Croydon Holiday Lets Run at a Loss After Costs vs Buy-to-Let

Warning: holiday let figures apply only where legally permitted. Croydon falls under the London 90-day rule (Deregulation Act 2015), which caps short-term letting at 90 nights per year without planning permission. Exceeding 90 nights requires a change-of-use planning consent from Croydon Council, and Airbnb automatically blocks bookings beyond the cap on London addresses. Source: Limited to 90 nights per year. London 90-day rule: properties without planning permission are limited to 90 nights/year of short-term letting. Applies to all London boroughs. Exceeding 90 days requires planning permission from the local council. Platforms like Airbnb automatically block bookings beyond 90 days for London addresses.

The gross holiday let premium for a 3-bed house in Croydon is -66%, which is the rare case where the headline number is negative: holiday letting grosses less than buy-to-let here, because London's 90-night cap removes roughly three quarters of the year from the revenue calculation. After all operating costs, that gap widens further. This article works through the real numbers for both a 3-bed house and a 2-bed apartment, because the cost structures diverge in a material way: apartments enter the market at a much lower price but add a service charge that houses do not pay.

3-Bed House: Holiday Letting Runs Negative, Buy-to-Let Nets 3.1%

What Eats the House Premium in Croydon

The buy-to-let column collects £25,177 in gross rent across a full year, while the holiday let tops out at £8,789 because the 90-night cap removes nine months of letting from the calendar. That is the dominant effect: even before any cost is paid, holiday letting starts the year over £16K short of buy-to-let on revenue. Costs then compound the deficit. Airbnb's host-only fee of 15.5% takes £1,362 per year, holiday let insurance runs at £1,921 against £780 for a standard landlord policy, and short-let maintenance comes in at £4,824 because it includes furnishing replacement and frequent turnover wear. The combined picture: a holiday let net income of £-3,819 versus £15,310 on the buy-to-let side, a swing in the wrong direction of more than £19K.

The Airbnb fee structure is platform-specific. Vrbo charges roughly 8% to hosts, Booking.com around 15%, and direct bookings carry no platform commission, although the host absorbs the marketing burden in that case. Switching platforms does not change the underlying revenue ceiling that the 90-night cap creates.

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2-Bed Apartment: Lower Entry Price, Service Charges Eat the Saving

Note: the service charge appears in both columns because it is a leasehold-level cost that the freeholder demands regardless of whether the unit is vacant, let long-term, or hosted on Airbnb.

House vs Apartment: Service Charges Narrow the Apartment Advantage

The 2-bed apartment costs £288,608 versus £492,204 for a 3-bed house, a saving of more than £200K on the entry price. On the buy-to-let side that translates into a clear yield improvement: the apartment lets at around £1,553/month against £2,163 for the house, narrowing the rent gap relative to the price gap. The apartment finishes the year at a net buy-to-let yield of 3.1% compared with 3.1% for the house. Service charges of £2,272 take a meaningful slice of that improvement, but the apartment still wins on net yield in the buy-to-let column.

On the holiday let side, both property types sit underwater. The apartment grosses £5,427 at the regulated 90-night ceiling, and the service charge alone consumes a sizeable share of that revenue before any other cost is paid. The apartment's holiday let net yield is -1.6% versus -0.8% for the house. Neither is a viable income strategy under the current regulatory regime, although the apartment falls less far below the line because its lower price base reduces the absolute pound loss.

Holiday Letting Cannot Mathematically Break Even Against Buy-to-Let

The break-even occupancy at which holiday letting would match buy-to-let gross income comes out at 136%, which is mathematically impossible because the maximum is 100%. Put differently, even at full 100% occupancy across all 90 permitted nights the gross ceiling is £19,095, well short of the £25,177 a buy-to-let collects passively. The market median occupancy across listed Croydon properties is 46%, which is what investors who already own a holiday let here typically achieve once seasonality and weekday gaps are absorbed. The break-even number is the floor for catching up to buy-to-let, not a target, and in this market the floor sits above the ceiling.

Hiring a Letting Agent Pushes the Holiday Let Further into Loss

The cost tables above assume the host self-manages the holiday let, which is the dashboard default. In practice, full-service holiday let agencies in London typically charge around 18% of gross revenue. On a Croydon 3-bed house that adds roughly £1,582 per year and pushes the holiday let net yield to -1.1%. That moves an already loss-making column further into the red. The buy-to-let column already includes the letting agent at around 10% of rent (£2,596/year), reflecting the standard agent-managed terms most landlords use in this market.

The implication is straightforward: for a Croydon investor, the choice between self-managing or paying an agent does not change the strategic conclusion on holiday letting. Both routes leave the holiday let column behind buy-to-let. Hiring a letting agent on the buy-to-let side, by contrast, is already priced into the 3.1% headline.

Tax Implications: FHL Abolition Removed the Holiday Let Advantage

The Furnished Holiday Lettings (FHL) tax regime was abolished from April 2025, removing the historic tax advantages that holiday letting once enjoyed over buy-to-let. Holiday lets and buy-to-let properties are now taxed equivalently for income tax, capital gains tax, and pension contribution purposes. That change matters here because the financial comparison no longer has a tax-side rebate to offset the 90-night gross revenue gap. Mortgage interest is restricted to a basic-rate tax credit on both sides, so higher-rate taxpayers receive only partial relief on financing costs.

Stamp duty applies on purchase, with an additional rate surcharge for buy-to-let acquisitions above the standard rate. The exact figure depends on the price band and your other property holdings, so confirm the bill with your solicitor before you commit. Croydon levies council tax at standard banded rates rather than as a percentage of value, so the actual bill depends on the property's council tax band rather than its market price; check the band before you finalise the cost stack. On a buy-to-let the tenant pays council tax direct to the council, which is why that column shows nothing here. A holiday let that meets the FHL qualifying availability test can switch to business rates with Small Business Rate Relief often reducing the bill to zero, but the 90-night cap makes that test difficult to satisfy in London. Holiday lets that genuinely meet the qualifying criteria can apply for business rates instead, with potential Small Business Rate Relief reducing that bill to zero, but the 90-night cap makes the qualifying availability test materially harder to satisfy in London than it is outside the capital.

These figures are city-level medians for Croydon. Individual postcode districts diverge: Thornton Heath (CR7) prices in at £427,367 with rent of £2,188 and 6.1% gross yield, while Coulsdon (CR5) sits at £504,350 and 5.1%. The dashboard shows the same cost stack for every postcode area, every bedroom count, and every property type. For a comparable analysis of holiday let economics under the same London 90-night regime, see London Rental Investment Insights. Maida Vale/Little Venice (W9) Tops Westminster Yields at 4.9% works through the same buy-to-let comparison for a contrasting market.

Data reflects market conditions as of April 2026. Methodology: data sources and market score methodology. 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.