Holiday let owners earned an average gross income of £25,600 in 2025, up from £24,700 in 2024, according to new research from Sykes Holiday Cottages. The data offers landlords considering alternatives to traditional buy-to-let a snapshot of potential returns across different property sizes and regions.
Income varies sharply by property size
The Sykes Holiday Letting Outlook Report 2026 reveals significant income differences based on bedroom count. One-bed properties averaged £16,800 in gross income, rising to £21,000 for two-bed homes and £25,600 for three-bed properties.
Larger holiday lets commanded higher returns, with four-bed homes averaging £36,000 and five-bed properties reaching £48,200 in annual gross income.
Cotswolds tops regional rankings
The Cotswolds emerged as the highest-earning location, with owners averaging £30,600 in gross income. Cumbria and the Lake District followed at £28,400, while the Highlands and Islands rounded out the top three at £28,000.
For investors seeking the best overall returns, Matlock in Derbyshire was identified as the top investment hotspot, with owners earning £34,000 on average – 33 percent more than the UK average – alongside a 14 percent year-on-year increase in bookings.
This follows Landlord Knowledge’s previous analysis of the holiday let sector, which highlighted growing investor interest as traditional buy-to-let margins have tightened.
Running costs and owner concerns
The research also detailed typical annual costs for holiday let owners: bills averaged £2,140, changeover costs £1,190, property maintenance £1,580, tax or licensing fees £1,450, and marketing £1,000.
Ben Spier, head of regulation and policy at Sykes Holiday Cottages, acknowledged the challenges facing the sector. “It’s impossible to ignore that the nation’s holiday let owners have faced some hurdles in recent years, but UK holiday lets still command high occupancy and competitive weekly rates,” he said.
Owners’ top concerns included rising operational costs, the impact of cost-of-living pressures on tourist numbers, higher council taxes, statutory licensing schemes, and potential tourism levies.
What this means for landlords
- If you are considering holiday lets: The Cotswolds, Lake District and Highlands offer the highest average incomes, though Derbyshire locations like Matlock show strong growth.
- Watch for: New council tax premiums and licensing schemes – though most established holiday lets qualify for business rates, which offers some protection.
- Bottom line: Gross income of £25,600 sounds attractive, but factor in running costs of approximately £7,400 and active management time before comparing to traditional BTL yields.
Editor’s view
The headline figure looks healthy, but holiday lets are not passive income. The data shows owners averaging £25,600 gross need to subtract substantial operating costs before reaching net income. For landlords tired of the regulatory complexity in the residential sector, holiday letting brings its own compliance burden – just a different one.
Author: Editorial Team – UK landlord & buy-to-let news, policy, and finance
Published: 10 March 2026
Sources: Sykes Holiday Cottages Holiday Letting Outlook Report 2026
Related reading: UK holiday letting – a growing investment opportunity
