previously priced out have the chance to buy. Plenty of local people either choose not to buy or simply can’t afford to buy ex-second homes, as they tend to be a lot more expensive than regular homes. This limits the potential pool of buyers. So in places where property prices have dropped, well-prepared holiday let buyers can have more choice as well as better value than ever before.

Team this with better holiday cottage mortgage availability for holiday lets and falling demand in some holiday hot spots and you can see why there’s an opportunity for savvy holiday cottage buyers. Reductions in holiday let mortgage pricing, with some major lenders lowering rates by as much as 0.4%, is also improving choice and affordability for people wanting to invest in a holiday cottage to let.

5 top tips to make yourself investment-ready

Great holiday cottage properties tend to sell quickly, especially when the price is low. You’ll want to move fast when the opportunity strikes. Here’s how to prepare yourself:

1. Read this article about which properties to avoid from a mortgage point of view
2. Draft a financial plan and work out where your deposit will come from
3. Find a trusted, experienced national or local holiday letting agent like Holiday Cottages UK or Cumbrian Cottage Holidays, who can help you get a rental appraisal for the ICR calculation
4. Contact us to discuss your finance requirements or dive straight in and request your free mortgage assessment by creating an account with us
5. Consider getting a Mortgage in Principle (more about this next month, including how the process can help you beat others when it comes to grabbing a deal!)

Your holiday cottage let take-aways

• Areas with high levels of second-home ownership have seen prices drop and listings increase thanks to tax and regulatory changes.
• Some second home owners are selling rather than paying extra taxes
• This is a local phenomenon, not nationwide where wider economic factors still dominate house prices
• All this can bring exciting opportunities for holiday let buyers who are well prepared

Need help and advice about a holiday cottage mortgage?

Being prepared to take advantage of the situation means getting your holiday let mortgage sorted before you start looking, so when you find the perfect property you’ll be able to move quickly. Talk to us about anything and everything to do with a mortgage for your holiday let and we’ll bring years of expertise into play to help make your investment dream come true.