After All Costs, Westminster Holiday Lets Trail Buy-to-Let

Westminster's gross holiday let 'premium' is -52% for a 3-bed house, meaning holiday letting actually grosses less than buy-to-let here once the 90-day cap is applied. After all operating costs the gap widens further: net yields land slightly negative on holiday let against a modest positive on buy-to-let. This article runs the side-by-side numbers for both a 3-bed house and a 2-bed apartment, because Westminster's cost structures are quite different between the two. Apartments add service charges but cost roughly a third of a typical 3-bed house, which changes the ratios in ways the headline numbers obscure.

After Costs, a 3-Bed Westminster House Yields -0.3% on Holiday Let

At a typical Westminster sale price of £2,544,195, the table below assumes self-management for the holiday let column (the dashboard default) and agent-managed buy-to-let at around 10% of gross rent for the traditional letting column. All cost lines reflect the live pipeline rather than national averages, since Westminster utility, insurance, and council tax bands sit well above the UK median.

The Airbnb host fee of 15.5% is platform-specific. Vrbo runs closer to 8% on its host-only model and Booking.com sits around 15%, so the cost line shifts depending on which platform you list with. Direct bookings carry no platform fee but require building your own demand channel, which is impractical for most owners on a 90-night-per-year footprint.

The 90-Day Cap Eats the Holiday Let Premium Before Costs Begin

The 90-day cap is the single biggest factor in Westminster's holiday let economics, even though it shows up as a revenue ceiling rather than a cost line. Capping a Westminster house at 90 lettable nights at £430 per night and 77% occupancy yields gross revenue of £29,838, well below the £62,018 a buy-to-let tenant pays over the same 12 months. London-wide, the Deregulation Act 2015 caps nights without planning permission at 90 per calendar year, and Airbnb auto-blocks bookings beyond that threshold for London addresses. 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.

Operating costs widen the gap further. Holiday let insurance at £6,391 runs more than double the buy-to-let policy because cover must include public liability, contents, and accidental damage by guests. Maintenance is higher because guest turnover wears furnishings and fittings faster than a single tenancy. Utilities of £2,148 are paid by the landlord rather than the tenant. Add Airbnb fees of £4,625 on top, and the holiday let column sheds another chunk before reaching net income. Buy-to-let in Westminster works comparatively because the tenant pays utilities and council tax during tenancy, leaving the letting agent fee of £6,394 as the single largest operating cost.

A Westminster 2-Bed Apartment Sells for £863,328, but Service Charges Bite

The apartment view changes the maths because entry price drops to £863,328, roughly a third of the 3-bed house figure. The trade-off is the service charge line that houses do not pay, which is a property-level cost tied to leasehold ownership and applies regardless of rental strategy.

The service charge appears in both columns because it is a leasehold obligation tied to the building, not the rental strategy. Most Westminster apartments are leasehold, and the service charge typically covers building insurance, communal area maintenance, lift servicing, concierge in higher-end blocks, and reserve fund contributions. Prime central London charges sit well above the UK median because of the cost of maintaining period buildings and the staffing levels in mansion blocks. Always read the lease and recent service charge accounts before committing, since reserve fund top-ups and major works levies can spike a single year's costs significantly above the annualised figure shown here.

Houses vs Apartments: Both Trail Buy-to-Let in Westminster

The apartment delivers a holiday let net yield of -0.3% versus -0.3% for the house, and a buy-to-let net yield of 2.5% versus 1.2%. Lower entry price helps the apartment ratios because broadly fixed cost lines spread across a smaller capital denominator. But the 90-day cap still ceilings holiday let gross revenue regardless of property type, and the service charge consumes savings that house owners do not face. The honest verdict: in Westminster, neither property type produces compelling cash flow from holiday letting once the cap is enforced, and buy-to-let edges ahead in both cases.

The decision in Westminster is therefore less about house versus apartment and more about cash flow versus appreciation. Investors here typically accept low yields in exchange for prime central London capital growth potential. These are area-level medians, and individual postcodes diverge significantly: top-yielding Westminster postcodes such as Maida Vale/Little Venice (W9) clear 4.9% on a buy-to-let basis, while prime addresses like St John's Wood (NW8) sit closer to 2.8%. The dashboard shows postcode-level data for every bedroom count and property type.

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

Holiday Let Break-Even of 160% Is Mathematically Impossible

The gross break-even occupancy for a 3-bed Westminster house works out at 160%, which is mathematically impossible. The market average occupancy of 77% cannot close the gap because the binding constraint is the 90-day cap on lettable nights, not the occupancy rate within those nights. Even at a 100% fill rate across all 90 permitted nights, the revenue ceiling is £38,721, still below the £62,018 a long-term tenant would pay over the same year. The break-even number above is the floor the holiday let column would need to clear to match buy-to-let, not a target most operators can realistically aim for. In Westminster it simply cannot be reached without planning permission for change of use, which is rarely granted in residential zones.

A Letting Agent Drops Net Yield to -0.5%

The tables above assume self-management for the holiday let column. Hiring a holiday let manager typically costs around 18% of gross revenue, which on a Westminster 3-bed house works out to roughly £5,371 per year. Add this and total costs rise to £43,127, dragging net yield to -0.5%. For most Westminster investors the meaningful question is not 'self-manage or hire' but whether holiday letting makes financial sense at all when the 90-day cap binds gross revenue below the buy-to-let alternative before any management decision is made.

Buy-to-let management is already factored into the comparison. The default in Westminster is agent-managed letting, and the £6,394 agent fee in the table reflects roughly 10% of gross rent. Self-managing a buy-to-let is possible but uncommon in prime central London, where overseas owners and time-poor professionals rely on agents for tenant sourcing, deposit handling, and statutory compliance.

FHL Abolition Levels the Playing Field with Buy-to-Let

The Furnished Holiday Lettings tax regime was abolished from April 2025, removing the historic tax advantage that holiday lets enjoyed over buy-to-let. Holiday lets and buy-to-let are now taxed equivalently for income tax, capital gains, and pension contribution purposes. Mortgage interest relief operates as a basic-rate tax credit rather than a full deduction, which means higher-rate taxpayers carry the difference. The abolition of FHL has made the financial comparison between holiday letting and buy-to-let more important than ever, because the tax wrapper no longer compensates for the operational complexity of a holiday let.

Stamp duty land tax includes the 5% second-property surcharge for additional dwellings, which on a Westminster 3-bed house at £2,544,195 adds a substantial transaction cost not modelled in the operating numbers above. Verify current rates with a UK tax adviser and your solicitor before committing. Council tax in the tables is a modelled annual charge calculated as a percentage of sale price; UK council tax is actually banded and capped, so for a Westminster Band H property the real figure is closer to £1,800/year rather than the table value. The comparison between holiday let and buy-to-let is therefore tighter than the headline net yields suggest, since this overstated line falls only on the holiday let column. During tenancy a buy-to-let tenant typically pays council tax directly, while during void periods the landlord covers it. Holiday lets meeting commercial-let criteria can transfer to business rates and qualify for Small Business Rate Relief, which can reduce or eliminate this line entirely. Eligibility depends on availability for letting and actual letting days each year.

Methodology details for the cost lines above are documented in the data sources page, with the scoring framework in the market score methodology. Bromley Holiday Lets Run at a Loss After All Costs covers the same question for a comparable London location.

Data reflects market conditions as of May 2026.

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.