Invest in Short-Term Lets UK: Top Locations & High-Yield Opportunities
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The short-term rental market in the United Kingdom is booming. In 2023, platforms like as Airbnb reported over 1.9 million stays, accounting for approximately 18.1 million guest nights across the country.
Short-term rentals can provide financial benefits to property owners. In Manchester, for example, the average annual revenue for a typical short-term rental was £20,000 in 2023, with homes reserved for around 234 nights per year at an average daily fee of £96.
In the UK, the average monthly rent for a new lease was £1,223 in April 2024. This is a lot more than that. Staycations are becoming more popular, and business visitors are choosing cheaper stays, so demand is only going to rise.
But short-term lets aren’t hands-off—legal rules, management, and seasonal income all play a role. This guide covers everything you need to know to maximise returns while staying compliant in this high-growth market.
What is a Short-Term Let?
A short-term let is any property rented out for a short period, typically less than 90 days per stay in many UK cities. Unlike long-term rentals, where tenants sign leases for six months or more, short-term lets cater to paying guests looking for temporary accommodation.
Think tourists visiting Birmingham for a weekend, professionals on business trips in Liverpool, or families needing a fully equipped kitchen and extra space for a short stay.
Unlike hotels, short-term lets often provide a more home-like experience—better privacy, lower costs, and more space. Many properties are conveniently located in city centres or near transport hubs, making them attractive to guests who value flexibility.
But here’s the catch—short-term lets are subject to different rules across the UK. In Scotland, for example, you now need a short-term license to operate legally. That’s why understanding the local market and regulations before investing is crucial.
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Why Invest in Short-Term Lets?
Investing in short-term lets in the UK offers several compelling advantages
`(2022–23)
Higher Rental Yields
Recent data indicates that short-term rentals in the UK have experienced significant growth in average earnings post-2020. As of 2023, the average annual income for a UK holiday let owner stands at £24,500, an increase from £15,600 in the 2020–21 tax year.
This represents a 57% increase in earnings for short-term let landlords. The flexibility to adjust pricing based on demand, especially during peak tourist seasons or local events, allows property owners to maximise their returns.
In contrast, traditional long-term rental income has seen a more modest rise. In the 2022–23 tax year, unincorporated landlords declared a total property income of £50.17 billion, up from £49.51 billion in 2021–22.
This slight increase reflects the challenges landlords face, including increased expenses such as mortgage interest rates and maintenance costs. Notably, nearly half (48%) of landlords’ income is now allocated to covering these costs, up from 45% in 2020–21.
These figures underscore the financial pressures on traditional long-term rental landlords in the current UK market.
Growing Demand
The UK’s tourism sector has been experiencing a robust recovery. In 2023, the country welcomed approximately 38 million overseas visitors, representing a growth of over 20% from the previous year.
This influx of tourists has bolstered the demand for short-term rental accommodations.
Domestic tourism also remains strong. In 2023, UK residents made 37.2 million domestic overnight holiday trips in Great Britain, with spending reaching £12.3 billion.
This surge is driven by factors such as international travel uncertainties and a renewed appreciation for local destinations. As more travellers opt for domestic holidays, the demand for short-term rental accommodation options continues to rise, presenting lucrative opportunities for investors.
Shorter Void Periods
High demand in popular locations often leads to consistent bookings, reducing the time your property sits unoccupied. For instance, properties in tourist hotspots or cities hosting major events can experience occupancy rates exceeding 70% annually. This high occupancy ensures a steady income stream and minimises the financial impact of vacant periods.
Diversified Portfolio
Incorporating short-term lets into your investment portfolio offers diversification, balancing the more stable, albeit lower, returns of long-term rentals with the potentially higher, yet variable, income from short-term properties.
This strategy can mitigate risks associated with market fluctuations and provide multiple income streams. Additionally, owning a short-term let offers personal flexibility; you can reserve the property for personal use during off-peak times, combining investment with leisure.
