Croydon Buy-to-Let Yields 5.1%, Holiday Let Capped at 90 Nights

⚠ Holiday let figures apply only within the 90-night cap. Operating beyond 90 nights requires planning permission; without it, Airbnb automatically blocks further bookings.

Estimates for a typical 3-bedroom house. Figures are modelled from market data; not guaranteed outcomes.

Annual buy-to-let revenue is monthly rent × 12 × tenanted occupancy (97%). Annual holiday let revenue is nightly rate × occupancy × 90 available nights. Both match the Dashboard's calculation.

Buy-to-let grosses around £25,177 a year against roughly £8,789 for a capped holiday let. Operating costs are higher on the holiday let side, which widens the gap further once expenses come out.

Holiday Let Only Beats Buy-to-Let Above an Impossible Occupancy

The break-even maths kills the holiday let case before it starts. Holiday let revenue would need to match buy-to-let's roughly £25,177 annual rent on just 90 legal nights. That requires occupancy of 132%, which is mathematically unreachable (anything above 100% is impossible) at the prevailing nightly rate of £212. Even at the theoretical ceiling of 100% occupancy across all 90 permitted nights, gross revenue tops out at £19,095, well short of buy-to-let.

Occupancy Sensitivity: The Cap Caps the Upside

Occupancy is normally the swing variable in holiday let returns, but the 90-night ceiling truncates the upside before it matters. At a weaker 31%, gross drops to roughly £5,925. At a stronger 56%, gross rises to about £10,699. Buy-to-let, meanwhile, books £25,177 essentially regardless of which scenario plays out, because tenanted occupancy in Croydon runs at 97%.

Yield Spreads Across Croydon Suburbs Are Wider Than the Headline

The Croydon council average masks a meaningful yield spread across postcode districts. Thornton Heath (CR7) leads on gross yield at 6.1%, supported by a lower entry price near £427,367 and rents around £2,188. Purley/Kenley (CR8) follows at 6.0%, with higher prices around £544,000 offset by stronger rents of £2,699. Croydon Town Centre (CR0), South Croydon/Selsdon (CR2), and Coulsdon (CR5) sit progressively lower as house prices climb faster than rents in the more suburban southern parts of the borough.

These are averages per postcode district across 63 areas in the borough. The dashboard breaks it down further, by bedroom count and property type, so you can model your specific property.

View Croydon in the dashboard → Free preview · every bedroom count and property type

The London 90-Night Cap Defines What's Possible in Croydon

The Deregulation Act 2015 limits short-term letting in every London borough, including Croydon, to 90 nights per calendar year without planning permission. Airbnb enforces the cap automatically by blocking bookings once a London listing reaches the threshold. Operating beyond 90 nights legally requires applying to Croydon Council for a change of use under planning law, a process that is slow, often refused for residential properties, and not a realistic route for typical investor lets. The practical effect: holiday let revenue is hard-capped at the £19,095 ceiling regardless of how strong demand is.

Inside the cap, Croydon's holiday let demand is moderate rather than strong, with regional occupancy averaging 46%. Distance from central London tourist anchors and a primarily commuter-and-residential rental market work against premium nightly rates. The borough is closer to a buy-to-let market with a thin holiday let overlay than a genuine short-stay destination.

Operating Costs Erode the Holiday Let Case Further

Even before tax, costs widen the gap between the two strategies. Buy-to-let total operating costs come in around £9,867 a year, leaving net income near £15,310 on roughly £25,177 of gross rent. Holiday let total costs are higher at about £13,470, against a gross of just £8,789 under the cap. Net yield works out to approximately 3.1% for buy-to-let versus -1.0% for holiday let.

The default holiday let cost stack at this market's nightly rate looks like:

• Airbnb host fee at 15.5% of gross, around £1,362
• Specialist short-let insurance, around £1,921
• Maintenance and furnishing wear, around £3,790
• Utilities (paid by host on holiday lets), around £2,040
• Council tax (or business rates if registered), around £2,461

Self-management is assumed in the figures above, in line with how the dashboard models costs by default. If you instead use a specialist short-let agent, add roughly £1,582 a year for management at around 18% of gross. That pushes net yield from -1.0% into territory that's harder to defend at all.

Buy-to-let costs are simpler: landlord insurance around £780, maintenance roughly £3,790, and a letting agent at approximately 10% of rent. Council tax during voids is the main downside risk; while tenanted, the tenant pays it. Upfront furnishing of around £13,500 only applies to the holiday let route.

Croydon Yields Around 5.1%, Above the London Average but Below the National Median

Croydon's headline buy-to-let yield of 5.1% sits comfortably above the London regional average of 4.6%, reflecting the borough's lower entry prices versus prime and inner London. Compared to the UK national median yield of 5.7%, however, Croydon prints below; that's the standard London discount, where capital values run far ahead of rents.

Comparison of key investment metrics.

Tax Implications for Croydon Investors

The Furnished Holiday Lettings (FHL) regime was abolished from April 2025, eliminating the tax advantages that previously favoured short-let strategies. Holiday lets and buy-to-let are now taxed equivalently as standard property income, which makes the gross-revenue gap on a Croydon 3-bed (roughly £25,177 buy-to-let versus £8,789 holiday let) the dominant factor; there is no longer a tax wrinkle to close it.

For mortgaged investors, interest is no longer a fully deductible expense. Instead, mortgage interest is restricted to a 20% basic-rate tax credit, which sharply reduces post-tax cash flow for higher-rate taxpayers buying at Croydon's roughly £492,204 price point. Allowable expenses still include repairs, insurance, letting agent fees, and ground rent.

Stamp duty on additional properties carries a surcharge of 5% on top of standard residential rates, which on a typical Croydon 3-bed adds a substantial upfront cost that should be modelled into any acquisition. Rates and bands change frequently; check current numbers with your solicitor or conveyancer before committing.

On exit, capital gains tax on residential property runs at 18% for basic-rate taxpayers and 24% for higher-rate taxpayers (since October 2024). Council tax during void periods sits with the landlord and should be modelled as a risk on the buy-to-let side; a holiday let registered for business rates may qualify for Small Business Rate Relief, reducing this cost to zero, but only if the property is genuinely available 140+ nights a year, a tougher threshold under the 90-night cap.

Investment Bottom Line

Croydon is a buy-to-let market. The 90-night cap caps holiday let gross revenue at £19,095, which can't compete with £25,177 of capped tenanted rent, especially once higher holiday let costs are layered on. The investor profile that fits Croydon is yield-focused and patient: lower London entry prices, reliable commuter-driven tenant demand, a 5.1% gross yield that's above the 4.6% London average, and capital appreciation tied to broader London cycles.

Data reflects market conditions as of May 2026.

For broader context across London and the UK, see London rental market insights. Peer markets facing similar dynamics: Bromley Holiday Lets Run at a Loss After All Costs, Westminster Holiday Lets Lose Money After 90-Night Cap and Costs, Croydon Holiday Lets Run at a Loss After Costs vs Buy-to-Let, London Holiday Lets vs Buy-to-Let Under the 90-Night Cap. Methodology: market score methodology and data sources. Explore rental data in the dashboard.

This information is for educational purposes only and should not be considered financial or legal advice. Regulations and market conditions change frequently. Verify current rules with local authorities before making investment decisions.