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Holiday lets generate highest returns in UK property market

Holiday lets are among the highest returning assets within the UK real estate sector, according to research from holiday property fund Second Estates.

Yields from holiday properties were 1.1 percentage points higher than those for residential buy-to-let properties over the last 12 months, and higher than all other major categories, according to the property group’s study.

The average weekly income for a holiday letting was £563 last year, compared to just £191 for an average buy-to-let residential property. Even when taking into account the off-season weeks, holiday lets generate nearly three times more income than residential buy to let properties.

The lettings data shows holiday lets generated an average net yield of 6.1 per cent over the last year. The next highest property asset class was student accommodation with a net yield of 5.25 per cent.

Meanwhile, the data showed that holiday lets are forecast to outperform other asset classes with an average total return of 9.3 per cent over the next five years.

Commenting on the data, Alistair Malins, CEO of Second Estates, said: “This research demonstrates the strength of the UK holiday property market as an emerging alternative asset class.”

Second Estate pointed to the strong increase in UK tourism, which has seen an increase of seven per cent last year, which is having a positive impact on UK holiday accommodation.

There are close to two million buy-to-let landlords in the UK, of which and an estimated 165,000 homes listed as holiday lets.

Source: City A.M.