However, it’s essential to stay informed about evolving regulations and market trends to maximise returns and ensure compliance. Engaging with local property management experts and regularly reviewing market data can help navigate the dynamic landscape of short-term rentals.
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5 Best Locations for Short-Term Let Investment in the UK
Investing in short-term lets can be highly profitable, but location is key. The best-performing cities offer strong rental demand, high tourism numbers, and solid property price growth. Below are five of the best UK cities for short-term let investment, along with key property recommendations.
LIVERPOOL
Liverpool’s property market presents attractive opportunities for both long-term and short-term rental investments. This potential is fueled by a thriving tourism sector, a large student population, and strong business travel demand. With over 60 million visitors annually and a student population exceeding 70,000, Liverpool enjoys consistent rental demand across multiple tenant groups. It’s affordability, economic growth, and cultural appeal make it one of the UK’s most lucrative property investment destinations.
Average Rental Yield
60 Million+
Visitors in 2023
Best Areas
Baltic Triangle, Ropewalks, Liverpool One
Short-Term Rentals
For a property valued at £176,000, generating an average monthly income of £2,563 from short-term lets, the estimated annual rental yield is approximately 17.5%.
These figures underscore the potential for higher returns in the short-term rental market, particularly in key areas like the Baltic Triangle, Ropewalks, and Liverpool One.
Average Daily Rate (ADR)
Average Monthly Income
Short-Term Average Rental Yield
Angel Gardens
Angel Gardens
A Unique High-Yield Investment in Liverpool
Angel Gardens is a modern, high-end residential development in Liverpool city centre, ideal for both short-term and long-term lets. With its premium amenities and prime location, it attracts business travellers, tourists, and professionals looking for high-quality rental accommodation.
The development also benefits from excellent transport links, providing easy access to key city attractions and business hubs. Its contemporary design, combined with on-site concierge services and leisure facilities, enhances tenant satisfaction and ensures a competitive edge in Liverpool’s thriving rental market.
Why Invest in
ANGEL GARDENS?
Q4 2026
Completion Date
PROJECT HIGHLIGHTS
- Recognised as one of Liverpool City Centre's greenest developments.
- Anticipate up to 10% NET returns on investment.
- Short-term lettings are approved, offering increased yield potential.
- Flats are approximately 25% larger than Liverpool's average.
- Each unit includes a balcony, with parking spaces available.
- Enjoy the exclusivity and security of a gated community.
- Situated near major regeneration projects and universities, with excellent transport links.
Angel Gardens
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Property Price
Rent per month
Rental Yield
Dockside Residences
Dockside Residences
Another High-Yield Investment in Liverpool
Dockside Residences is a modern waterfront development in Liverpool, offering 32 eco-friendly apartments designed for both short-term and long-term stays. Its prime location adjacent to the M&S Arena and National Convention Centre ensures high occupancy rates, making it an attractive investment opportunity.
The development is fully completed and ready for immediate income generation. On-site management services are available to handle short-term lettings, ensuring a hassle-free experience for investors.
Why Invest in
DOCKSIDE RESIDENCES?
10 Years
Structural Defects Warranty
PROJECT HIGHLIGHTS
- The project boasts a great BREEAM rating and an excellent EPC rating.
- The design prioritises environmental responsibility by featuring an all-electric system, ensuring there are no direct fossil fuel emissions associated with the site.
- Energy-efficient living space is created. This includes High-Performance Insulation, Energy-efficient Service Systems, LED Lighting, Water-saving fixtures, Renewable energy sources with the installation of Photo-Voltaics on the roof.
- The building has been awarded an A1-rated EWS1.
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- Liverpool
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BIRMINGHAM
Birmingham, the UK’s second-largest city, presents strong investment potential for both long-term and short-term rentals. The city attracts business travelers, tourists, and students, ensuring a steady demand for rental properties. With major events, concerts, and conferences taking place year-round, short-term lets in Birmingham benefit from high occupancy rates. Ongoing regeneration projects, including HS2, continue to drive property demand and enhance capital growth prospects.
