The gross holiday let premium in Edinburgh is 170% for a 3-bed house, but the picture changes once every cost is netted out. This article runs the after-costs maths for both a 3-bed house and a 2-bed apartment, because the cost structures differ. Apartments add service charges that houses do not pay, but they enter the market at a much lower price.
3-Bed House: Holiday Let Nets 13.5% vs Buy-to-Let at 4.9%
The headline figures for a typical Edinburgh 3-bed house, priced at around £264,848, are below. Holiday let assumes self-management at the city's average occupancy of 59%. Buy-to-let assumes agent management at around 11% of rent, the dashboard default for the UK.
| holiday let | buy-to-let | |
|---|---|---|
| Property price | £264,848 | £264,848 |
| Gross revenue | £58,182 | £21,534 |
| Airbnb fees (15.5%) | £9,018 | — |
| Rental management | — | £2,331 |
| Insurance | £1,202 | £490 |
| Maintenance | £5,616 | £3,787 |
| Utilities | £1,956 | £226 |
| council tax | £1,702 | £1,702 |
| holiday let tax | £2,909 | — |
| Total costs | £22,403 | £8,536 |
| Net income | £35,779 | £12,998 |
| Net yield | 13.5% | 4.9% |
Airbnb Fees and Higher Insurance Eat Most of the House Premium
Airbnb fees are the single largest cost difference, taking £9,018 a year off the top at the 15.5% host-only rate. Other platforms charge differently: Vrbo runs at roughly 5%, Booking.com at around 15%, and direct bookings cost nothing per stay but require their own marketing spend. Insurance jumps from £490 a year on a tenanted let to £1,202 for short-stay cover, and utilities of £1,956 sit entirely with the host on a holiday let, whereas on a buy-to-let tenants pay the bulk and the landlord only covers void periods and any common-area share.
Maintenance is also higher on the holiday let line at £5,616 versus £3,787 on a tenanted let, because the dashboard rolls furnishing replacement into the holiday let figure. Add the 5% holiday let tax line and total costs reach £22,403, against £8,536 for the buy-to-let. Even with that gap, holiday let net income of £35,779 comfortably beats buy-to-let net income of £12,998.
2-Bed Apartment: Lower Entry Price, Service Charges Bite
The same exercise for a typical 2-bed Edinburgh apartment, priced at around £171,622, looks like this. The service charge applies to both columns because it is a property-level cost the freeholder bills regardless of whether the flat is let short or long.
| holiday let | buy-to-let | |
|---|---|---|
| Property price | £171,622 | £171,622 |
| Gross revenue | £36,670 | £15,283 |
| Airbnb fees (15.5%) | £5,684 | — |
| buy-to-let management | — | £1,605 |
| Insurance | £748 | £317 |
| Maintenance | £3,711 | £2,454 |
| Utilities | £1,356 | £126 |
| council tax | £1,103 | £1,103 |
| holiday let tax | £1,834 | — |
| Service charge | £1,675 | £1,675 |
| Total costs | £16,111 | £7,280 |
| Net income | £20,559 | £8,003 |
| Net yield | 12.0% | 4.7% |
House vs Apartment: Where the Yield Lands After Service Charges
The apartment entry price of £171,622 is far below the £264,848 house price, which lifts gross yield purely on the denominator. The drag comes from the service charge of £1,675 per year, a fixed cost that houses simply do not face. After all costs, the holiday let net yield comparison is 13.5% on the house against 12.0% on the apartment.
The buy-to-let comparison runs 4.9% on the house against 4.7% on the apartment. These are city medians; individual postcodes diverge significantly, and leasehold service charges in the New Town and West End are routinely higher than the citywide average used here. The dashboard shows postcode-level data for every bedroom count and property type so investors can stress-test the assumption against a specific street.
