Exploring the best places to buy a holiday home across the UK could be your ticket to both relaxation and financial success. Whether it’s the charm of coastal retreats or the bustling energy of city getaways, discovering the ideal spot can boost your revenue. Let’s dive into the top destinations where investing in a holiday home can offer both personal enjoyment and impressive profits.
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Factors to Consider When Choosing a Holiday Home Location
Discovering the best spots to own a vacation rental involves various considerations. Yet, among the crucial factors, the Occupancy Rate and Cap Rate stand out, as they directly impact a real estate investor’s primary aim: generating revenue.
Occupancy Rate
The occupancy rate tells us the percentage of rooms that are currently in use compared to all the rooms available.
Occupancy rate = Number of occupied rooms / The total number of rooms available
An ‘ideal’ occupancy rate should be between 70% and 95%.
Capitalisation Rate
Capitalisation Rate (Cap Rate) is a key real estate measure obtained by dividing a rental property’s net operating income by its current market value. The cap rate signifies the anticipated return rate from a short-term rental investment. While it’s not the sole factor determining success, it serves as a crucial indicator when identifying the most promising holiday rental markets.
Capitalisation Rate = Net operating income / Current market value
The ‘ideal’ cap rate in property investment isn’t universally fixed – it hinges on your comfort level with risk as an investor. A higher cap rate often signals increased risk, while a lower one signifies less risk but potentially lower returns.
Typically, a capitalisation rate falling between 4-10% is considered favourable. However, many investors lean toward the upper end of this spectrum for potentially higher returns.
10 Best Places to Buy a Holiday Home in England
Dorset
The average cap rate: 5-10%
The average occupancy rate: 70-80%
The average gross annual income: 22,000 GBP
Dorset is renowned for its stunning coastline, picturesque countryside, and charming towns such as Lyme Regis, Weymouth, and Swanage. Dorset benefits from good infrastructure, including transportation links and essential facilities. Accessibility via road and rail, along with shops, restaurants, and leisure facilities, can enhance the appeal of your holiday rental to potential guests.
Devon
The average cap rate: 5-7%
The average occupancy rate: 70%
The average gross annual income: 25,000 GBP
Devon’s stunning coastline, charming villages, and rich history make it a magnet for tourists seeking a beautiful getaway. The demand for vacation rentals in this region tends to be consistent throughout the year. Additionally, Devon’s popularity among visitors provides a good chance for appreciation in property value over time.
Alnwick, Northumberland
The average cap rate: 5-8%
The average occupancy rate: 70-85%
The average gross annual income: 27,000 GBP
Northumberland’s captivating landscapes, including stunning coastline, historic castles, and natural beauty, make it an appealing destination for tourists and holidaymakers. Alnwick, in particular, has a rich history, a beautiful market town ambiance, and attractions like Alnwick Castle and The Alnwick Garden, drawing visitors year-round. The demand for holiday rentals in this area often remains consistent, providing potential for a reliable income stream.
Somerset
The average cap rate: 5-8%
The average occupancy rate: 70-85%
The average gross annual income: 22,000 GBP
Somerset’s captivating landscapes, historic attractions like Glastonbury Tor and Cheddar Gorge, and its proximity to the stunning coastline make it a desirable destination. The region’s popularity among tourists, coupled with its diverse offerings including countryside retreats and coastal escapes, often ensures a steady demand for holiday rentals.
North York Moors and Coast
The average cap rate: 5-7%
The average occupancy rate: 80%
The average gross annual income: 30,000 GBP
North York Moors and Coast draws visitors year-round for its stunning landscapes, including the rugged coastline, charming villages, and the expansive North York Moors National Park. The demand for holiday accommodations in this area often remains robust, especially during peak seasons. Moreover, the region’s appeal to both domestic and international tourists contributes to the potential for property appreciation over time.
Yorkshire Dales
The average cap rate: 5-7%
The average occupancy rate: 80-90%
The average gross annual income: 20,000 GBP
The Yorkshire Dales National Park’s stunning landscapes, Idyllic villages, and outdoor activities, such as hiking, attract tourists year-long. The area’s enduring popularity and limited availability of properties can potentially lead to property value appreciation over time.
The Cotswolds
The average cap rate: 4-6%
The average occupancy rate: 70-80%
The average gross annual income: 30,000 GBP
Known for its quintessential English countryside, charming villages, and idyllic landscapes, The Cotswolds is a highly sought-after destination for holidaymakers. Properties in this area tend to retain their value well due to the region’s timeless appeal and development restrictions that help maintain its traditional charm.
Cornwall
The average cap rate: 5.2%
The average occupancy rate: 72%
The average gross annual income: 25,000 GBP
Cornwall’s exquisite coastline, beautiful beaches, and picturesque countryside make it a perennial favourite among travellers. The region’s popularity ensures a steady stream of tourists seeking charming accommodations, creating favourable conditions for rental income.
Snowdonia
The average cap rate: 8-12%
The average occupancy rate: 80%
The average gross annual income: 30,000 GBP
Snowdonia National Park is renowned for its breathtaking natural beauty, encompassing majestic mountains, and a wealth of outdoor activities. Snowdonia’s appeal isn’t solely limited to its natural splendour. The area boasts a rich cultural heritage, historic sites, and charming villages, adding to its attractiveness for visitors.
Hastings
The average cap rate: 8-10%
The average occupancy rate: 80%
The average gross annual income: 22,000 GBP
Hastings, with its rich history, beautiful coastline, and vibrant cultural scene, attracts tourists throughout the year. The area has seen ongoing regeneration, which has positively impacted property value in recent years. Moreover, Hastings’ proximity to London and other major cities makes it easily accessible and enhances its appeal for weekend getaways.
