Buy-to-let holiday homes in 2026: are they still a good investment?

The UK staycation market has matured. What began as a pandemic-driven shift has settled into something more structural, and in 2026 it is clear that domestic tourism is no longer a short-term trend.

Flexible working, rising overseas travel costs, environmental awareness, and a preference for space and privacy have all reshaped how people holiday in the UK. As a result, demand for short-term rentals and professionally run holiday lets remains strong across coastal towns, countryside destinations, and lifestyle-led locations.

For investors, this has pushed buy-to-let holiday homes firmly into the mainstream. Once seen as a niche strategy, holiday lets are now viewed as a credible way to generate income, diversify beyond traditional buy-to-let, and tap into tourism-driven demand.

This guide explains how buy-to-let holiday homes work, the benefits and trade-offs involved, and whether they make sense as part of a property portfolio in 2026.

Holiday buy-to-let vs traditional buy-to-let

Before looking at the benefits, it is important to understand how holiday lets differ from traditional buy-to-let.

A holiday buy-to-let is a short-term rental, typically let from one night up to 31 days at a time. Income is generated through nightly or weekly rates rather than fixed monthly rent. A traditional buy-to-let, by contrast, is usually let on a six or twelve-month tenancy, often longer.

Holiday lets operate more like a hospitality business than a residential tenancy. Pricing is flexible, demand is seasonal, and performance is driven by location, quality, and guest experience.

In some cases, short-term holiday lets may qualify for specific tax treatment if they meet availability and occupancy thresholds. This is something investors should always discuss with a qualified tax adviser, as rules can change and individual circumstances vary.

Why buy-to-let holiday homes appeal to investors in 2026

Higher income potential

One of the main reasons investors are drawn to holiday lets is income potential. In the right locations, short-term rentals can outperform traditional buy-to-let on a gross income basis.

Instead of a fixed rent, holiday homes generate income per night or per stay. During peak seasons, premium properties can command significantly higher rates, particularly where supply is limited and demand is strong.

Well-positioned holiday homes often benefit from pricing flexibility, strong summer and school holiday performance, and the ability to adjust rates to reflect local events or demand spikes. Over a full year, this can translate into attractive overall returns when managed properly.

Sustained demand for UK staycations

The UK staycation market continues to expand, not just in volume but in depth. People are travelling domestically more often, for shorter breaks, and across a wider range of locations.

Demand is particularly strong in coastal areas, national parks, historic towns, and countryside locations that offer privacy, quality accommodation, and good amenities. Increasingly, lesser-known destinations in Wales, Scotland, and rural England are attracting visitors who want space and tranquillity without long-haul travel.

This shift supports long-term demand for well-located holiday lets and creates opportunities for capital appreciation in areas that were previously overlooked.

Lifestyle and personal use

One of the distinguishing features of a buy-to-let holiday home is the option for personal use. Many investors value the ability to use the property themselves while still generating income for most of the year.

For some, this dual-purpose appeal is central. The property can function as an income-producing asset, a regular holiday base, or even a long-term lifestyle plan for later life. While personal use does reduce letting availability, many investors see this as part of the overall value rather than a drawback.

Portfolio diversification

Holiday lets sit outside many of the pressures facing traditional residential buy-to-let. They are not subject to long-term tenant legislation in the same way and are less exposed to rent controls or tenancy reform.

For investors with existing residential portfolios, holiday homes can provide diversification, spreading risk across different demand drivers. Rather than relying solely on local employment or housing affordability, holiday lets are supported by tourism, lifestyle demand, and domestic travel patterns.

Fully managed, hands-off options

Many modern holiday let investments are sold with full management in place. This includes marketing, bookings, guest communication, cleaning, and maintenance.

For investors who want exposure to property income without active involvement, this structure can be far more appealing than self-managed buy-to-let or HMOs. While management fees apply, they often replace the time, effort, and uncertainty associated with hands-on ownership.

What to consider before investing in a holiday let

Holiday buy-to-let is not risk-free, and it suits some investors better than others.

Seasonality is a key consideration. Income is often concentrated around peak months, so performance should be assessed on an annual basis rather than headline summer returns.

Ownership structure also matters. Many holiday homes are sold on leases or licence agreements, with ongoing site fees or service charges. Understanding these costs and terms is essential.

Capital growth should be viewed realistically. While prime locations can appreciate over time, holiday lets are primarily income-led investments rather than pure capital growth plays.

What makes a strong holiday let location

Location remains the single most important factor in holiday let performance.

Strong locations typically have established tourism demand, limited accommodation supply, good accessibility, and year-round appeal. Coastal towns, areas of natural beauty, and destinations with strong local amenities tend to perform best.

Emerging locations can also offer opportunity, particularly where regeneration, new attractions, or improved transport links are underway. However, demand fundamentals should always come before headline yield projections.

Examples of buy-to-let holiday investments

Cairns Hill Luxury Lodges, Scotland

Cairns Hill is a countryside-led holiday lodge development in New Cumnock, Scotland, set within the Glen Afton landscape. The scheme focuses on premium lodges designed for modern staycation demand, combining privacy, high-quality finishes, and natural surroundings.

Phase One includes a limited number of high-spec lodges, with full management provided by an experienced operator. Completion is scheduled for 2026, with income projections reflecting the area’s growing appeal as a rural retreat destination.

This type of investment demonstrates how countryside locations with limited supply and strong lifestyle appeal can support long-term holiday let demand.

Off-market coastal investment, Newquay

Newquay remains one of the UK’s strongest coastal tourism markets, with year-round demand driven by beaches, events, and domestic travel.

This off-market aparthotel development offers fully managed short-stay units located close to Towan Beach and the town centre. Operated by an established serviced accommodation provider, it is designed to deliver hands-off income in a location where demand often exceeds supply.

Developments like this highlight how professionally operated short-stay accommodation can outperform traditional buy-to-let in high-tourism locations.

Red Wharf Bay, Anglesey

Red Wharf Bay offers a luxury lodge investment opportunity in one of Anglesey’s most sought-after coastal settings. The development focuses on eco-friendly lodges with high-end finishes, private outdoor features, and proximity to the beach.

Anglesey’s enduring popularity as a holiday destination supports both strong occupancy and repeat bookings, making it well suited to short-term letting strategies. Investments like this appeal to those targeting premium nightly rates and long-term tourism demand.

Who is holiday buy-to-let best suited to?

Buy-to-let holiday homes tend to suit investors who are comfortable with income-led strategies, value diversification, want a hands-off structure, or are interested in combining investment with lifestyle use.

They may be less suitable for investors seeking guaranteed monthly income or those focused solely on long-term capital appreciation.

Investing with Advantage Investment

At Advantage Investment, we specialise in sourcing holiday let and alternative property investments that align with how the market is actually behaving in 2026.

Our focus is on strong locations, professional management structures, realistic income modelling, and long-term demand. We work with experienced developers and operators to offer opportunities that are designed to perform across market cycles.

If you are considering a buy-to-let holiday home and want to understand whether it fits your goals, our team can help you assess the options and structure your investment properly.