Holiday Let Breaks Even at 22% Occupancy
The gross break-even occupancy for the 3-bed house is 22%, the level at which holiday let gross revenue equals the buy-to-let annual rent. This is a floor, not a target: the Edinburgh market median sits at 59%, comfortably above. Treat the break-even number as the worst-case acceptable booking rate before the holiday let stops outperforming a tenanted let on revenue alone, before factoring in the higher cost base above.
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A Letting Agent Drops House Net Yield to 8.7%
Both tables above assume self-management, the dashboard default. For a 3-bed Edinburgh house, hiring a holiday let agent costs roughly £12,800 a year, around 22% of gross revenue. That cost drops total holiday let costs to £35,203 and net yield to 8.7%, still ahead of the buy-to-let at 4.9% but with a much narrower margin.
The trade-off is straightforward: full-service agents handle bookings, guest communication, cleaning coordination, and Edinburgh's short-term let licence compliance, which has been mandatory Scotland-wide since October 2022 and is enforced strictly in the city. Self-managers keep the 22% but absorb the time cost of running effectively a small hospitality business, including responding to guests at all hours and managing the licence renewal cycle.
Furnished Holiday Lettings Abolition Has Closed the Tax Gap Between the Two Strategies
The Furnished Holiday Lettings tax regime was abolished from April 2025, removing the historic advantages holiday lets enjoyed over standard buy-to-let. Mortgage interest now qualifies only for the basic-rate tax credit on both strategies, capital allowances on furniture have ended for new holiday let purchases, and pension contributions can no longer be made from holiday let profits. The financial comparison between holiday letting and buy-to-let now rests almost entirely on the operational economics shown above, not the tax wrapper.
Edinburgh purchases above the standard threshold attract Scotland's stamp duty plus the second-property surcharge, which has risen in recent years. Exact transaction costs depend on the specific property price and your existing portfolio, so confirm the current rates and any reliefs with a Scottish solicitor before exchange. Scotland Rental Investment Insights covers the same after-costs question for a comparable UK market, and Glasgow Apartments Beat Houses on Buy-to-Let Yield sits alongside it.
Data reflects market conditions as of May 2026. For the underlying calculations see the data sources page and the market score methodology.
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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.
Methodology and Assumptions
Defaults used in the figures above. All inputs are adjustable in the dashboard.
How available nights are determined
Available nights default to 330 per year, reflecting an active operator with minimal blocked time. Where local regulations cap whole-home short-term lets (for example London at 90 nights, New South Wales at 180), the cap is applied. In markets where short-term rental requires owner-occupancy or is otherwise prohibited for investment properties, available nights drop to zero.
How occupancy is measured
The percentage of available nights that get booked, drawn from market data. A property listed for 200 nights with 100 bookings shows 50% occupancy. Adjustable in the dashboard.
Long-term rental management default
Includes a 9% letting agent fee, the standard arrangement for UK buy-to-let investors who use a managing agent. Self-managed landlords can adjust this to zero in the dashboard.
Short-term rental management default
Set to self-managed (zero management fee) by default, the most common arrangement for individual investors. Hiring a professional manager typically costs 20-25% of gross revenue and reduces net yield proportionally. Toggle in the dashboard.
How property tax is calculated
Council tax in the UK is typically paid by the tenant for long-term rentals, so it is excluded from buy-to-let costs. Holiday lets are usually assessed as business rates and may qualify for Small Business Rate Relief, often reducing this to zero.
Local regulations
Short-term let licence required since October 2022 (Scotland-wide). Edinburgh has the strictest enforcement. New secondary letting (non-primary residence) may also need planning permission for change of use in certain control areas. No night cap per se, but licensing requirements add cost and compliance burden.
Sampling and data sources
Short-term rental yield figures reflect properties currently listed on short-term rental platforms. In high-tourism markets, listings tend to concentrate in central postcodes, which can pull city-median yields above what residential areas of the same city would achieve. Yields for any specific suburb may differ materially from the city-wide median.
For metric definitions and broader methodology, see the About page.