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Newport
The average cap rate: 5.5%
The average occupancy rate: 56-75%
The average gross annual income: 15,000 GBP
Newport boasts a rich cultural heritage, stunning landscapes, and proximity to beautiful Welsh countryside and coastal areas. The property market in Newport can offer relatively affordable options compared to some other popular tourist locations. Furthermore, Newport’s ongoing developments, such as improved infrastructure and urban regeneration projects, may positively impact property value over time.
Tenby
The average cap rate: 5-7%
The average occupancy rate: 80%
The average gross annual income: 15,000 GBP
Tenby, nestled along the stunning Pembrokeshire coastline, is renowned for its breathtaking beaches, historic charm, and vibrant community. Tenby’s popularity among tourists provides a consistent rental market, potentially yielding a reliable income stream for property owners.
St David’s Peninsula
The average cap rate: 5-8%
The average occupancy rate: 70-80%
The average gross annual income: 22,000 GBP
The appeal of St. David’s Peninsula lies in its unspoiled landscapes, including pristine beaches, rugged cliffs, and scenic coastal paths. While property prices may vary, the potential for appreciation in property value over time could be promising. This is specifically due to the area’s reputation for natural beauty and its designation as part of the Pembrokeshire Coast National Park.
Caernarfon
The average cap rate: 5-7%
The average occupancy rate: 70-80%
The average gross annual income: 20,000 GBP
Caernarfon, situated on the picturesque coast of North Wales, has a storied past, stunning landscapes, and proximity to popular tourist attractions. The town’s historical landmarks, including Caernarfon Castle, attract a steady flow of tourists all-year and foster a consistent demand for holiday rentals.
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Isle of Skye
The average cap rate: 4-6%
The average occupancy rate: 70-90%
The average gross annual income: 35,000 GBP
The Isle of Skye is renowned for its breathtaking landscapes, rugged coastline, and dramatic scenery. Limited availability of properties on the Isle of Skye, coupled with its charm, could lead to potential appreciation in property value over time. However, some parts of Skye might have limited facilities due to its remote nature, potentially affecting convenience and property management.
Edinburgh
The average cap rate: 4-5%
The average occupancy rate: 70-80%
The average gross annual income: 25,000 GBP
Edinburgh is a vibrant city that attracts tourists year-round due to its rich history, cultural festivals, iconic landmarks like Edinburgh Castle and the Royal Mile, as well as its renowned arts and culinary scenes.
The city’s popularity as a tourist destination ensures a consistent demand for holiday accommodations. Moreover, Edinburgh’s real estate market has shown resilience and stability over the years. Edinburgh’s diverse attractions cater to various visitor interests, making it an attractive destination not only for leisure travellers but also for business and cultural events.
Loch Lomond
The average cap rate: 5-7%
The average occupancy rate: 70-80%
The average gross annual income: 30,000 GBP
Loch Lomond is situated within the stunning Trossachs National Park, offering breathtaking scenery, tranquil surroundings, and ample opportunities for outdoor activities. The region’s popularity as a tourist destination, coupled with its proximity to Glasgow and other major cities, enhances the potential for a steady stream of visitors.
Isle of Lewis
The average cap rate: 8-12%
The average occupancy rate: 70-80%
The average gross annual income: 20,000 GBP
The Isle of Lewis, part of the Outer Hebrides, is renowned for its breathtaking landscapes, rugged coastline, and rich Gaelic culture. The island’s popularity as a holiday destination has been growing. It attracts tourists interested in outdoor activities like hiking, birdwatching, and exploring the unique culture and heritage of the area.
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Belfast
The average cap rate: 5-7%
The average occupancy rate: 53%
The average gross annual income: 30,000 GBP
Belfast is a vibrant city with a rich history, cultural attractions, and a growing tourism industry. This city has experienced a surge in tourism due to its historical landmarks, lively nightlife, and the Titanic Quarter, drawing in visitors from around the world. Belfast’s ongoing urban regeneration projects and economic development could contribute to property appreciation over time.
Cloughey
The average cap rate: 10%
The average occupancy rate: 80%
The average gross annual income: 15,000 GBP
Cloughey boasts picturesque landscapes along the coast of the Ards Peninsula, making it an attractive spot. The area’s beautiful beaches, such as Cloughey Bay, and proximity to various attractions like Kirkistown Castle Golf Club and Exploris Aquarium, make it appealing to tourists. Cloughey’s accessibility from Belfast and its proximity to other attractions in Northern Ireland can enhance its appeal to both local and international tourists.
Ballyhalbert
The average cap rate: 5-8%
The average occupancy rate: 60-70%
The average gross annual income: 15,000 GBP
Ballyhalbert is a serene coastal village known for its beautiful scenery, sandy beaches, and tranquil atmosphere. Ballyhalbert’s coastline and proximity to the Irish Sea make it an attractive spot for tourists looking for seaside escapes. This consistent tourism can contribute to the potential rental income from a holiday property.
Bangor
The average cap rate: 6.5%
The average occupancy rate: 75%
The average gross annual income: 15,000 GBP
Bangor holds scenic coastal landscapes, beautiful parks, historic sites, and a vibrant community. Its proximity to Belfast (around 30 minutes by train) adds to its appeal as a holiday destination. The area offers a range of outdoor activities, cultural events, and stunning views of Belfast Lough. The potential for a holiday home in Bangor to serve as a rental property can be promising, particularly during the summer.
In this article, you read about the 22 best places to buy a holiday home in the UK. You found that investing in a vacation rental in the UK can be a rewarding venture, providing not only a source of income but also a personal retreat. However, like any investment, thorough research is crucial. Consider factors such as location, seasonal variations in tourism, ongoing maintenance costs, and rental market trends. Engaging with local real estate professionals familiar with the area can provide valuable insights and help make an informed decision.
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