Acclaimed for its hundreds of sandy beaches, fishing coves and beautiful scenery, Cornwall has long been the undisputed champion of staycations and the holiday rental market.
Last year, official data showed the province had the highest number of holiday homes (6,080), attracting 14,230 guests. However, despite these figures, Cornwall is not the most lucrative hotspot for landlords looking to rent on a short-term basis (less than 28 days). We reveal where vacation rental owners make the most money.
The Cotswolds is an area stretching from Stratford-upon-Avon in the north to Swindon in the south, Gloucester in the west and Oxford in the east
How the Cotswolds became a hotspot
Many will be surprised to hear that a shelter in Cornwall generates less income than Cumbria, the Lake District and Dorset.
The region with the highest income in 2023 was the Cotswolds, an area stretching from Stratford-upon-Avon in the north to Swindon in the south, Gloucester in the west and Oxford in the east.
Here the average holiday home owner earns £28,500 a year (all figures before tax), according to Sykes Holiday Cottages.
A four-bedroom cottage in a chocolate box village like Broadway or a house in a small market town like Chipping Campden would bring in £46,300 annually in holiday rentals.
The country’s popularity as a quintessentially English destination has soared as famous faces move there – from David Cameron, Kate Moss and Elizabeth Hurley to Jilly Cooper and Stella McCartney.
Where people buy and stay in the Cotswolds
Maria Stengard-Green, who has run Luxury Cotswold Rentals with her husband Nigel since 2010, says the area has always been a favorite retreat for wealthy Londoners but has recently gained popularity among international tourists.
‘Americans love the Cotswolds, where they can see all the beautiful little picturesque villages. We are also getting more and more Europeans, including Scandinavians and Dutch tourists. We didn’t used to get much from the mainland.’
The couple now manages a portfolio of dozens of properties – including those from other landlords – and say tourists are willing to pay a premium to stay in a nice home.
‘It’s expensive to stay here, but people are willing to pay the price. Many of them will stay for a whole month to explore the area,” she added.
Property on their books can cost £55,000 a week in the case of North Lodge Blenheim, a seven-bedroom country house in the gated and private Blenheim Palace Park near Woodstock. The rate includes daily cleaning service and a private chef for 2 meals per day.
Paul Houghton-Brown, from estate agent Hamptons, agrees, saying there has been a shift over the past two years, with buyers now typically coming from further afield.
‘The international market – mainly Americans and Australians – buy property in the Cotswolds and use the house when they visit Britain with friends and family, then rent it out as a holiday let when they are not there, to generate cash and reduce running costs to cover.
“We are dealing with properties making £75,000 a year, but some of these properties can be quite expensive to run,” he says.
“British buyers have become increasingly concerned about high holiday rental taxes and increased government restrictions,” he adds.
The towns of Stow-on-the-Wold and Bourton-on-the-Water, popular for their romantic honey-coloured Cotswold stone cottages and pretty gardens, are among the most sought after by holidaymakers. According to the report, average earnings last year were £42,500 and £36,000 respectively.
The region’s year-round appeal is also helping to improve sales, says Graham Donoghue, managing director of Sykes Holiday Cottages. However, according to the Land Registry, buying a property in the Cotswolds in February 2024 will cost almost twice the national average at £500,311.
Where else do vacation rentals make the most profit?
Cumbria and the Lake District are the second most lucrative region in Britain for holiday home owners. Demand for holiday homes in Cumbria has ‘never been higher’, according to The Holiday Letting Outlook Report 2024.
Homes in the national park fetch an average of £28,200 a year, rising to £44,200 for four-bedroom properties. However, the average home is much more affordable than in the Cotswolds. Houses in Westmorland and Furness, the local authority that includes many of the Lake District’s most popular towns including Windermere, Penrith and Kendal, cost an average of £220,045 in February. This means that landlords who rent out their second home to walking holidaymakers can expect a return of 12.8 percent per year on their average home.
Take the picturesque village of Grasmere, nestled at the foot of spectacular hills and home to William Wordsworth. It is one of the fastest growing regions of Britain in terms of holiday rental income. Landlords with homes in the village will earn 12 per cent more in 2023 than the previous year – equivalent to an extra £4,700 – bringing their total annual income to an average of £43,100.
Ambleside, which has become a popular base for exploring the Lake District, has also seen one of the biggest increases in income, with holiday lets bringing in 12 per cent more to £32,900 in 2023, compared to £29,300 the year before.
The third most profitable holiday rental location is Dorset, famous for the dramatic cliffs along the Jurassic Coast. Here, holiday lets earn an average of £27,000 a year, while four-bedroom houses earn £38,300 a year.
This means that with an average home price of €354,268, potential landlords who want to get in on the action can still generate a healthy rental income. However, they may end up having to pay extra council tax as Dorset councilors approved plans in February to charge double council tax on second homes. The premium takes effect on April 1, 2025.
About £10,000 a year behind the Cotswolds in pre-tax profits, Cornwall and the Peak District are joint fourth, with landowners generating an average income of £26,500 each year.
But a surprising outsider is Northumberland, which dominates the list of top regions with the fastest income growth, with five of the top ten locations. Landlords in the coastal town of Seahouses saw their income rise by 36 per cent in a year, earning an extra £7,800, for a total of £29,700.
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