The UK holiday home market is showing signs of rebalancing as tax changes and tighter regulation prompt investors to shift away from short-term gains towards longer-term returns.
New data indicates that the number of second homes and holiday properties in England fell from 346,956 in 2024 to around 336,011 in 2025, marking a 3% decline and the first sustained drop in more than a decade.
The slowdown follows the introduction of higher tax charges and council tax premiums, now applied by around 70% of local authorities, which have significantly altered the economics of second-home ownership.
Despite this, underlying demand for UK holiday accommodation remains resilient, with growth in domestic stays recorded across several regions, suggesting a shift rather than a collapse in the market.
HIGH-PERFORMING LOCATIONS
Data from VisitBritain shows Scotland recorded the strongest growth in domestic stays in March, rising from 3% in 2025 to 15% in 2026, while London saw a 31% increase over the same period. The South West and East of England also posted steady gains, reinforcing demand in established leisure markets.
Analysis suggests the market is consolidating around fewer, high-performing locations, particularly coastal and rural destinations where demand for experience-led stays remains strong.
Figures from the Office for National Statistics highlight the concentration of holiday homes in certain areas, with the Isles of Scilly topping the list at 31% of total housing stock. Central London boroughs, including the City of London and Kensington and Chelsea, also feature prominently, reflecting their dual role as tourism and investment hubs.
In coastal regions, areas such as North Norfolk, Cornwall and South Hams continue to see strong levels of holiday home ownership, underpinned by established visitor demand and accessibility.
INCOME AND CAPITAL GROWTH
Laura Dubois, Holiday home specialist at Together Travel, says: “The market is evolving, but underlying demand remains strong, particularly in coastal and rural areas.
“What we’re seeing is a shift towards more considered decision-making, with buyers increasingly focused on long-term performance rather than short-term gain.
“In regions like Cornwall and across the South West, holiday homes continue to play an important and established role in supporting local tourism economy, helping to sustain year-round visitor activity, local employment and investment in local services.
“While conditions are changing, well-located properties with strong management remain well positioned to deliver consistent performance over time.
“Importantly, that performance isn’t just about rental income. Properties that are carefully chosen and professionally managed in proven destinations have typically shown the ability to appreciate in underlying value over the long term. That balance of income and capital growth is increasingly what buyers are looking for.”