42 Million+
Visitors Annually
Best Areas
Jewellery Quarter, Digbeth, Birmingham City Centre
Short-Term Rentals
For a property valued at £232,000, generating an average monthly income of £1,421 from short-term lets, the estimated annual rental yield is approximately 7.75%.
With ongoing infrastructure improvements, Birmingham offers promising short-term rental returns, especially in prime areas like the Jewellery Quarter, Digbeth, and the city centre.
Average Daily Rate (ADR)
Average Monthly Income
(ranging from £990 to £1,800 depending on seasonality)
40–50%
Occupancy Rate
(higher in city center and peak months)
Short-Term Rental Yield
Smithfield House
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Property Price
Rent per month
Rental Yield
NOTTINGHAM
Nottingham is a fast-growing city with a strong demand for rental properties. The city attracts business professionals, students, and tourists, thanks to its thriving economy, vibrant nightlife, and historic attractions. With two major universities, the University of Nottingham and Nottingham Trent University, the city experiences year-round rental demand from students and academics.
34.33 Million+
Visitors Annually
Best Areas
City Centre, Lace Market, West Bridgford
Short-Term Rentals
For a property valued at £194,000, generating an average monthly income of £1,400–£1,600 from short-term lets, the estimated annual rental yield is approximately 9.28%.
The presence of major universities and a diverse tenant base makes Nottingham a strong contender for high-yield short-term rental investments.
£86–£119
per night
Average Daily Rate (ADR)
£1,400–£1,600
Average Monthly Income
59–61%
Occupancy Rate
(around 215 nights booked per year)
Short-Term Rental Yield
Long Row
Long Row
A Unique High-Yield Investment in Nottingham
Long Row is a modern residential development in the heart of Nottingham’s city centre. It benefits from high rental demand from business travellers, tourists, and professionals looking for short-term accommodation.
Situated in the heart of Nottingham, it is close to lively bars, delectable restaurants, and captivating tourist attractions. The central location is convenient for both local amenities and attractions in the city centre. It is described as an ideal location for investors looking for solid residential long-term income or those interested in higher yields through short-term lets.
Why Invest in
LONG ROW?
Q3 2024
Completion Date
PROJECT HIGHLIGHTS
- The project offers well-designed 1 and 2-bedroom layouts.
- Backed by a comprehensive 10-year build warranty.
- Designed to accommodate short-term rentals, providing flexibility and potential for higher yields.
- Situated in the city centre, offering easy access to vibrant nightlife, dining, and tourist hotspots.
- Ideal for those seeking stable long-term rental income or higher returns through short-term lets.
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LEEDS
Leeds is a key business and financial hub in the UK, attracting corporate travellers and tourists alike. With a growing student population, strong economy, and ongoing regeneration projects, Leeds offers excellent opportunities for short-term let investors.
31.68 Million+
Visitors in 2023
Best Areas
Leeds City Centre, Holbeck, South Bank
Short-Term Rentals
For a property valued at £245,000, generating an average monthly income of £1,200–£1,526 from short-term lets, the estimated annual rental yield is approximately 5.9%–7.5%.
With a combination of corporate demand and a vibrant student scene, Leeds is a strategic location for short-term rental investments.
£93–£106
per night
Average Daily Rate (ADR)
£1,200–£1,526
Average Monthly Income
61–63%
Occupancy Rate
(approximately 223 nights booked per year)
Approx.
5.9–7.5%
Short-Term Rental Yield
The One Residences
The One Residences
A Unique High-Yield Investment in Leeds
The One Residences is a luxury residential development in Leeds’ thriving city centre. With its high-end amenities and strong tenant demand, it’s an excellent option for short-term let investors.
