This beautiful region is UK’s holiday lets heaven – owners earn £28,200 a year | Personal Finance | Finance

The rise of the staycation has made letting out a holiday home even more rewarding. Yet there’s a cloud on the horizon, as Conservative Party Chancellor Jeremy Hunt looks to squeeze even more tax out of holiday lets.

Life may get even tougher for second homeowners, if the Labour Party wins the next election.

The Labour-led Welsh government is showing the way, by hammering holiday homeowners with a crippling 300 percent tax crackdown. The SNP is targeting holiday lets in Scotland, while Yorkshire is also hiking taxes.

There’s a pretty strong chance that Keir Starmer and shadow chancellor Rachel Reeves will intensify the holiday let tax attack, if they get the opportunity.

New research shows that second homeowners are worried, but they aren’t giving up on their dreams that easily.

They’re having too much fun to let greedy politicians spoil it. And making money, too.

The average holiday let brings in £24,500 a year, according to new research from Sykes Holiday Cottages.

In the nation’s tourist hotspots they earn a lot more than that. Notably the Cotswolds, which is now the most rewarding place in Britain to have a holiday let.

The Cotswolds is a designated Area of Outstanding Natural Beauty in England, best known for its charming villages, rolling hills and Jeremy Clarkson’s Diddly Squat.

The region is a magnet for tourists who make a beeline for places like idyllic Castle Combe, named the most beautiful village in England. It has featured in high-profile films including War Horse, Doctor Dolittle, Stardust and The Wolf Man.

The beautiful little market town of Stroud has been named the UK’s ‘best place to live’, thanks to its schools, transport links, green spaces and community spirit.

Holiday homes are always in demand, and the average owner earns a bumper £28,500 a year by renting out their property to visitors, Sykes said.

It’s not the only region in demand among the growing army of staycationers.

Holiday home owners in Cumbria & the Lake District are the second biggest earners with average income of £28,200 a year, followed by Dorset at £27,000.

Cornwall, the Peak District, Scottish Highlands & Islands, and Northumberland are also notably profitable.

Across the UK, the average holiday let owner earns an estimated £24,500 a year.

Inevitably, the Treasury wants its share.

A backlash has been brewing for years, as second homeowners stand accused of driving locals out of their own towns and villages. Many towns and villages in tourist areas feel completely overrun by Airbnbs.

This has given politicians the excuse they need to hike taxes on holiday lettings.

As I wrote in March, the dream of buying a holiday home in a UK beauty spot has slipped that little bit further out of reach after Jeremy Hunt‘s spring Budget.

Hunt is abolishing the furnished holiday letting regime, in a bid to make owning a holiday home less attractive and free up more properties for locals.

Currently, owners can deduct mortgage interest from their rental profits, giving higher rate taxpayers a 40 percent deduction. 

From April 2025, every owner will be limited to a flat-rate 20 percent tax credit, regardless of their tax bracket.

This will cost those with mortgage debt £1,890 a year on average, according to tax specialists Zeal. Owners will also pay capital gains tax on any profit at a higher rate if they sell.

Two thirds of holiday letters are worried about Hunt’s raid and any Labour follow-up, but they’re not giving up.

Amost nine in 10 holiday refuse to consider exiting the market. More than half do not have a mortgage on their property and are less likely to be affected.

Sykes Holiday Cottages chief executive Graham Donoghue said staycations continue to grow in popularity, boosting demand and incomes. “Holiday letting remains a profitable and rewarding long-term business model, with the nation’s love of holidaying at home and exploring our incredible country going nowhere.”

Maintaining and managing a holiday home isn’t easy, but most owners feel the hard work is worthwhile. Holiday lets also bring much-needed visitors and income into otherwise sleepy areas.

The Treasury is set to tax holiday lets to the max. Yet given the attractions, owners won’t give up easily.

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