Recent findings from Zero Deposit, a provider of tenancy deposit alternatives, have brought to light the stark disparity in rental prices between holiday homes and private rentals across England’s prime holiday destinations. The research shows that tenants, like homebuyers, are being edged out of local housing markets due to holiday homes renting for an average of 292% more per month. In some locales, this figure skyrockets to an astonishing 488%.
Zero Deposit’s study examined the top 30 holiday hotspots in England, identified using ONS data from the 2021 census, which are characterized by the highest proportion of holiday homes relative to total dwellings. South Hams, renowned for the picturesque town of Salcombe, tops this list with 4.4% of its dwellings being holiday homes, starkly higher than the national average of 0.24%.
The research also highlights that nearly 5,000 homes across these hotspots are currently on the market, aimed at investors seeking short-term let opportunities. This constitutes 7% of the total homes listed, a significant chunk of the housing stock that could otherwise aid buyers and private renters. Nationally, holiday investment listings make up only 2% of the total homes listed across England.
When it comes to rental income, the disparity is stark. The average monthly rent for a private rental property in these areas is £849. In contrast, the average income from short-term holiday lets stands at a hefty £3,325 per month, based on a 58% average monthly occupancy rate – 292% more than what is attainable through traditional private rentals. Westmorland and Furness, East Suffolk, Great Yarmouth, East Riding of Yorkshire, and Northumberland are among the regions with the highest holiday rental price premiums.
In popular areas like Cornwall, the Isle of Wight, Dorset, South Hams, Cotswold, and the New Forest, the difference in rental prices isn’t as drastic due to higher average private rental prices. Nonetheless, holiday lets in these areas still command between 224% and 327% more per month than average private rentals.
Moreover, the influx of holiday homes not only leads to inflated rental prices but also exacerbates the housing crisis by reducing the available stock for private rentals, driving up rents for regular tenants. The average private rent in England has risen by 5.1% over the last year, but in the top 30 holiday hotspots, this increase is even sharper at 6.4%. Areas like Arun, Folkestone and Hythe, Bournemouth, Christchurch and Poole, Chichester, and Torridge are witnessing significantly higher rates of rental price growth.
Sam Reynolds, CEO of Zero Deposit, voiced concerns over the predicament facing tenants in holiday hotspots. “Tenants are at a notable disadvantage regarding the availability and affordability of rental market stock. Holiday homes, which are typically occupied for just 58% of the year, not only strip the market of essential housing stock for potential buyers but also limit rental property availability where demand far outstrips supply. The inflated rental prices of holiday homes, averaging 292% more per month, are simply unrealistic for many tenants,” Reynolds remarked.
Reynolds also noted the tough predicament for landlords, stating, “It’s understandable that many are opting for the short-let model in high-demand areas, given the diminishing profitability of buy-to-let portfolios due to recent legislative changes. However, ironically, it’s the local tenants who are most adversely affected by these changes, initially intended to support them.”