Whether you’re in pursuit of a tranquil retreat for your family holidays or a savvy investment opportunity, purchasing a holiday home can be both an exciting and daunting endeavour. Of course, it goes without saying that the location of your holiday home plays a (perhaps the most) crucial role in determining its profitability.
As a savvy investor – apologies for making assumptions – it’s important to consider not only the price of the property but also its potential rental yields, tourist appeal, and long-term capital gains. With that in mind, here are some of the most potentially lucrative locations for Brits to own a holiday home.
Cornwall, England
Cornwall is arguably the UK’s quintessential holiday home hotspot and one of the South West’s most beloved staycation destinations. With its stunning coastline, charming villages, and mild climate, it is one of the UK’s most popular tourist destinations. Its strong holiday letting market is underpinned by a high demand for short-term rentals, particularly during the summer. It provides an attractive income stream, making Cornwall a profitable choice for holiday home investors.
The Lake District, England
Proudly named as a UNESCO World Heritage site, the Lake District’s breathtaking landscapes and range of outdoor activities – both active and languid – make it a year-round attraction. This ensures the possibility of continuous rental yields, uninterrupted by the wants and whims of peak and off season. Buying a holiday home here could be a smart investment move, especially around Windermere and Ambleside, where property prices are high but so are rental rates.
Edinburgh, Scotland
If you’re considering an urban location, Edinburgh’s thriving tourism industry makes it an incredibly profitable choice. The city sees a consistent stream of tourists year-round due to its historical and cultural appeal, further boosted by events like the Edinburgh Festival. A holiday home in Edinburgh is not only a solid investment but it also offers the owner a cultural hub to explore.
Read: The best vegan restaurants in Edinburgh
Paphos, Cyprus
Let’s bounce from the UK now, in search of pastures new and exciting on the continent. Financially viable and geographically desirable, the ancient capital of Cyprus, Paphos offers a robust holiday rental market with a continuous demand from European tourists. The city also offers favourable tax conditions for foreign property owners. An additional benefit is the potential for long-term capital gains, given Cyprus’ growing economy and rising property prices.
The city’s international airport provides excellent connections to major UK cities, and the year-round Mediterranean climate ensures a steady stream of visitors well beyond the peak summer months. Property prices in Paphos remain relatively competitive compared to other Mediterranean destinations, particularly in up-and-coming areas like Universal and Kato Paphos.
Costa del Sol, Spain
Spain’s “Sun Coast” continues to be a magnet for British property investors, particularly around upmarket areas like Marbella and Estepona. Before diving in, you’ll need to obtain a NIF number (Spanish tax identification number) – a crucial first step for any property purchase in Spain. The Costa del Sol’s year-round sunny climate and excellent infrastructure make it particularly attractive for both personal enjoyment and rental potential.
The region’s proximity to Málaga Airport, with its extensive connections to UK cities, adds to its appeal. While property prices here can be higher than in some other Spanish coastal areas, the strong rental demand – especially during the extended summer season from April to October – can provide impressive returns on investment.
Algarve, Portugal
Portugal’s Algarve region is popular among Brits for its sun-drenched coastlines and golf courses. It boasts a thriving holiday rental market, which results in rewarding rental yields. Furthermore, Portugal’s Non-Habitual Resident (NHR) tax regime can offer tax benefits for British expats, enhancing the profitability of owning a holiday home in the Algarve.
The region’s excellent infrastructure, centered around Faro International Airport, makes it easily accessible for tourists throughout the year. Areas like Vilamoura and Lagos are particularly sought after, combining traditional Portuguese charm with modern amenities and strong rental potential.
Mallorca, Spain
Mallorca’s popularity as a holiday destination combined with its strong rental market makes it an appealing choice for investors. The island’s strong local laws protecting the landscape mean that new development is limited, increasing the value of existing properties.
The island’s exceptional transport links through Palma Airport ensure steady visitor numbers throughout the year, while its sophisticated infrastructure and high-end tourism sector attract a discerning clientele. Areas like Port d’Andratx and Pollença are particularly popular with international buyers, offering a blend of luxury living and strong rental prospects.
Or, also part of the Balearic Island archipelago and with an excellent culinary tradition and restaurant scene, more laid back atmosphere and slightly more affordable house prices, Menorca offers an interesting alternative.
Florida, USA
For those willing to invest further afield, Florida’s strong tourist appeal – with attractions like DisneyWorld and Universal Studios – ensures a steady rental demand. Florida also has favourable property laws for foreign investors and the potential for substantial long-term returns.
Top Tips For Creating The Perfect Holiday Rental
Of course, it’s not only about location. Your holiday rental also needs to look and feel the part if it’s going to be profitable.
Doing Your Due Diligence
Above all, and regardless of where you choose to make a purchase, you need to treat your holiday rental like a business if it’s to succeed as an investment. Handling all of your important details will help your tenants or guests enjoy their vacation, and will let you increase your revenue while maintaining your peace of mind.
Create separate business checking accounts for any property that you’re using as a holiday rental. Consider your financing resources and what price points will help you continuously get the best ROI.
Investing in another country is a much larger undertaking, and requires more of your time, money, and effort. The reward potential is also greater, so don’t shy away from doing your due diligence.
Make sure that you also get to know the banking system in the country. Understand interest rates, financing opportunities, and what is required to put these sorts of deals together.
Make It Somewhere You’d Want To Stay
Business aspects aside, make sure that you go all out to make the holiday rental somewhere that you’d want to spend a trip. This means fully furnishing it and making sure that you add art and decorative elements. Hire cleaning professionals to turn the rental over for you each time someone books. This way, they’ll have a clean and luxurious experience. Add little touches like providing people water and champagne on the first day that they check in. These little details make all the difference in the world and will help you get repeat visitors.
Blend Travel With Investing
The world is your oyster when you’re looking for travel-based investment opportunities. If you love to travel, have an interest in other cultures and attractions, or simply fancy the travel industry, these strategies can help you create the perfect holiday rental. Start with these words of advice as you grow your portfolio and travel opportunities at the same time.
The Bottom Line
When considering these locations, it’s crucial to remember that profitable holiday home ownership isn’t only about the potential rental income. Consideration should also be given to the potential capital appreciation of the property, the local regulations regarding property ownership and rental, the tax implications, and the desirability of the location for personal use.
Nevertheless, owning a holiday home can be a reliable and profitable investment when the location is carefully chosen, the local market is well-understood, and the property is well-managed. With these key considerations in mind, whether nestled in the idyllic landscapes of the Lake District or basking in the sun-kissed shores of the Algarve, your dream holiday home can become a tangible asset in your investment portfolio.