Comparison · Property Investment & Mortgages · 2026
Holiday Let vs Buy-to-Let Mortgage UK 2026: Which Property Strategy Pays?
Holiday lets and buy-to-lets are financed differently, taxed differently and demand very different levels of hands-on work. The abolition of the Furnished Holiday Lettings tax regime from April 2025 narrowed the gap that once favoured holiday lets. This guide compares the two property strategies across financing, tax and yield, using 2026/27 figures.
TL;DR -- 30-Second Summary
- • Holiday let: higher gross income potential, but seasonal, high-cost and hands-on
- • Buy-to-let: steadier, lower-effort income with a lower ceiling
- • FHL regime abolished from April 2025 -- holiday lets lost their tax edge
- • Mortgage interest relief now restricted to a 20% credit for both
- • Stamp duty: the 5% additional-property surcharge applies to either strategy
Side-by-Side Comparison
| Feature | Holiday Let | Buy-to-Let |
|---|---|---|
| Income pattern | Seasonal, variable, high gross | Steady monthly rent |
| Mortgage affordability test | Projected weekly rates by season | Expected monthly rent |
| Typical deposit | Often larger; fewer lenders | Commonly around 25% |
| Running costs | High (cleaning, fees, utilities, voids) | Lower; many costs fall to the tenant |
| Tax regime since April 2025 | Standard property rules (FHL abolished) | Standard property rules |
| Mortgage interest relief | 20% basic-rate credit | 20% basic-rate credit |
| Additional-property SDLT surcharge | 5% in England and NI (LBTT/LTT equivalents in Scotland and Wales) | |
Worked Example: A GBP 250,000 Property
Compare buying the same GBP 250,000 property as a long-term buy-to-let versus a holiday let. As an additional property, the purchase attracts the 5% SDLT surcharge in England and Northern Ireland on top of the standard bands, so the upfront stamp duty is the same for both strategies.
| Measure | Holiday let | Buy-to-let |
|---|---|---|
| Purchase price | GBP 250,000 | GBP 250,000 |
| SDLT (standard GBP 2,500 + 5% surcharge GBP 12,500) | GBP 15,000 | GBP 15,000 |
| Illustrative gross annual income | GBP 24,000 (variable, seasonal) | GBP 13,200 (GBP 1,100/month) |
| Illustrative running costs | about GBP 12,000 (cleaning, fees, utilities) | about GBP 2,000 (lower turnover) |
| Illustrative net income before finance and tax | about GBP 12,000 | about GBP 11,200 |
On these illustrative figures the holiday let earns nearly double the gross income but, after far higher running costs, the net income before finance and tax is similar to the buy-to-let. The holiday let also requires far more hands-on management and carries seasonal void risk. SDLT of GBP 15,000 (the GBP 2,500 standard charge plus the GBP 12,500 surcharge) applies either way. These are estimates only; actual income, costs and yields vary widely by location and demand.
When a Holiday Let Wins
A holiday let wins in a strong, year-round tourist location where occupancy and nightly rates stay high, where you can manage the property efficiently or have a reliable agent, and where you value the flexibility to use the property yourself in quiet periods. In the best locations the gross income premium over a long-term let can be substantial even after costs.
It suits investors who treat the property as a small business, are comfortable with variable income and seasonal voids, and have the time or budget to handle cleaning, marketing and guest turnover. It is far less attractive in low-demand areas or where local licensing and planning rules restrict short-term letting.
When a Buy-to-Let Wins
A buy-to-let wins when you want predictable, lower-effort income and a simpler operation. A single long-term tenant on an assured shorthold tenancy gives steady monthly rent, lower running costs and far less management time than a string of short holiday bookings. For many landlords the steadier net yield and reduced void risk outweigh the higher gross ceiling of a holiday let.
With the Furnished Holiday Lettings tax advantages gone since April 2025, the buy-to-let is now on a more level footing with holiday lets on tax, removing one of the main historic reasons to choose a holiday let. For hands-off investors, or those in areas without strong tourism, a buy-to-let is usually the more practical strategy.