Cheshire has topped a new ranking of the best places in the UK to invest in a holiday let, according to a new report from Sykes Holiday Cottages.

With house prices averaging £256,500 and an average revenue potential of over £46,000 per year, Cheshire beat Anglesey and the Lake District, while other common UK holiday hotspots like the Peak District and Norfolk also featured in the top 10.

The Holiday Letting Outlook Report 2023 analyses Sykes’ revenue data and occupancy figures, alongside house prices, house price growth and investment returns, to drill into the long-term potential of holiday letting across the UK.

The report also contains consumer research, Sykes’ booking figures and insights from Oxford Economics to paint a picture of the positive impact holiday letting has on UK economies amid growing scrutiny of the sector. 

According to a poll of UK holiday home owners commissioned for the report, a quarter are very worried about the potential of new regulations or fees being enforced following the government’s recent Call to Evidence.

However, sentiment amongst holiday let owners remains strong and the demand for staycations still appears to be growing, with bookings for Sykes’ holiday lets in 2023 up nine per cent compared to last year already.

The consumer research found that 50 per cent of holiday let owners say bookings are still stronger than ever post-pandemic, with 63 per cent planning to grow their holiday let portfolio over the next five years.

The report also highlights that, compared to the same period prior to the pandemic, Sykes saw new owner enquiries from prospective holiday home investors increase by 173 per cent in 2022. 

Sykes claims the average holiday let owner earned £24,000 in revenue from their holiday let last year, up 59 per cent from 2019. 

In terms of where to invest in the short-term, Cumbria and the Lake District topped the highest-earning holiday hotspots list according to Sykes’ revenue figures, with holiday lets earning an average revenue of £28,000.

The Cotswolds made its first appearance in the top five highest earning regions list, with an average annual income of £28,000, closely followed by the Peak District in third place and an average turnover of £27,500

Sykes’ research found that the average holiday let owners spends around £7,400 per year on expenses for their holiday let, with the highest costs being utility bills and property maintenance.

Chief executive Graham Donoghue says: “Our analysis shows demand for holiday lets held strong over the past year – demonstrating the resilience of the market in what are undeniably challenging times. Staycations often offer a more affordable alternative for holidaymakers across the UK and, combined with the fact that our country has such incredible places to discover, it appears demand for UK holiday lets is going nowhere.

“Our new investment analysis has identified the locations to watch when it comes to investing, and I would encourage anyone considering making the leap into holiday letting to get in touch to find out how else they can make the most of their investment.

“As many are clearly aware, the UK Government is currently looking into concerns from some quarters about the impact of holiday letting on the housing market, but at this stage our view is that any immediate changes for the sector are quite unlikely amid other priorities in government.”

The top 10 investment areas are, in order, Cheshire; Anglesey, Lake District, Lincolnshire, Angus, Peak District, Dumfries and Galloway, Norfolk, North Yorkshire and Pembrokeshire.