An analysis of England’s 30 most popular holiday destinations has unveiled an a potential opportunity for property investors. This research, tapping into the 2021 Census data, not only delves into the sales premium of holiday homes but also sheds light on the rental income potential in these areas.
Out of the myriad of properties across these prime locations, 41,000 are holiday homes. This figure represents 1.4% of the total housing stock, with some areas like South Hams – the jewel of Devon – witnessing holiday homes making up 4.4% of its dwellings.
Market Trends
Currently, almost 5,000 homes are up for sale in these hotspots, specifically targeting investors keen on short-term letting ventures. This accounts for about 7.0% of all market listings. Nationally, these holiday investment listings represent a modest 2% of all homes listed in England.
Rental Revenue
Here’s where it gets interesting: the average monthly rent in these hotspots stands at £849. However, when properties are let out as holiday homes, the average monthly income soars to £3,325, calculated at an average occupancy rate of just 58%. That’s 292% more than traditional private rental sector (PRS) incomes.
Regional Spotlight – Westmorland and Furness
In the North West’s Westmorland and Furness, holiday homes already make up 2.0% of the housing stock. The area boasts the highest holiday rental premium, with homes earning an astounding £3,978 per month at a 68% occupancy rate – a staggering 488% above the average PRS rent of £676.
Rental Growth
The Zero Deposit study highlights a national average rent increase of 5.1% across England. However, in these top holiday destinations, the surge is even more pronounced at 6.4%. Some areas, like Arun, have seen an astronomical annual increase of 22.6%, with Folkestone and Hythe, Bournemouth, Christchurch and Poole, Chichester, and Torridge also experiencing significantly higher rental growth rates.
The Investor Perspective
According to a Zero Deposit spokesperson, “Landlords have seen the profitability of their buy-to-let portfolios dwindle in recent years as a result of numerous legislative changes from the government. So you can understand why many are turning to the short-let model in areas where demand is high.”