After All Costs, Manchester's Holiday Let Premium Shrinks

The gross holiday let premium in Manchester is 62% for a 3-bed house, but after Airbnb fees, insurance, higher maintenance and council tax, the picture narrows considerably. This article covers both a 3-bed house and a 2-bed apartment because the cost structures differ materially: apartments carry lower entry prices but add service charges that houses never pay. The abolition of the Furnished Holiday Lettings tax regime in April 2025 removed the tax advantage holiday lets once enjoyed, making this head-to-head comparison more important than ever.

The 3-Bed House: Holiday Let Nets 6.3% vs Buy-to-Let at 4.1%

For a typical Manchester 3-bed house at £251,089, the numbers line up as follows. Holiday let figures assume self-management (the Manchester dashboard default), while buy-to-let assumes a letting agent at roughly 9% of rent, which is the standard local market arrangement.

Airbnb host fees at 15.5% are the single largest cost difference between the two strategies. That figure applies to Airbnb specifically; Vrbo charges closer to 8% and Booking.com closer to 15%, so the platform mix you choose materially affects take-home income.

Airbnb Fees and Higher Maintenance Are What Eat the Premium

The 62% gross premium for holiday let in Manchester is primarily consumed by four lines. Airbnb fees of £4,643 come off the top of gross revenue before any operating costs are paid. Insurance for a holiday let runs at £1,288 versus £526 for a standard buy-to-let policy, reflecting the commercial-use risk profile of short-let guests. Maintenance at £4,273 for holiday let (which includes furnishing replacement cycles) is meaningfully higher than the £3,314 routine-repair figure for a long-term tenancy.

Utilities add another £2,016 to the holiday let column because the landlord pays them between and during guest stays, whereas a buy-to-let tenant typically covers their own bills. Once all of these hit, the net yield gap between holiday let at 6.3% and buy-to-let at 4.1% is materially smaller than the gross comparison of 11.9% versus 7.4% would suggest.

The 2-Bed Apartment: Lower Entry Price, Plus Service Charges

A Manchester 2-bed apartment enters at £171,942, materially below the £251,089 house price. The trade-off is that apartments carry a service charge (leasehold ground rent and building management fees) that houses, which are typically freehold, never pay.

Service charges of £1,677 appear in both columns because they are a property-level cost that applies regardless of whether you let short or long. A leasehold buyer pays them whether the flat is occupied, vacant, or rented nightly. Before signing, read the management pack: some Manchester blocks explicitly restrict short-letting in the lease, which can kill a holiday let strategy before it starts.

Apartments Carry Service Charges, Houses Carry Higher Entry Costs

The cost comparison between the two property types is a genuine trade-off in Manchester. Apartments cost £171,942 to enter, roughly one-third less than the £251,089 needed for a comparable 3-bed house, which frees up capital for deposits on additional properties or simply reduces leverage. The offsetting drag is the annual service charge of £1,677 on apartments, which is a fixed cost that houses never face.

Comparing the two tables directly, holiday let returns 6.3% on the house versus 5.3% on the apartment, and buy-to-let returns 4.1% on the house versus 3.3% on the apartment. The decision between the two therefore hinges less on yield arithmetic and more on practical factors: whether you want the capital efficiency of a cheaper entry, the regulatory simplicity of a freehold, or the demand profile of a city-centre apartment versus a residential street. Manchester's 84 postcode districts include both urban apartment cores and suburban terraced-house areas, so the choice is live in this market.

Holiday Let Break-Even Occupancy Is 30%, Well Below the Market Average

Holiday let only needs to fill 30% of available nights for gross revenue to equal an equivalent buy-to-let annual rent. This is the floor, not the target. The current Manchester market average is 49%, meaning a typical operator sits comfortably above the break-even line. If you underwrite new acquisitions against 30%, you leave yourself substantial margin for seasonal variation and competition entering the market.

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Hiring a Letting Agent Drops Holiday Let Net Yield to 3.9%

The tables above assume you self-manage the holiday let, which is the Manchester dashboard default. If you prefer a professional letting agent to handle listings, cleaning coordination and guest communications, expect to pay roughly 20% of gross revenue, equivalent to around £5,991 per year on a 3-bed house at the market average. That alone drops holiday let net yield from 6.3% to 3.9%.

At that managed yield, the gap against buy-to-let at 4.1% narrows substantially. Whether the remaining premium justifies the operational complexity (licensing, cleaning turnover, guest reviews, seasonal swings) is an investor-specific judgement. Many Manchester investors start with self-management to learn the operation, then transition to an agent once they add a second property or decide the time cost is too high.

FHL Abolition Levels the Tax Playing Field

The Furnished Holiday Lettings tax regime was abolished from April 2025. Before that date, holiday lets enjoyed meaningful advantages: full mortgage interest deductibility, capital allowances on furnishings, and pension-relevant earnings treatment. Those advantages are gone. Holiday lets are now taxed on broadly the same basis as buy-to-let: mortgage interest relief is restricted to the basic rate tax credit, and capital allowances on furnishings are no longer available.

The practical consequence is that the financial comparison in this article, which is before-tax, translates more cleanly into after-tax terms than it used to. Transaction costs still apply on purchase, including stamp duty land tax with the additional 5% surcharge for second homes and buy-to-let purchases. Specific amounts depend on the purchase price and your circumstances; check with your solicitor before committing.

Regulation Remains Light in Manchester for Now

No specific short-term rentals licensing or night cap currently. Manchester is expected to implement a registration scheme under the Levelling Up and Regeneration Act provisions. Currently one of the most permissive major UK cities for short-term rentals. Manchester sits outside Greater London, so the 90-day rule under the Deregulation Act 2015 does not apply here. Outside London there is no statutory night cap, although converting a property to a holiday let may trigger planning permission requirements for change of use, which councils have increasing discretion to enforce. Liverpool faces similar dynamics across the North West. For a Manchester suburb-level view, see Collyhurst Leads Manchester Yields at 11.0%, Beating City Median. For a Cheshire East comparison covering the same cost question, see Crewe (CW1) Yields 8.2% in Cheshire East, Ahead of Sandbach's 5.4%.

These figures reflect city medians across 84 Manchester postcode districts. Individual areas diverge substantially: Collyhurst/Cheetham Hill (M8) tops the yield table at 11.0%, while prime central postcodes carry higher prices and softer yields. The dashboard shows suburb-level data for every bedroom count and property type, which is the natural next step if the city-median view leaves you wanting per-postcode detail. Full methodology is set out in our market score methodology and data sources.

Data reflects market conditions as of April 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.