Holiday let owners earned an average of £25,600 gross income in 2025, according to new data from Sykes Holiday Cottages – a 3.6% increase on the previous year’s figure of £24,700.
Earnings rise but costs climb faster
The Holiday Letting Outlook Report analysed bookings and revenue data from 23,500 UK holiday rentals. Earnings vary significantly by property size, with one-bed homes generating £16,800 on average, rising to £21,000 for two-bed properties. Three-bedroom homes matched the £25,600 national average, while four-bed properties brought in £36,000 and five-bedroom lets reached £48,200.
The Cotswolds emerged as the highest-earning region at £30,600, followed by Cumbria and the Lake District at £28,400, and the Highlands and Islands at £28,000.
However, annual costs eat into returns. Owners reported spending an average of £2,140 on bills, £1,580 on property maintenance, £1,450 on tax or licensing fees, £1,190 on changeover costs, and £1,000 on marketing.
This follows Residential Landlord’s coverage of growing council demands for short-let licensing powers, which could add further compliance costs for holiday let owners.
Rising costs top owner concerns
When asked about their biggest worries, holiday let owners cited rising operational costs as their primary concern, followed by the rising cost of living affecting tourist spending, higher council taxes, the statutory licensing scheme, and potential tourism levies.
Ben Spier, head of regulation and policy at Sykes Holiday Cottages, said: “New council tax premiums have probably received the most attention in the media, which might be why our research found this to be causing a lot of worry among owners. However, these are intended for second homes rather than holiday lets, because the former contribute far less to local tourist economies.”
He added that most holiday let owners have not been affected by council tax changes as they qualify for business rates instead.
Around 37% of owners said they were future-proofing their investment by making properties available for more days to increase income. The same proportion are investing in property improvements to boost appeal and rates.
Investment outlook
The report also ranked Matlock in Derbyshire as the top holiday let hotspot for 2026, with owners there earning an average of £34,000 – 33% above the national average – alongside a 14% year-on-year increase in bookings. Warkworth in Northumberland and Castleton, also in Derbyshire, completed the top three investment locations.
The top motivation for holiday letting remained investment for future finances, followed by generating retirement income.
Opinion
The 3.6% income rise looks modest when set against the cost pressures holiday let owners face. Council tax premiums, licensing fees, and potential tourism levies are piling up just as energy costs spike. For landlords weighing whether to switch from assured tenancies to holiday lets, the numbers deserve careful scrutiny – the headline gross income rarely tells the full story.