This exquisite property, nestled in the heart of Leeds, offers a seamless blend of urban chic, unparalleled elegance, and comfort in every meticulously designed corner.
Catering to a diverse range of interests, the project benefits from Leeds’ vibrant cultural scene and electrifying nightlife, ensuring unforgettable experiences for all.
Why Invest in
THE ONE RESIDENCES?
Q3 2026
Completion Date
PROJECT HIGHLIGHTS
- This brand-new development features 125 stunning apartments spread across 12 floors.
- The project offers a seamless blend of urban chic and comfort in every meticulously designed corner.
- 125 apartments in total consisting of 49 Executive Residences, 50 One beds, 11 Two beds, and 15 Three beds
MANCHESTER
Manchester is one of the fastest-growing cities in the UK, with high rental yields and strong occupancy rates for short-term lets. The city’s economy is booming, driven by tech, finance, and media industries, while major events at venues like the AO Arena and Old Trafford attract thousands of visitors year-round.
1.6 Million+
Visitors annually
Best Areas
Northern Quarter, Ancoats, Deansgate
Short-Term Rentals
For a property valued at £245,000, generating an average monthly income of £1,500.87 from short-term lets, the estimated annual rental yield is approximately 7.35%.
Manchester’s robust economic growth, cultural appeal, and thriving event scene make it an attractive destination for short-term rental investments.
Average Daily Rate (ADR)
Average Monthly Income
Occupancy Rate
Approximately
Short-Term Rental Yield
- Manchester
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- Manchester
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Property Types for Short-Term Lets
Choosing the right property type for a short-term let investment can significantly impact rental yields and occupancy rates. While all short-term rental options have their advantages, city apartments stand out as the best choice for investors due to consistent demand, strong rental yields, and year-round occupancy.
City Apartments
City apartments are a reliable and profitable short-term let investment. High demand from business travelers, weekend tourists, and event attendees ensures steady bookings year-round, reducing investment risk.
Year-Round Demand
Unlike holiday cottages with seasonal dips, modern city apartments in Manchester, Liverpool, Birmingham, Nottingham, and Leeds attract guests consistently.
High Rental Yields
Prime city-centre apartments generate high rental yields than traditional buy-to-lets, especially near corporate hubs, universities, and attractions.
Preferred by Guests
Business professionals seek modern, well-located spaces with fast Wi-Fi, while tourists value stylish apartments near restaurants, shopping, and nightlife.
To see how much you could earn from a short-term let investment, try our Passive Income Calculator. This easy-to-use tool helps estimate potential rental income and ROI, making it easier to assess investment opportunities. Start calculating here
Angel Gardens
Angel Gardens is located in an up-and-coming district of Liverpool. It is in close proximity to two major regeneration projects: the £150 million Project Jennifer and the £5.1 billion Liverpool Waters scheme.
£20k
10%
£1.5k
Property Price
Serviced Apartments
Serviced apartments offer a hotel-like experience with the comfort of a private home. Featuring concierge services, gyms, pools, and premium interiors, they attract business travellers and tourists seeking an upmarket stay.
High Rental
Income
With Airbnb daily rates averaging £175, serviced apartments generate strong rental returns, especially in city centres.
Increased Maintenance Costs
Frequent guest turnover leads to higher upkeep expenses, requiring regular maintenance and cleaning.
Professional Management Needed
Due to operational demands, serviced apartments often require professional management for smooth operations.
Holiday Cottages
The UK staycation market has grown 6% year-on-year, increasing demand for rural and coastal holiday cottages. Popular areas like Cornwall, the Lake District, and North Wales see high bookings, especially for properties with gardens, fireplaces, and scenic views.
Strong Market Value
In 2022, the UK domestic holiday market reached £15.6 million, surpassing pre-pandemic levels, highlighting strong demand.
Seasonal Challenges
Holiday cottages see high occupancy in peak seasons but quieter periods off-season, leading to fluctuating rental income.
