How to Spot a Winning Property with Holiday Let Potential: A Guide for UK Investors

In 2024, research found that of the 52% of Brits planning to take a holiday, 34% planned to holiday twice in the UK with 23% of them fully embracing the staycation trend. With the staycation boom well and truly here to stay, how can investors look to capitalise on this ever-increasing trend and lucrative prospect?

Investing in holiday let properties has become increasingly popular in the UK, with demand for unique and high-quality short-term rentals on the rise. For investors, these properties can offer strong returns and the added benefit of personal use. However, identifying a winning property requires careful the consideration of various factors. Here’s a guide to help UK investors find holiday let properties with excellent potential.

Location, Location, Location…

…as the saying goes! The location of a property is the cornerstone of its success as a holiday let. Consider evaluating the following:

• Is there tourist demand? Consider researching areas that attract consistent visitor numbers. Costal locations and areas of outstanding natural beauty tend to be very popular with holidaymakers looking to escape their usual place of living.
• How close is it to attractions? Properties near beaches, national parks, historical sites, or cultural hubs often have greater appeal for staycations.
• How accessible is it? Is the property easily accessible by road, rail, or air? Having good transport links can significantly boost a property’s booking potential. Ensure the property is well-connected for both domestic and international tourists, for those visiting from further afield.

The Right Property Type

Certain property types perform better as holiday lets depending on the target market. The following property types typically perform well as holiday lets.

• Quaint Cottages: Ideal for couples or small families looking for a countryside escape.
• Luxury Apartments: A luxury apartment in a city centre or trendy, bustling neighbourhood can attract urban professionals and affluent travellers.
• Larger Homes: Suitable for multi-generational families or group bookings.
• Unique Properties: Converted barns, treehouses, or waterfront cabins can command premium rates due to their distinctiveness and high demand.

Consider the local market demand and align the property’s type and size with your target audience.

Dress To Impress

Modern travellers seek comfort, convenience, and memorable experiences. A winning property will dress the property with desirable amenities, including:

• High-speed Wi-Fi and smart TVs.
• Well-equipped kitchens with modern appliances.
• Outdoor spaces, such as gardens, patios, or hot tubs.
• Luxurious touches, such as premium bedding, spa-like bathrooms, and stylish interiors.
• Pet-friendly accommodations to attract a broader audience.

Bonus features like log burners or panoramic views can also set your property apart.

Evaluate Seasonal and Competitive Trends

An important factor to think about when owning a holiday let is making sure you understand the local market dynamics. This is crucial knowledge for optimising bookings.

• Seasonal Peaks: Identify the high and low seasons to anticipate income fluctuations. Summer holidays and the festive period are key periods of occupancy for holiday let investors and there may be room for increased rates if there’s high demand.
• Competitor Analysis: Study other holiday lets in the area to determine what makes them successful and identify potential gaps in the market that present you with an opportunity.
• Pricing Strategy: Set a competitive pricing strategy that reflect your property’s value, location, and amenities.

Marketing and Management

No matter how appealing the property is, effective marketing and management are vital to ensuring the property thrives in the competitive holiday let market. The following top tips are vital for success:

• Online Presence: List the property on popular platforms like Airbnb or Booking.com.
• Professional Photography: High-quality images are essential for attracting bookings.
• Responsive Management: Ensure prompt communication with guests and timely resolution of issues.
• Local Partnerships: Collaborate with local businesses, such as tour operators or restaurants, to enhance the guest experience.

If managing the property yourself feels overwhelming, consider hiring a holiday let management company to handle bookings, cleaning, and guest relations.

Long-Term Sustainability

Sustainability is increasingly important to travellers choosing to stay local, rather than flying abroad, and can enhance a property’s appeal:

• Eco-Friendly Features: Think about the attraction of solar panels, energy-efficient heating, and recycling facilities will appeal to environmentally conscious guests.
• Sustainable Practices: Provide reusable products, source local materials for furnishings and support nearby businesses to show guests your environmentally conscious.

A property with sustainable credentials may be able to command higher rates, and gain positive reviews for being environmentally friendly.

Money, Money, Money

The financial viability and potential returns of a holiday let property are paramount to its success. Consider conducting a thorough financial analysis to assess the investment’s potential. Important points to think about include:

• The Purchase Price and Running Costs: Factor in upfront costs, including stamp duty, renovation (if required), and furnishing costs, as well as ongoing expenses like utilities, cleaning, and maintenance.
• Rental Income Projections: Research comparable properties in the area to estimate nightly rates and occupancy levels.
• Yield and ROI: Aim for a balance between rental yield and capital appreciation, ensuring the property aligns with your long-term financial goals.

A well-managed holiday let can generate higher returns than traditional buy-to-let investments, but success depends on accurate financial planning.

Plan for Future Growth

Investing in holiday lets is not just about immediate returns, it’s also about long-term value. Consider obtaining capital for changes that can make a big difference. For example:

• Property Improvements: Securing a loan for renovations or upgrades can boost rental income and property value.
• Expanding Your Portfolio: Success with one property can pave the way for additional investments in other high-performing areas. Lenders will also feel more confident loaning money to experienced landlords or investors. If you are considering expanding into a portfolio of properties, debt finance may be a good solution.

Spotting a winning property with holiday let potential requires a combination of research, strategic planning, and attention to detail. By focusing on prime locations, offering desirable amenities, understanding regulations, and adopting effective marketing strategies, UK investors can maximise their chances of success. With the right approach underpinned by strong financial backing, a holiday let property can become a lucrative and rewarding addition to your investment portfolio.

If you’re considering debt finance for your holiday let investment, let Wharf Financial help. Contact our friendly team and let’s get started today.