Process

Buying a holiday let

A holiday let can generate income and give you a place to escape to, but the mortgages, tax rules and running costs differ sharply from a normal home or buy-to-let. Going in with realistic numbers is what separates a profitable let from an expensive second home.

Last reviewed 26 June 2026

In short

Buying a holiday let, a furnished property let to short-stay guests, needs a specialist holiday let mortgage. These usually require a larger deposit (often 25 to 35 percent) and assess projected seasonal rental income rather than a long-term tenancy. As a second property the purchase attracts the stamp duty additional-property surcharge. Running costs are higher than a standard let because you pay for cleaning, changeovers, marketing, utilities, insurance and management. Tax treatment depends on whether the property qualifies under HMRC rules, and the furnished holiday lettings regime has been changing, so confirm the current position before you buy.

How a holiday let differs from buy-to-let

A holiday let is let furnished to short-stay guests, typically by the night or week, rather than to a tenant on an assured shorthold tenancy. That changes almost everything: the mortgage, the insurance, the tax position and the day-to-day workload.

Income can be higher per night in peak season, but it is lumpy. You earn most of your money in summer and over school holidays, with quiet shoulder seasons and winter voids in between. You also turn the property over far more often, which means more cleaning, more wear, and more management whether you do it yourself or pay an agency.

Location matters more than for a standard let. Demand follows scenery, coastlines, national parks and tourist towns. A property an hour from the action will sit empty while one in a honeypot village books out, so research occupancy in the specific area before committing.

Check the latest tax rules and licensing

The furnished holiday lettings regime has been changing, and several areas now require short-let licences or planning permission. Confirm the current tax treatment and any local rules with a tax adviser and the council before you buy.

Holiday let vs buy-to-let vs second home

The three look similar but carry different finance, tax and effort.

Feature	Holiday let	Standard buy-to-let	Second home
Mortgage type	Specialist holiday let	Buy-to-let	Residential or second-home
Typical deposit	25 to 35 percent	25 percent	10 to 25 percent
Income basis	Projected seasonal income	Long-term rent	None (personal use)
Stamp duty surcharge	Yes	Yes	Yes
Management effort	High	Low to medium	Low

Running costs to budget for

These are easy to underestimate and they eat into headline income.

Cleaning and changeovers between every booking.
Marketing and platform commission (listing sites take a cut).
Utilities, broadband and TV licence, which you pay, not the guest.
Specialist holiday let insurance, including public liability.
Management fees if you use an agency (often 15 to 25 percent of income).
Maintenance, replacements and a sinking fund for bigger repairs.

Buying a holiday let step by step

Research the area
Check realistic occupancy, nightly rates and seasonality for comparable lets nearby.
Model the numbers
Build a cautious projection with voids and full running costs, not just peak weeks.
Get a mortgage in principle
Use a broker who knows holiday let lenders and their income criteria.
Confirm tax and licensing
Speak to a tax adviser and the council about FHL status and short-let rules.
Budget for stamp duty
Add the additional-property surcharge to your upfront costs.
Plan the setup
Furnishing, listings, cleaning and management all need to be ready before launch.

Common questions

Can I get a mortgage for a holiday let?

Yes, but you need a specialist holiday let mortgage rather than a residential or standard buy-to-let one. Lenders typically want a larger deposit and assess the property's projected seasonal rental income.

How much deposit do I need for a holiday let?

Most holiday let lenders want at least 25 percent, and some ask for 30 to 35 percent. A bigger deposit widens your lender choice and improves the rate, so build that into your budget.

Do I pay extra stamp duty on a holiday let?

Usually yes. As an additional property, a holiday let attracts the stamp duty surcharge on top of standard rates in England and Northern Ireland, which adds significantly to the upfront cost.

What is a furnished holiday letting?

It is a tax classification for short-let properties that meet HMRC occupancy thresholds. The rules around FHL tax reliefs have been changing, so confirm the current treatment with a tax adviser before relying on any benefit.

Is a holiday let a good investment?

It can earn more than a standard let in peak season but has higher costs, more management and seasonal voids. Run realistic income and cost projections, including changeovers and marketing, before committing.

Do I need a licence to run a holiday let?

Increasingly, yes. Scotland operates a short-term let licensing scheme and several English areas are introducing registration or planning controls. Check the local council's current requirements before you buy.

Can I use the holiday let myself?

You can, but personal use reduces lettable weeks and can affect FHL qualification and the deductibility of some costs. Plan personal stays around quiet periods and keep clear records of business versus private use.

What insurance does a holiday let need?

Standard home insurance will not cover commercial short letting. You need specialist holiday let cover that includes buildings, contents for let property, public liability and often loss of rental income.

Sources

Work out your full cost of buying

The planner adds stamp duty, legal fees, surveys, refurbishment, removals and the emergency reserve you should keep after completion, so you know exactly how much cash you really need.

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