Positive Future Outlook
A survey shows 28% of consumers plan long UK stays in 2025, supporting continued investment opportunities.
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Legal & Regulatory Considerations for Short-Term Lets
Understanding the legal rules for short-term lets is important for investors. Different parts of the UK have their own regulations, and failing to follow them can lead to fines or restrictions on renting. Here’s what you need to know before investing in a short-term let.
The 90-Day Rule in London
In London, there’s a strict rule that limits short-term lets to 90 nights per year unless you have planning permission from the local council.
This rule helps protect housing availability for long-term residents. If you go over the 90-night limit, your listing can be removed from platforms like Airbnb, and councils may issue fines.
For investors, the best way to avoid this restriction is to invest in serviced apartments with C1 planning consent, as these are classified as commercial properties and not affected by the 90-day rule.
Licensing Requirements in Scotland
Scotland has one of the toughest short-term let laws. Since October 2022, all short-term rental properties must have a licence from the local council. This means owners must follow safety rules, such as fire safety checks, gas and electrical inspections, and proper insurance.
There are three main types of licences:
- Home Sharing: Renting out a room in a home where the owner also lives.
- Home Letting: Renting out a whole property that the owner also stays in at times.
- Secondary Letting: Renting out a property that is only used as a short-term let.
If you’re planning to invest in Scotland, be prepared for extra costs and paperwork to get a licence. Not following the rules can lead to fines or a ban on renting out your property.
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Possible Future Regulations in England & Wales
The UK government is thinking about introducing a national short-term let registration system for England and Wales. This would mean landlords may need to register their properties with local councils to make sure they follow planning and safety laws.
Some areas, especially coastal towns and city centres, are already bringing in local rules to limit the number of short-term lets. Investors should keep an eye on these changes because new rules could affect rental income and property values.
C1 Planning Consent
A Simple Way to Avoid Restrictions
One of the easiest ways to invest in short-term lets without worrying about limits is to buy a property with C1 planning consent. This category includes hotels, serviced apartments, and other short-stay accommodations.
C1 properties are not affected by London’s 90-day rule or Scotland’s licensing laws. Many of these properties are part of fully managed developments, making them a great option for hands-off investors.
Short-term let laws vary depending on where you invest. London and Scotland have stricter rules, while other parts of the UK are more flexible.
The government may bring in new regulations in England and Wales, so staying updated is important. If you want to avoid restrictions, investing in a C1-classified serviced apartment could be the best option.
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Financing a Short-Term Let Investment
Investing in a short-term let requires careful financial planning. The best financing option depends on your budget, long-term goals, and risk tolerance. Here’s a breakdown of the main ways to finance a short-term rental property.
Holiday Let Mortgages
A holiday let mortgage is designed for properties used as short-term rentals rather than full-time residences. To qualify, lenders typically require:
A 25% deposit (though some lenders ask for more).
The property is to be available for rent at least 210 days per year.
The property to be let for at least 105 days per year to qualify for tax benefits.
One major benefit of a holiday let mortgage is that it allows landlords to claim tax advantages that aren’t available for traditional buy-to-let properties. For example, investors can deduct mortgage interest and property expenses before calculating taxable income.
However, interest rates on holiday let mortgages can be higher than standard residential mortgages, so it’s important to compare options before committing.
To estimate your monthly repayments and overall costs, consider using a Mortgage Calculator. This tool can help you understand how much you will need to pay and assist in planning your investment effectively.
Off-Plan Investments
Early Purchase, Higher Returns
Buying an off-plan property can yield 10–20% price growth by completion, making it a lucrative investment opportunity.
Investors can spread costs over months or years, easing financial burden.
Off-plan purchases allow entry into short-term rentals with less upfront investment.
Cash Purchase vs Mortgage
Which One is Better?
Buying a property in cash means you own it outright and don’t have to worry about mortgage repayments. This allows for:
A faster purchase process, as there’s no waiting for mortgage approvals.
