Is it time to invest in the booming UK holiday let property market?

With stellar growth, holiday let investors have never had it so good

The holiday let market is booming in the UK. The decrease in the value of the pound has made the UK more attractive for foreign visitors. It has also made staycations more popular – the pound in your pocket doesn’t buy as much in Spain as it used to. In this article, we look at just how vibrant the holiday let market is and help answer the question, is holiday let property a good investment?

The UK tourism market is huge

With such history and heritage, a variety of culture and landscapes, such a range of things to do, and a huge economy attracting millions of international and domestic business visitors, the UK is one of the world’s most popular destinations. Every overnight trip taken is an opportunity for those offering accommodation.

The 2017 GB Tourist Report – sponsored by VisitEngland, VisitScotland and Visit Wales – is packed with every visitor statistic you could think of. It shows that there were 369.45 million bed nights taken in the UK in 2017. This is up from 349.55 million in 2014 and 359.55 million in 2016. Put another way, the demand for accommodation grew by 2.8% between 2016 and 2017, and by 5.7% between 2014 and 2017. It’s one of the fastest-growing sectors in the UK.

Why do people want accommodation?

To be really successful in the holiday let market, you’ll need to know why people might want to stay on your holiday let property. Here is how the numbers broke down in 2017:

  • 3 million bed nights for holidays (+9.7% since 2014)
  • 3 million bed nights for visiting friends and family (+0.8% since 2014)
  • 9 million bed nights for business (+1.3% since 2014)

The holiday market is huge, and more than five times the size of the business market. England dominates the market in the UK, with 83% of all trips. The average stay per trip is three nights in England (3.1 nights across the UK), and the average spend in England per trip is £189. Most of these trips in England were made by residents of England.

What type of overnight accommodation is most popular in the UK?

The visitor market is huge, and growing rapidly. So, the question now is, what type of accommodation do people stay in?

Perhaps unsurprisingly, hotels and motels are high on the list, with 24.2% of nights booked. Staying at the home of a friend or relative or in a second home or timeshare fills more than a third of nights away from home. What might surprise you is that self-catering accommodation accounts for between 26.1% of booked accommodation in England and 41.5% in Wales.

In England, almost half (44.7%) of holiday trips are taken in self-catering accommodation, with a spend of around £4 billion.

Where do people want to stay?

So, the visitor market is massive, and within this the holiday market is huge. In the holiday market, almost half of all trips are booked in self-catering accommodation. There’s a highly attractive opportunity to profit from holiday let investment. Now, the question is, where should you invest? Where do people stay?

When you think of a holiday let property, you might think of a quaint cottage in a sleepy rural paradise miles from anywhere. The idyllic getaway. But is this what people really want? The figures show otherwise, while also indicating that profitable holiday let opportunities can be found pretty much anywhere in the UK. When the numbers of nights booked are broken down, the most popular destinations are:

City/large town 33.6%
Seaside 29.7%
Countryside/village 18.5%
Small town 17.7%

 

Where is the holiday let market growing most strongly?

In England, the most popular destination city is London, with 27.8 million nights’ accommodation booked. However, there is a large demand for holiday accommodation in all regions. Here are the number of nights’ accommodation (in millions) booked across England’s regions in 2017:

North East 10.9
North West 37.8
Yorkshire and Humber 29.3
East Midlands 21.7
West Midlands 18.4
East of England 32.6
South East 43.0
South West 76.8

 

The 2017 GB Tourist Report doesn’t show by how much the demand in the regions is growing. Fortunately, a House of Commons Library Briefing Paper (Number 8395, published in 2018) gives us the answer. The paper, examining the growth in short-term lettings, looks in detail at Airbnb listings and lettings – and these show some startling growth. In compiling these statistics, the paper took data from Airbnb itself and from analysis of Airbnb’s business by external organisations. This analysis shows that:

  • London had more active listings than any other region and the most listings per 1,000 residents
  • London attracts more visitors than any other region
  • But smaller markets saw more growth in the number of guests

Examples of the growth in visitors between 2017 and 2018 include:

  • East Midlands +134%
  • West Midlands +119%
  • North East +115%
  • North West +115%
  • Yorkshire & Humberside +112%

In summary

Brexit is the buzzword that is clouding every conversation at the moment, and it astounds me that all the fuss is around the potential negatives of Brexit. There are a lot of positives, too. The UK visitor economy is benefitting hugely. Numbers of overseas visitors are increasing and the number of staycations is growing. The potential for profit from the holiday let sector is growing. With the right strategy and the right property, you could benefit from the tremendous potential for exceptional rental yield and capital growth – as well as the tax advantages of holiday let investment.

To learn more about the advantages and benefits of holiday let property investment, contact Gladfish today on +44 207 923 6100. We’ll be happy to discuss how a holiday let investment might fit in with an existing portfolio or be the investment to help you achieve your lifestyle goals.

Live with passion

Brett Alegre-Wood

More details:

GB Tourism Survey (domestic overnight tourism): Latest results

 

<<Previous

Next >>

 

About the Author

Brett has over 20 years experience in all facets of property, he owns various companies centred around property and is the driving force behind the education and training at Gladfish. His companies have sold over £850 million in UK and London property and he manages over 1200 properties through his estate agency chain. Today he shares his time between UK, Australia and Singapore. He is married to Arlene and together they have 4 kids.

>