Buying a second home to rent out in the UK: where to start
A calm, practical run-through for anyone weighing up their first holiday let
July 2026
There’s a particular daydream that tends to creep in after a good week away: what if that little cottage by the coast, or the flat you keep coming back to, could pay for itself? Plenty of people go a step further and start doing the sums. Buying a second home to rent out to holidaymakers can be a rewarding move, but it sits at the meeting point of property, tax and local licensing, and each of those has shifted in the last couple of years. Before you fall for a set of front-door photos, it’s worth understanding what you’re actually taking on.
Start with the numbers, not the property
It’s tempting to search listings first and worry about the finances later. Do it the other way round. Investing in a holiday let only makes sense if the income comfortably covers the mortgage, running costs and the quieter months.
Sketch out a realistic budget before you view anything:
- Purchase price plus buying costs (survey, legal fees, stamp duty)
- Furnishing and getting the place guest-ready
- Ongoing costs: insurance, cleaning, utilities, maintenance and a repairs buffer
- Void periods, because no holiday home is booked every single week
Be honest about occupancy. A property that’s busy in August might sit empty in February, so build your figures around a sensible annual average rather than peak-season optimism.
Financing the purchase: holiday let mortgages
A standard residential mortgage won’t usually cover a property you intend to let to holidaymakers, and neither will an ordinary buy-to-let deal, which is aimed at long-term tenants. What you’ll typically need is a holiday let mortgage, offered by a smaller pool of specialist and building-society lenders.
The second home mortgage rules in the UK tend to be stricter for holiday rentals than for a home you’ll live in. Expect lenders to ask for:
- A larger deposit, often around 25% to 30% of the value
- Evidence that projected rental income comfortably exceeds the mortgage payments
- A view on your other income, since seasonal lettings are less predictable
It’s worth speaking to a broker who knows this niche. The right product for a buy to let holiday home is rarely the cheapest headline rate; it’s the one whose terms fit how a seasonal let actually earns.
Second home tax in the UK: what changed
The tax treatment of holiday lets has changed significantly, and older guides online are now out of date.
Stamp duty on an additional property
If you already own a home, buying another one usually means paying a higher rate of Stamp Duty Land Tax. Since 31 October 2024, the surcharge on additional residential properties in England and Northern Ireland is 5 percentage points above the standard rates. On a holiday home that can add up quickly, so factor it into your budget from the outset.
The end of the Furnished Holiday Lettings regime
For years, holiday rentals enjoyed their own favourable tax treatment under the Furnished Holiday Lettings regime. That regime was abolished from 6 April 2025, and holiday lets are now taxed like any other property income. In practice that means mortgage interest relief is now restricted to the basic rate, and some of the old capital allowances and capital gains reliefs no longer apply. If a spreadsheet you found online still leans on FHL perks, treat it with caution.
Capital gains when you sell
When you eventually sell a second home, any gain above your allowance is taxed at the residential property rates: 18% within the basic rate band and 24% above it. It’s a long way off when you’re buying, but it shapes the true return, so keep it in mind.
Given how much has moved, this is one area where a quick conversation with an accountant pays for itself. Reporting rental profit through self-assessment to HMRC is straightforward once you know what counts, but the rules around second home tax in the UK are genuinely easy to get wrong.
Business rates or council tax for holiday rentals
Whether your holiday home pays council tax or business rates depends on how much you let it. In England, a self-catering property becomes eligible for business rates once it’s been available to let commercially for at least 140 nights in the year, and actually let for at least 70 of those nights. Until you meet both thresholds, you’ll pay council tax as normal.
This matters because many small holiday homes then qualify for small business rate relief, which can reduce the bill considerably. Check the position with the local council before you commit, as it can make a real difference to your annual costs.
Registration, planning and local rules
The regulatory picture is tightening. The government is delivering a registration scheme for short-term lets in England, alongside a new planning use class for properties let out short-term that aren’t someone’s main home. Neither is fully in force yet, but if you’re buying now, it’s sensible to assume registration will become part of the routine.
Beyond that, a few local checks are worth making before you buy:
- Ask the local council whether it has any specific short-term let rules or planning restrictions in your target area.
- Check the lease if the property is leasehold, as some prohibit short-term letting outright.
- Sort the practical safety essentials early: a gas safety check, working smoke and carbon monoxide alarms, and safe electrics.
- Arrange proper holiday let insurance rather than standard home cover.
Getting these lined up before completion saves a scramble later, and it’s the difference between a smooth first season and a stressful one. Knowing how to start a holiday rental business properly from day one is far easier than unpicking mistakes afterwards.
Turning a new purchase into a booked-out home
Buying the property is only half the story. Once the keys are yours, the challenge shifts to filling the calendar at the right price, and doing that without the admin swallowing your evenings. This is where a holiday rental management platform earns its place.
Holidu gives new hosts a running start on both fronts. Its Smart Pricing recommendations analyse local demand and comparable properties to suggest a price for every night of the year, which takes the guesswork out of a property you don’t yet know the rhythm of; you always set the final price and keep control of your own calendar. Professional photography is included as part of getting set up, and strong photos genuinely move the needle, with listings shot professionally seeing up to 5 times more bookings. With experience across seven European markets behind it and English-speaking support when you need a hand, there’s help understanding how the numbers and the rules fit together, wherever your holiday home happens to be.
Start with the sums, get the tax and licensing right, and the rewarding part (welcoming your first guest), tends to look after itself.