No monthly interest payments, meaning higher net profits.
More flexibility to negotiate better deals with developers or sellers.
However, financing a short-term let with a mortgage can provide greater financial leverage, allowing you to buy multiple properties with the same capital. Using a mortgage also means you can spread your investment risk and potentially achieve a higher return on investment (ROI) than a cash purchase.
Now let’s see this in more detail with a case study.
Meet Callum and Ryan—both are investing £100,000 in off-plan properties, but they’re taking very different approaches.
Callum is going all in with a 100% cash deposit, meaning he owns the property outright without any mortgage.
Ryan, however, is using his £100,000 as a 25% deposit and financing the remaining 75% with a mortgage. This allows him to leverage his capital while still securing the property.
This shows that investors should never buy a property completely in cash. With this approach, they will earn lower rental income, significantly lower capital appreciation, and CAGR. The lower the cash deposit you invest, the higher capital appreciation you get along with a higher CAGR (as seen with Ryan’s case).
| Criteria | Callum | Ryan | Difference |
|---|---|---|---|
| Initial Investment | £100,000 | £100,000 | 0 |
| Mortgage Repayment or Interest Only | Interest Only | Interest Only | None |
| Years to Invest | 10 | 10 | None |
| Deposit | 100% | 25% | |
| Rent Enjoyed | £94,306 | £272,224 | £177,918 |
| Capital Appreciation | £294,729 | £766,417 | £471,688 |
| Net Worth | £200,423 | £501,693 | £301,270 |
| CAGR | 11.41% | 22.59% | 11.18% |
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How to Maximise Short-Term Let Returns
Investing in a short-term let is only the first step—maximising returns requires a strategic approach. Effective pricing, high guest satisfaction, and efficient management can significantly boost occupancy rates and rental income.
Here’s how to get the best results from your short-term rental property
Key Takeaways
Short-term lets offer higher rental income than long-term lets but require active management due to frequent guest turnover and maintenance.
Location is key—properties in tourist hotspots, business hubs, and event areas generate the best returns. Cities like Liverpool, Birmingham, Nottingham, Leeds, and Manchester have strong demand.
Understand regulations before investing. London has a 90-day rental cap, Scotland requires licences, and England & Wales may introduce a registration scheme.
Factor in operational costs and seasonality. Cleaning, maintenance, and vacancies affect profitability. Use dynamic pricing to adjust rates during peak and off-peak seasons.
With the right strategy and location, short-term lets can provide high returns and long-term growth.
Investing in short-term lets is like leading a team, where the right people, market trends, and strategy drive success. The thriving visitor economy fuels demand for holiday homes, while smart investors balance supply with location-driven opportunities.
Navigating authorities and securing the right insurance policy safeguards assets, ensuring stability in the evolving rental sectors. For proactive homeowners, short-term lets aren’t just properties—they’re high-yield investments in financial growth.
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Frequently Asked Questions
Yes, short-term lets remain a lucrative investment, particularly in high-demand locations like Liverpool, Birmingham, and Manchester. While regulations are evolving, investing in properties with C1 planning consent or serviced apartments can help avoid restrictions.
Short-term lets that qualify as furnished holiday lets (FHLs) can benefit from mortgage interest tax relief, capital allowances, and reduced capital gains tax rates, making them more tax-efficient than traditional buy-to-let investments.
High occupancy rates can be achieved through competitive pricing, professional marketing, and an excellent guest experience. Using dynamic pricing tools, optimizing listings with high-quality images, and offering flexible check-in options can boost bookings.
Investors typically need a holiday let mortgage, which is specifically designed for properties rented out on a short-term basis. Lenders usually require a higher deposit (25%+), and the property must meet rental occupancy criteria to qualify.
Self-management allows for greater control and cost savings, but it requires time and effort. A property management company can handle guest check-ins, cleaning, and maintenance for a fee (typically 10-15% of rental income), making it a more passive investment.
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